What changed in this filing

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Item 1A. Risk Factors

2021-11-04 compared with 2020-11-05 · 150 added, 103 removed, 262 unchanged (49% of the section changed)

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We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Reference to this ("Cautionary Statement") in the context of a forward-looking statement shall be deemed to be a statement that any one or more of the following factors may cause actual results to differ materially from those indicated in the forward-looking statement.

Reference to this cautionary statement (the "Cautionary Statement") in the context of a forward-looking statement shall be deemed to be a statement that any one or more of the following factors may cause actual results to differ materially from those indicated in the forward-looking statement.

The following risk factors are in addition to any other cautionary statements, written or oral, which may be made or referred to in connection with any particular forward-looking statement.

The following risk factors should not be construed as exhaustive.

Additional risks and uncertainties not currently known to us or that we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations.

Risks Related to Operating Our Business

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Our revenues, results of operations and cash flows are affected by market prices for commodities such as crude oil, natural gas, ethanol, fertilizer, grain, oilseed, flour, and crude and refined vegetable oils.

Commodity prices generally are affected by a wide range of factors beyond our control, including weather, plant disease, insect damage, drought, availability and adequacy of supply, availability of a reliable rail and river transportation network, outbreaks of disease, government regulation and policies, global trade disputes, and general political and economic conditions.

Commodity prices generally are affected by a wide range of factors beyond our control, including weather, plant disease, insect damage, drought, availability and adequacy of supply, availability of reliable rail and river transportation networks, outbreaks of disease, government regulation and policies, global trade disputes, and general political and economic conditions.

We are also exposed to fluctuating

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commodity prices as the result of our inventories of commodities, typically grain, fertilizer and petroleum products, and purchase and sale contracts at fixed or partially fixed prices.

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If these controls and strategies are not successful in mitigating our exposure to these fluctuations, we could be materially and adversely affected.

Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings.

For example, fluctuations in commodity prices may result in significant noncash losses being incurred on our commodity-based derivatives, which may in turn materially and adversely affect our operating results.

In addition, changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings.

Similarly, increased or decreased sales volumes without a corresponding change in the purchase and selling prices of those products can affect revenues and operating earnings.

For example, in our energy operations, profitability depends largely on the margin between the cost of crude oil that we refine and the selling prices that we obtain for our refined products.

In our energy operations, profitability depends largely on the margin between the cost of crude oil that we refine and the selling prices that we obtain for our refined products.

The prices for crude oil and for gasoline, diesel fuel and other refined petroleum products fluctuate widely.

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• capacities of domestic and foreign refineries;

• ability of members of the Organization of Petroleum Exporting Countries and other countries that are significant producers of oil to agree to and maintain oil price and production controls, and the price and level of imports;

• ability of members of the Organization of Petroleum Exporting Countries ("OPEC") and other countries that are significant producers of oil to agree to and maintain oil price and production controls, and the price and level of imports;

• disruption in supply;

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Accordingly, we expect our margins and the profitability of our energy business to fluctuate, possibly significantly, over time.

In addition, our renewable fuels business produces ethanol, which is closely related to, or may be substituted for, petroleum products, and may be blended into gasoline to increase octane content.

Therefore, the selling price of ethanol can be impacted by the selling prices of gasoline, diesel fuel and other octane enhancers.

A significant decrease in the price of gasoline, diesel fuel or other octane enhancers could result in a significant decrease in the selling price of ethanol, which could adversely affect our revenues and operating earnings.

We are subject to political, economic, legal and other risks of doing business globally.

We are a global business and are exposed to risks associated with having global operations.

These risks include, but are not limited to, risks relating to terrorism, war, civil unrest, changes in a country's or region's social, economic or political conditions, changes in local labor conditions and regulations, changes in safety and environmental regulations, changes in regulatory or legal environments, restrictions on currency exchange activities, currency exchange fluctuations, price controls on commodities, taxes, doing business in countries or regions with inadequate infrastructure and logistics challenges.

These risks include, but are not limited to, risks relating to terrorism, war or civil unrest;

changes in a country's or region's social, economic or political conditions;

changes in local labor conditions and regulations;

changes in safety and environmental regulations;

changes in regulatory or legal environments;

restrictions on currency exchange activities and currency exchange fluctuations, price controls on commodities;

doing business in countries or regions with inadequate infrastructure;

and logistics challenges.

In particular, some countries where we operate lack well-developed legal systems or have not adopted clear legal and regulatory frameworks.

This lack of legal certainty exposes our operations to increased risks, including increased difficulty in enforcing our agreements in those jurisdictions and increased risk of adverse actions by local government authorities, such as unilateral or forced renegotiation, modification or nullification of existing agreements or expropriations.

This lack of legal certainty exposes our operations to increased risks, including increased difficulty in enforcing

our agreements in those jurisdictions and increased risk of adverse actions by local government authorities, such as unilateral or forced renegotiation, modification or nullification of existing agreements or expropriations.

Our business and operations and demand for our products are highly dependent on certain global and regional factors that are outside our control and that could adversely impact our business.

The level of demand for our products is affected by global and regional demographics and macroeconomic conditions, including population growth rates and changes in standards of living.

A significant downturn in global economic growth or recessionary conditions in major geographic regions, including what have been experienced as a result of the COVID-19

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pandemic, may lead to a reduced demand for our products and services, which could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

Weak global economic conditions and adverse conditions in financial and capital markets may adversely impact the financial condition and liquidity of some of our customers, suppliers and other counterparties, which could have a material adverse effect on our customers' ability to pay for our products and on our business, financial condition, liquidity, results of operations and prospects.

A significant downturn in global economic growth or recessionary conditions in major geographic regions may lead to a reduced demand for our products and services, which could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

Weak global economic conditions and adverse conditions in financial and capital markets may adversely impact the financial condition and liquidity of some of our customers, suppliers and other counterparties, which could have a material adverse effect on our customers' abilities to pay for our products and on our business, financial condition, liquidity, results of operations and prospects.

Additionally, planted acreage and consequently the volume of fertilizer and crop protection products applied, is partially dependent on government programs, grain prices and the perception held by producers of demand for production, all of which are outside our control.

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• Adverse weather conditions, such as heavy snow or rainfall and any flooding as a result thereof, may cause transportation delays and increased transportation costs, or damage physical assets, especially facilities in low-lying areas near coasts and river banks or situated in hurricane-prone and rain-susceptible regions.

For example, in August 2021, our Myrtle Grove, Louisiana, grain export terminal was damaged by Hurricane Ida and was not operational for approximately four weeks during storm recovery and cleanup.

As a result, we were required to divert scheduled export shipments through other export locations, resulting in transportation delays and increased transportation costs.

• Changes in weather patterns may shift periods of demand for products or regions in which our products are produced or distributed, which could require us to evolve our procurement and distribution processes.

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Accordingly, factors outside our control could materially and adversely affect our revenues, results of operations and cash flows.

Our business and operations have been and may continue to be adversely affected by the ongoing COVID-19 outbreak or other similar outbreaks.

Our business and operations have been and may continue to be adversely affected by the ongoing COVID-19 outbreak or other outbreaks.

Outbreaks of contagious diseases, including the ongoing COVID-19 outbreak and pandemic, and other adverse public health developments in countries and states where we operate, have had and are expected to continue to have an adverse effect on our business, financial condition and results of operations.

These effects include a potential negative impact on the availability of our key personnel;

These effects include a potentially negative impact on the availability of our key personnel;

temporary closures of our facilities or facilities of our members, business partners, customers, suppliers, third-party service providers or other vendors;

and interruption of domestic and global supply chains, distribution channels, liquidity and capital or financial markets.

and interruption of domestic and global supply chains, distribution

channels and liquidity and capital or financial markets.

In particular, we are actively monitoring COVID-19 impacts on our supply chain and distribution channels.

Restrictions on or disruptions of transportation, port closures or increased border controls or closures, or other impacts on domestic and global supply chains or distribution channels, could increase our costs for raw materials and commodity costs, increase demand for raw materials and commodities from competing purchasers, limit our ability to meet customer demand or otherwise have a material adverse effect on our business, financial condition, results of operation or cash flows.

In addition, we have taken and will continue to take temporary precautionary measures intended to help minimize the risk of COVID-19 to our employees, including requiring administrative and other groups of our employees to work remotely, suspending nonessential travel and restricting attendance at industry events and in-person, work-related meetings, which could negatively affect our business.

Some of these precautionary measures, and similar precautionary measures that we may take in the future, may result in additional costs.

Further, COVID-19 has resulted in a widespread health crisis that has affected and is expected to continue to adversely affect the economies and financial markets of many countries and most areas of the United States, which may affect our ability to obtain additional financing for our businesses and demand

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for our products and services, such as the declines in demand experienced during the third and fourth quarters of our fiscal year 2020 by our refined fuels, renewable fuels, and processing and food ingredients businesses and Ventura Foods.

The declines in demand experienced by our refined fuels, renewable fuels, and processing and food ingredients businesses and Ventura Foods have and may continue to have an adverse effect on our business and our financial results.

Further, COVID-19 has resulted in a widespread health crisis that has affected and is expected to continue to adversely affect economies and financial markets throughout the world, which may affect our ability to obtain additional financing for our businesses and demand for our products and services, such as the declines in demand experienced during the third and fourth quarters of our fiscal year 2020 by our refined fuels, renewable fuels and processing businesses and Ventura Foods.

The declines in demand experienced by our refined fuels, renewable fuels and processing businesses and Ventura Foods have and may continue to have an adverse effect on our business and our financial results.

The impact of the COVID-19 pandemic may also exacerbate the other risks discussed in this Item 1A, any of which could have a material effect on us.

The extent to which COVID-19 will impact our business and our financial results in the future will depend on future developments, which are highly uncertain and cannot be predicted.

Such developments may include the ongoing spread of the virus, the severity of the disease, the duration of the outbreak, the extent of any reoccurrence of the coronavirus or any evolutions or mutations thereof, the development of vaccines or therapeutic treatments that can restore consumer and business economic confidence, and the type and duration of actions that may be taken by various governmental authorities in response to the outbreak and the impact on the U.S.

Such developments may include the ongoing spread of the virus;

the severity of the disease;

the duration of the outbreak;

the extent of any reoccurrence of the coronavirus or any evolutions or mutations thereof;

the availability, administration and effectiveness of vaccines;

the development of therapeutic treatments that can restore consumer and business economic confidence;

the type and duration of actions that may be taken by various governmental authorities in response to the outbreak;

and the impact on the U.S.

and the global economy, including whether the agricultural industry continues to be designated an essential infrastructure industry and may continue to operate if future lockdowns occur.

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If our customers choose alternatives to our refined petroleum products, our revenues, results of operations and cash flows could be materially and adversely affected.

Numerous alternative energy sources currently under development could serve as alternatives to our gasoline, diesel fuel and other refined petroleum products.

Numerous alternative energy sources could serve as alternatives to our gasoline, diesel fuel and other refined petroleum products.

If any of these alternative products become more economically viable or preferable to our customers for environmental or other reasons, demand for our energy products would decline.

In addition, many governments have imposed, and in the future may impose, policies and regulations aimed at decreasing reliance on petroleum-based products, which could reduce demand for our energy products.

For example, the State of California, the Province of Quebec, the European Union and countries such as Japan and the United Kingdom have announced intentions to adopt restrictions with respect to the sale of new combustion-engine vehicles.

If realized, these restrictions would accelerate the decline in demand for gasoline, diesel fuel and other refined petroleum products.

In addition, a number of companies have announced their intention to phase out production of gasoline- and diesel-powered vehicles.

For example, Jaguar Land Rover plans to phase out all diesel powertrains by 2026;

Audi plans to stop producing internal combustion engine vehicles by 2033;

and General Motors has announced a target date of 2035 for phasing out production of gasoline- and diesel-powered vehicles.

While these projected phaseouts primarily impact light-

duty vehicles outside our primary markets, they are expected to further accelerate the decline in demand for gasoline, diesel fuel and other refined petroleum products.

Declining demand for our energy products, particularly diesel fuel sold for farming applications, could materially and adversely affect our revenues, results of operations and cash flows.

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If these cooperatives, distributors, brokers and retailers elect not to purchase our products, our revenues, results of operations and cash flows could be materially and adversely affected.

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In addition, in the seed, fertilizer and crop protection markets, consolidation at both the producer and wholesale customer level has increased the potential for direct sales from the respective input manufacturer to cooperative customers and/or individual agricultural producers, which would remove us from the supply chain and could have a material and adverse effect on our revenues, results of operations and cash flows.

In addition, in the seed, fertilizer and crop protection markets, consolidation at both the producer and wholesale customer level has increased the potential for direct sales from input manufacturers to cooperative customers and/or individual agricultural producers, which would remove us from the supply chain and could have a material and adverse effect on our revenues, results of operations and cash flows.

We are exposed to risk of nonperformance and nonpayment by counterparties.

We are exposed to risk of nonperformance and nonpayment by counterparties, whether pursuant to contracts or otherwise.

Risk of nonperformance and nonpayment by counterparties includes inability or refusal of a counterparty to pay us, inability or refusal to perform because of a counterparty's financial condition and liquidity or for any other reason, and risk that the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than current market prices.

Risk of nonperformance and nonpayment by counterparties includes inability or refusal of a counterparty to pay us, inability or refusal to perform because of a counterparty's financial condition and liquidity, operational failures, labor issues, cybersecurity events or for any other reason, and risk that the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than current market prices.

In the event we experience significant nonperformance or nonpayment by counterparties, our financial condition, results of operations and cash flows could be materially and adversely affected.

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In the event we experience any such nonperformance by a third-party warehouse operator, our financial condition, results of operations and cash flows could be materially and adversely affected.

As another example, if any of our counterparties experience a cyber breach or system failure, or does not respond or perform effectively in connection with such cyber breach or system failure, their businesses could be negatively impacted, and it may result in disruption to our supply chain or distribution channels, which could have a material adverse effect on our business.

Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money.

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In addition, due to implications of the overall agricultural sector's extended period of depressed commodity prices and margins, the COVID-19 pandemic and changing weather conditions, including those due to climate change, among other factors, the credit quality of borrowers and other third parties whose obligations we hold could deteriorate, including a deterioration in the value of collateral posted by those parties to secure their obligations to us pursuant to purchase contracts, loan agreements or other contracts.

If that deterioration occurs, the material adverse effects of third parties not performing their repayment obligations may be exacerbated if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount owed to us.

that deterioration occurs, the material adverse effects of third parties not performing their repayment obligations may be exacerbated if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount owed to us.

For example, certain loans and other financing arrangements we undertake with agricultural producers are typically secured by the counterparty's crops that are planted in the current year.

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Default rates, downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress and illiquidity.

In respect to our lending activity, we evaluate collectability of both commercial and producer loans on a specific identification basis, based on the amount and quality of the collateral obtained, and record specific loan loss reserves when appropriate.

With respect to our lending activity, we evaluate collectability of both commercial and producer loans on a specific identification basis based on the amount and quality of the collateral obtained, and record specific loan loss reserves when appropriate.

Consistent with accounting principles generally accepted in the United States ("U.S.

GAAP"), a general reserve is also maintained based on historical loss experience and various qualitative factors.

GAAP"), a general reserve is also maintained based on our best estimate of expected credit losses.

For other forms of credit, we establish reserves as appropriate and consistent with U.S.

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Our business is affected by fluctuations in commodity prices, transportation costs, energy prices, foreign currency exchange rates and interest rates.

We monitor position limits, account receivables and other exposures and engage in other strategies and controls to manage these risks.

Our monitoring efforts may not be effective at detecting a significant risk

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exposure and our controls and strategies may not be effective in adequately managing against the occurrence of a significant loss relating to a risk exposure.

We monitor position limits, accounts receivables and other exposures and engage in other strategies and controls to manage these risks.

Our monitoring efforts may not be effective at detecting a significant risk exposure and our controls and strategies may not be effective in adequately managing against the occurrence of a significant loss relating to a risk exposure.

If our controls and strategies are not successful in mitigating or preventing our financial exposure to losses due to the fluctuations or failures mentioned above, it could significantly and adversely affect our operating results.

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we do not insure against all potential losses and could be seriously harmed by unanticipated liabilities.

Our operations are subject to business interruptions due to unanticipated events such as explosions, fires, pipeline interruptions, transportation delays, equipment failures, crude oil or refined product spills, adverse weather conditions and labor disputes.

Our operations are subject to business interruptions due to unanticipated events such as explosions, fires, other natural disasters, war, terrorism, cyber attacks, industrial accidents, pipeline interruptions, transportation delays, equipment failures, crude oil or refined product spills, adverse weather conditions and labor disputes.

• Our oil refineries and other facilities are potential targets for terrorist attacks that could halt or discontinue production.

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• Our corporate headquarters, the facilities we own or the significant inventories we carry could be damaged or destroyed by catastrophic events, adverse weather conditions or contamination.

• Someone may accidentally or intentionally introduce a computer virus to our information technology systems or breach our computer systems or other cyber resources.

• Someone may accidentally or intentionally introduce a computer virus into our information technology systems or breach our computer systems or other cyber resources.

• An occurrence of a pandemic or epidemic disease, such as the COVID-19 pandemic, affecting a substantial part of our workforce or our customers could cause an interruption in our business operations.

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To hire new employees, we may be forced to pay higher wages or offer other benefits that might impact our cost of labor.

Furthermore, when we do hire new employees, we may be unable to successfully transfer our other employees' institutional knowledge and

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skills to them.

Furthermore, when we do hire new employees, we may be unable to successfully transfer our other employees' institutional knowledge and skills to them.

These or other employee workforce factors could negatively impact our business, financial condition or results of operations.

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Genetically engineered seeds that resist disease and insects, or that meet certain nutritional requirements, could affect the demand for our crop nutrients and crop protection products.

Demand for fuel that we sell could decline as technology allows for more efficient usage of equipment.

Demand for fuel that we sell could decline as technology allows for more efficient usage of equipment or should alternative energy sources become more viable due to technology.

Declining demand for our products could materially and adversely affect our revenues, results of operations and cash flows.

We utilize information technology systems to support our business.

The ongoing multiyear implementation of an enterprisewide resource planning system, reliance upon multiple legacy business systems, security breaches or other disruptions to our information technology systems or assets could interfere with our operations, compromise security of our customers' or suppliers' information and expose us to liability that could adversely impact our business and reputation.

The ongoing multiyear implementation of an enterprisewide resource planning system, the reliance upon multiple legacy business systems, security breaches or other disruptions to our information technology systems or assets could interfere with our operations, compromise the security of our customers' or suppliers' information and expose us to liability that could adversely impact our business and reputation.

Our operations rely on certain key information technology ("IT") systems, many of which are legacy in nature or may depend on third-party services to provide critical connections of data, information and services for internal and external users.

Over the past several years, we have been implementing a new enterprise resource planning system ("ERP"), and we expect this ERP implementation to continue for the next several years.

This ERP implementation has and will continue to require significant capital and human resources to deploy.

This ERP implementation has required and will continue to require significant capital and human resources to deploy.

Changes we have experienced in the implementation timeline and the scope of the implementation likely have impacted the capital and operating expense amounts required to complete the implementation, and there can be no assurance that the actual costs for completing the ERP implementation will not exceed our current estimates or that the ERP will not take longer to implement than we currently expect.

In addition, potential flaws in implementing the ERP or in the failure of any portion/module of the ERP to meet our needs or provide appropriate controls may pose risks to our ability to operate successfully and efficiently and with an effective system of internal controls.

There may be other challenges and risks to both our aging and current IT systems over time due to any number of causes, such as catastrophic events, availability of resources, power outages, security breaches or cyber-based attacks, as we upgrade and standardize our ERP system on a worldwide basis.

These challenges and risks could result in legal claims or proceedings, liability or penalties, disruption in operations, loss of valuable data, increased costs and damage to our reputation, all of which could adversely affect our business.

Our ongoing IT investments include those relating to cybersecurity, including technology, hired expertise and cybersecurity risk mitigation actions.

However, in connection with the COVID-19 pandemic, a number of our employees have transitioned to working remotely.

However, in connection with the COVID-19 pandemic, a number of our employees have transitioned to working

As a result, more of our employees are working from locations where our cybersecurity programs may be less effective and robust.

In addition, we have experienced an increase in the number of attempts by external parties to access our networks and our data without authorization, and these attempts have become increasingly sophisticated.

We have experienced insignificant data security incidents in the past and any security incident or breach that may occur could adversely impact our business and reputation.

We are also subject to laws and regulations in the United States and other jurisdictions regarding privacy, data protection and data security, including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data.

In addition, IT investments in new technology that could result in greater operational efficiency may further expose our IT systems to the risk of cyber-based attacks.

Like many companies, we continue to experience an increase in the number of sophisticated attempts by external parties to access and/or disrupt our networks without authorization.

For example, in June 2021, we learned of a credible cybersecurity threat to our IT systems.

Upon learning of the cybersecurity threat, we launched an investigation and undertook immediate action, including employing protocols to mitigate the impact of the threat, and engaged internal and third-party information technology security and forensics experts to assess any impact on our IT systems.

We also utilized additional security measures to help safeguard the integrity of our IT system infrastructure and the data contained therein.

Although our systems were not breached, no data was lost or exposed, and our operations were not significantly interrupted by this incident, there is no guarantee that a future incident would not have a greater impact on our operations, our data or our reputation.

We may incur significant costs protecting against or remediating cyber-based attacks or other cyber incidents.

In addition, we are subject to laws and regulations in the United States and other jurisdictions regarding privacy, data protection and data security, including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data.

These laws and regulations pose increasingly complex compliance challenges and will require us to incur costs to achieve and maintain compliance;

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Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social and governance practices may expose us to new or additional risks.

Companies across all industries are facing increasing scrutiny from stakeholders related to their environmental, social and governance ("ESG") practices.

Investor advocacy groups, certain institutional investors, lenders, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments.

Regardless of the industry, investors' and other stakeholders' increased focus and activism related to ESG and similar matters may hinder access to capital or financing, as investors or lenders may determine to reallocate capital or not commit capital as a result of their assessment of a company's ESG practices.

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requirement to do so, we may suffer from reputational damage and our business or financial condition could be materially and adversely affected.

Companies across all industries are facing increasing scrutiny from stakeholders related to their environmental, social and governance ("ESG") practices and disclosures, including practices and disclosures related to climate change, diversity and inclusion, and governance standards.

Investor advocacy groups, certain institutional investors, lenders, investment funds and other influential investors are also increasingly focused on ESG practices and disclosures and in recent years have placed increasing importance on the implications and social cost of their investments.

If we do not adapt or comply with investor, lender or stakeholder ESG expectations and standards, which are evolving, or if we are perceived to have not responded appropriately to the growing focus on ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and our business or financial condition could be materially and adversely affected.

Acquisitions, strategic alliances, joint ventures, divestitures and other nonordinary course-of-business events resulting from portfolio management actions and other evolving business strategies could affect future results.

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Our ability to successfully complete a divestiture will depend on, among other things, our ability to identify buyers that are prepared to acquire such assets or businesses on acceptable terms and to adjust and optimize our retained businesses following the divestiture.

Additionally, we may fail to consummate proposed acquisitions, divestitures, joint ventures or strategic alliances after incurring expenses and devoting substantial resources, including management time, to such transactions.

Several parts of our business, including in particular our nitrogen production business, our foods business and portions of our global grain marketing and wheat milling operations, are operated through joint ventures with third parties where we do not have majority control of the venture.

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Our co-venturers may take actions that are not within our control, which may expose our investments in joint ventures to the risk of lower values or returns.

Joint venture investments may also lead to impasses.

Joint venture

investments may also lead to impasses.

Disputes between us and co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our day-to-day business.

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Each of these matters could have a material adverse effect on us.

We made certain assumptions and projections regarding the future of the markets served by our joint venture investments, which included projected raw materiality availability and pricing, production costs, market pricing and demand for the joint venture's products.

We made certain assumptions and projections regarding the future of the markets served by our joint venture investments that included projected raw materiality availability and pricing, production costs, market pricing and demand for the joint venture's products.

These assumptions were an integral part of the economics used to evaluate these joint venture investment opportunities prior to consummation.

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Our business is subject to numerous government policies, mandates and regulations that could have an adverse effect on our operations or profitability.

For example, government policies, mandates and regulations related to genetically modified organisms, traceability standards, product safety and labeling, and renewable and low-carbon fuels could have an adverse effect on our operations or profitability by, among other things, influencing planting of certain crops, location and size of crop production, trade of processed and unprocessed commodity products, volumes and types of imports and exports, availability and competitiveness of feedstocks as raw materials, and viability and volume of certain of our products.

In our Energy segment, government policies, mandates and regulations designed to stop or impede the development or production of oil, such as those limiting or banning use of hydraulic fracturing, drilling or oilsands production, could adversely affect our operations and profitability.

For example, government policies, mandates and regulations related to genetically modified organisms, traceability standards, sustainable practices, product safety and labeling, and renewable and low-carbon fuels could have an adverse effect on our operations or profitability by, among other things, influencing planting of certain crops, location and size of crop production, trade of processed and unprocessed commodity products, volumes and types of imports and exports, availability and competitiveness of feedstocks as raw materials, and viability and volume of certain of our products.

In our Energy segment, government policies, mandates and regulations designed to stop or impede the development or production of petroleum-based products, such as those limiting or banning use of hydraulic fracturing, drilling or oilsands production or restricting the sale of new combustion-engine vehicles, could adversely affect our operations and profitability.

In addition, changes in international trade agreements and trade disputes can adversely affect commodity trade flows by limiting or disrupting trade between countries or regions.

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For example, the U.S.

government has imposed tariffs on certain products imported into the

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United States, which has resulted in reciprocal tariffs from other countries, including countries where we operate and/or into which we import products, such as imports of U.S.

government has imposed tariffs on certain products imported into the United States, which has resulted in reciprocal tariffs from other countries, including countries where we operate and/or into which we import products, such as exports of U.S.

soybeans into China.

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government has indicated its intent to renegotiate or potentially terminate certain existing international trade agreements and it is unclear what changes, if any, will be made to international trade agreements that are relevant to our business activities.

These actions have created uncertainty between the United States and other nations, including countries where we operate, and have led to significant volatility in commodity prices, disruptions in historical trade flows and shifts in planting patterns in the United States and South America, all of which have resulted in reduced volumes of grain exports overall and have presented challenges and uncertainties for our business.

These actions have created uncertainty among the United States and other nations, including countries where we operate, and have led to significant volatility in commodity prices, disruptions in historical trade flows and shifts in planting patterns in the United States and South America, all of which have resulted in reduced volumes of grain exports overall and have presented challenges and uncertainties for our business.

Changes in trade policy, withdrawals from or material modifications to relevant international trade agreements and continued uncertainty could depress economic activity and restrict our access to suppliers and customers, and we cannot predict the effects of future trade policies, disputes or agreements on our business.

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Such initiatives have imposed and may continue to impose additional costs on us, including operating and compliance costs, and the cost of fines or penalties in the event we do not comply, and could materially affect the availability, as well as the cost and terms, of certain transactions.

Certain federal regulations, studies and reports addressing Dodd-Frank, including the regulation of swaps and derivatives, are still being implemented and others are being finalized.

Certain federal regulations addressing Dodd-Frank are still being implemented and others are being finalized.

We will continue to monitor these developments.

Any of these matters could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

In addition, new laws and regulations that are applicable to us or our businesses may be adopted, and the change in the U.S.

government's administration and its policies may increase the likelihood of such legal and regulatory developments.

If new laws or regulations become applicable to us or our businesses, our compliance costs could increase.

Any of the above matters could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

We establish reserves for the future cost of known compliance obligations, such as remediation of identified environmental issues.

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In addition, any investigation or proceeding by an exchange or the CFTC, whether successful or unsuccessful, could result in substantial costs, diversion of resources, including management time, and potential harm to our reputation, all of which could have a material adverse effect on our business financial condition, liquidity, results of operations and prospects.

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The consequences of any U.S.

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In connection with the preparation of our Annual Report on Form 10-K for the year ended August 31, 2018, our management noted potentially excessive valuations in net derivative asset valuations relating to certain rail freight contracts purchased in connection with our North American grain marketing operations.

Following the identification of these potentially excessive valuations, we engaged external counsel, which engaged forensic accountants to work with our management under the oversight of the Audit Committee of our Board of Directors to conduct an investigation.

Following identification of those potentially excessive valuations, we engaged external counsel, which engaged forensic accountants to work with our management under the oversight of the Audit Committee of our Board of Directors to conduct an investigation.

The investigation concluded there were misstatements in the consolidated financial statements included in certain of our filings with the SEC that were due to intentional misconduct by a former employee in our rail freight trading operations, and due to rail freight contracts and certain nonrail freight contracts not meeting technical accounting requirements to qualify as derivative financial instruments.

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We are unable at this time to predict when the SEC Division of Enforcement's review of these matters will be completed or what regulatory or other outcomes may result.

If the SEC or any other governmental authority determines that violations of certain laws or regulations occurred, we could be exposed to a broad range of civil and criminal sanctions.

If the SEC or any

other governmental authority determines that violations of certain laws or regulations occurred, we could be exposed to a broad range of civil and criminal sanctions.

Although we are currently unable to predict what actions the SEC or any other governmental authority might take, or what the likely outcome of any such actions might be, or estimate the range of reasonably possible fines or penalties, such actions, fines and/or penalties could be material, resulting in a material adverse effect on our business, prospects, reputation, financial condition, results of operations or cash flows.

Even if an inquiry or investigation does not result in an adverse determination, our business, prospects, reputation, financial condition, results of operations or cash flows could be adversely impacted.

In addition, the expenses incurred in connection with the ongoing or any other review by the SEC or any other governmental authority, and the diversion of the attention of our management that could occur as a result thereof, could adversely affect our business, financial condition, results of operations or cash flows.

In addition, the expenses incurred in connection with the ongoing review or any other review by the SEC or any other governmental authority, and the diversion of the attention of our management that could occur as a result thereof, could adversely affect our business, financial condition, results of operations or cash flows.

We are subject to extensive anti-corruption, anti-bribery, anti-kickback and trade laws and regulations, and any noncompliance with those laws and regulations could have a material adverse effect on our business, financial condition and results of operations.

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We operate and sell our products in many parts of the world that have experienced governmental corruption to some degree, and in certain circumstances strict compliance with anti-corruption, anti-bribery and anti-kickback laws and regulations may conflict with local customs and practices.

In addition, in certain countries, we engage third-party agents or intermediaries to act on our behalf and/or conduct all or a portion of our operations through joint venture partners, including in those countries with a high risk for corruption.

If any of these third parties violate applicable anti-corruption, anti-bribery or anti-kickback laws or regulations, we may be liable for those violations.

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Department of Justice ("DOJ") and SEC to voluntarily self-disclose potential violations of the FCPA in connection with a small number of reimbursements made to Mexican customs agents in the 2014-2015 time period for payments customs agents made to Mexican customs officials in connection with inspections of grain crossing the U.S.-Mexican border by railcar.

In connection with their review of this matter, we have cooperated with the DOJ's and SEC's evaluation of other areas of potential interest relating to the FCPA.

On February 25, 2020,

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we received a letter from the DOJ stating that it had closed its inquiry into each of these matters without taking any action against us and acknowledging its appreciation of our cooperation.

In connection with their review of this matter, we have cooperated with the DOJ's and SEC's evaluations of other areas of potential interest relating to the FCPA.

On February 25, 2020, we received a letter from the DOJ stating that it had closed its inquiry into each of these matters without taking any action against us and acknowledging its appreciation of our cooperation.

We are still fully cooperating with the SEC's ongoing evaluation of these FCPA-related matters.

At this time, the SEC has not taken a position on these FCPA-related matters and we are unable to predict when the SEC's review of these matters will be completed or what regulatory or other outcomes may result.

Due to the international scope of our operations, we are also subject to a complex system of import- and export-related laws and regulations, including U.S.

Due to the international scope of our operations, we are subject to a complex system of import- and export-related laws and regulations, including U.S.

regulations issued by Customs and Border Protection, the Bureau of Industry and Security, the Office of Antiboycott Compliance, the Directorate of Defense Trade Controls and the Office of Foreign Assets Control, as well as the counterparts of these agencies in other countries.

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Environmental and energy laws and regulations may result in increased operating costs and capital expenditures and may have a material and adverse effect on us.

New and current environmental and energy laws and regulations, including regulations relating to alternative energy sources and the risk of global climate change, new interpretations of existing environmental and energy laws and regulations, increased governmental enforcement of environmental and energy laws and regulations or other developments in these areas could require us to make additional unforeseen expenditures on technologies and/or other assets to continue our operations or unforeseen changes to our operations, either of which could adversely affect us.

For example, it is possible that some form of regulation will be forthcoming at the federal or state level in the United States with respect to emissions of greenhouse gases ("GHGs"), such as carbon dioxide, methane and nitrous oxide.

New federal legislation or regulatory programs that restrict emissions of GHGs or comparable new state legislation or programs or customer requirements in areas where we or our customers conduct business could adversely affect our operations and the demand for our energy products, which could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

increased governmental enforcement of environmental and energy laws and regulations or other developments in these areas could require us to make additional unforeseen expenditures on technologies and/or other assets to continue our operations or unforeseen changes to our operations, either of which could adversely affect us.

For example, in December 2015, 195 countries adopted, by consensus, a new international agreement known as the Paris Agreement.

The Paris Agreement is intended to provide a framework pursuant to which the parties to the agreement will attempt to hold the increase in global average temperatures below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels.

Participation in the Paris Agreement is subject to the concurrence of the United States Executive Branch Administration then currently in office.

As a result, adherence to the Paris Agreement may vary by administration.

The current administration is supportive of the Paris Agreement.

The Paris Agreement requires the United States to submit its own national plan for reducing emissions of greenhouse gases ("GHGs"), such as carbon dioxide, methane and nitrous oxide.

Executive orders issued by the current administration, including an executive order issued on January 27, 2021, focusing on climate change, are evidence of the current United States government's intent to undertake numerous initiatives in an effort to reduce GHGs.

New federal legislation or regulatory programs that restrict emissions of GHGs, such as cap and trade regimes, carbon taxes, restrictive permitting, increased fuel efficiency standards or mandates for renewable energy, or comparable new state legislation or programs or customer requirements in areas where we or our customers conduct business could adversely affect our operations and the demand for our energy products, which could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

In addition, new legislation, regulatory programs, or customer or other stakeholder expectations could require substantial expenditures for installation and operation of systems and equipment or for substantial modifications to existing equipment.

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The EPA generally establishes new annual renewable fuel percentage standards for each compliance year in the preceding year.

We generate RINs in our marketing operations under the RFS;

however, it may not be enough to meet the needs of our refining capacity and, if so, RINs must be purchased on the open market.

We generate RINs through our blending activities, but we cannot generate enough RINs to meet the needs of our refining capacity and RINs must be purchased on the open market.

In recent years, the price of RINs has been extremely volatile.

As a result, the purchase of RINs could have a negative impact on our future refined fuels margins, the impact of which we are unable to estimate.

Environmental liabilities could have a material adverse effect on us.

For example, in fiscal 2021, prices for D6 ethanol RINs and D4 ethanol RINs rose by 287% and 141%, respectively, compared to the prior year.

Continued RIN volatility could have a negative impact on our future refined fuels margins, as experienced during fiscal 2021.

Environmental liabilities and litigation could have a material adverse effect on us.

Many of our current and former facilities have been in operation for many years, and over that time, we and other operators of those facilities have generated, used, stored and disposed of substances or wastes that are or might be considered hazardous under applicable or future enacted environmental laws, including liquid fertilizers, chemicals and fuels stored in underground and aboveground tanks.

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Liabilities, including legal costs, related to remediation of contaminated properties are not recognized by us until the related costs are considered probable and can be reasonably estimated.

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We have noted a trend in public and private lawsuits filed on behalf of states, counties, cities and utilities alleging harm to the general public and the environment, including waterways and watersheds, as a result of the use of agricultural chemicals, such as fertilizers.

If we become a party to any such lawsuits, we could be required to pay damages or penalties or have other remedies imposed upon us, which could have a material and adverse effect on our results of operations and financial condition.

We face increased climate change-related litigation risk with respect to our operations.

In particular, governmental and other entities in various U.S.

states have filed lawsuits against companies in the coal, gas, oil and petroleum industries, alleging damages as a result of climate change, with the plaintiffs in such lawsuits seeking damages and abatement under various tort theories.

Although we are not currently a party to any of these lawsuits, they present a high degree of uncertainty regarding the extent to which we face an increased risk of liability stemming from climate change.

Risks Related to our Financial Position and Financing Our Business

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Many of our business activities are highly seasonal and operating results vary throughout the year.

Our revenue is generally lowest during the second and fourth fiscal quarters and highest during the first and third fiscal quarters.

For example, in our Ag segment, our country operations business generally experiences higher volumes and income during the spring planting season and during the fall harvest season and our agronomy business generally experiences higher volumes and income during the spring planting season.

Our global grain marketing operations are also subject to fluctuations in volume and income based on producer harvests, world grain prices and demand, and international trade relationships.

Our Energy segment generally experiences higher volumes and income in certain operating areas, such as refined products, in the spring, summer and early fall when gasoline and diesel fuel use by our customers and members is highest and is subject to global supply and demand forces.

Other energy products, such as propane, generally experience higher volumes and income during the winter heating and crop-drying seasons.

The COVID-19 pandemic may impact seasonal trends that typically characterize our revenue and operating results.

Our revenues generally trend lower during the second and fourth fiscal quarters and are highest during the first and third fiscal quarters.

For example, in our Ag segment, our country operations business generally experiences higher volumes and revenues during the fall harvest and spring planting seasons and our agronomy business generally experiences higher volumes and revenues during the spring planting season.

Our global grain and processing operations are subject to fluctuations in volume and revenues based on producer harvests, world grain prices and demand, and international trade relationships.

Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined products, in the spring, summer and early fall when gasoline and diesel fuel use by agricultural producers is highest and is subject to global supply and demand forces.

Other energy products, such as propane, generally experience higher volumes and revenues during the winter-heating and crop-drying seasons.

If any of our long-lived assets become impaired, we could be required to record a significant impairment charge, which would negatively impact our results of operations.

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GAAP at least annually for goodwill and whenever events or changes in circumstances indicate the carrying amount of a long-lived asset or asset group may not be recoverable.

For example, the COVID-19 pandemic and other factors resulted in substantial reductions in demand and sharp price declines in certain industries in which we operate during the third quarter of fiscal 2020, particularly with respect to the production of renewable fuels and other energy products.

Accordingly, based on these deteriorated macroeconomic and industry conditions, we considered the impacts on each of our businesses and determined that we needed to perform interim impairment assessments of goodwill and asset groups during the third quarter of fiscal 2020 for a reporting unit within our Ag segment that operates in the renewable fuels industry.

Although no impairment was recorded as a result of the impairment assessment during the third quarter of fiscal 2020, or as a result of our annual goodwill impairment tests as of July 31, 2020, we are continuing to monitor our results and projected cash flows to assess whether any impairment may be necessary in the future.

Any such future impairment, or any other future impairment of our long-lived assets, could require us to record a significant impairment charge, which would negatively impact our results of operations.

The process of evaluating for impairment involves a number of judgments and estimates.

If the judgments and estimates used in our analyses are not realized or change due to external factors, then actual results may not be consistent with these judgments and estimates, and our long-lived assets may become impaired in future periods.

We have in the past, and may in the future, be required to write down the value of our long-lived assets.

Any future impairment of our long-lived assets could require us to record a significant impairment charge, which would negatively impact our results of operations.

Our business is capital-intensive and we rely on cash generated from our operations and external financing to fund our strategies and ongoing capital needs.

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If we are unable to generate sufficient cash flow or maintain access to adequate external financing, including as a result of significant disruptions in the global credit markets, it could restrict our current operations and our growth opportunities, which could adversely affect our operating results and restrict our ability to repay our existing debts.

Our access to capital could be affected by financial institutions' and other capital sources' policies concerning energy-related businesses.

Public concern regarding the potential effects of climate change have directed increased attention toward the funding sources of energy-related businesses.

As a result, some financial institutions, funds and other sources of capital have reduced or restricted lending to, or investing in, companies that operate in the energy industry.

Limiting energy-related businesses' access to capital could make it more difficult for us to secure external financing, which could in turn restrict our current operations and our growth opportunities, adversely affect our operating results and restrict our ability to repay our existing debts.

Our cooperative structure limits our ability to access equity capital.

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These limitations may restrict our ability to raise equity capital and may adversely affect our ability to compete with enterprises that do not face similar restrictions.

Changes in the method of determining the London Interbank Offered Rate ("LIBOR") or the replacement of LIBOR with an alternative reference rate may adversely affect interest rates under our credit facilities and dividend rates with respect to our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock.

LIBOR is the basic rate of interest widely used as a global reference for setting interest rates on loans.

Uncertainty regarding the transition away from the London Interbank Offered Rate ("LIBOR") and the replacement of LIBOR with an alternative reference rate may adversely affect interest rates under our credit facilities and dividend rates with respect to our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock.

LIBOR is the base rate of interest widely used as a global reference for setting interest rates on loans.

Some of our credit facilities, including our five-year revolving credit facility and our 10-year term loan facility, use LIBOR as the reference rate.

In addition, the terms of our Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2 ("Class B Series 2

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Preferred Stock"), and our Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3 ("Class B Series 3 Preferred Stock"), provide that, beginning on March 24, 2024, in the case of our Class B Series 2 Preferred Stock, or on September 30, 2024, in the case of our Class B Series 3 Preferred Stock ("Initial Reset Date"), dividends on such preferred stock will accumulate at a rate equal to three-month LIBOR plus an applicable spread, not to exceed 8% per annum.

In 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

It is unclear if LIBOR will cease to exist at that time, if new methods of calculating LIBOR will be established such that it continues to exist after 2021 or whether different reference rates used to price indebtedness will develop or become widely accepted.

It is impossible to predict the effect these developments, any discontinuance, modification or other reforms to LIBOR or the establishment or acceptance of alternative reference rates may have on LIBOR, other benchmark rates or floating rate debt instruments.

Although certain of our credit facilities, including our five-year revolving credit facility and our 10-year term loan facility, contain LIBOR alternative provisions, use of alternative reference rates, new methods of calculating LIBOR or other reforms could cause the interest rates on our borrowings to be materially different than expected, which could have an adverse effect on our financial position, results of operations and liquidity and cause us to attempt to renegotiate such credit facilities.

Similarly, although the rate at which dividends accumulate on our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock may not exceed 8% per annum, there is uncertainty regarding the calculation of such rate following the applicable Initial Reset Date in the event that LIBOR ceases to exist, and the use of alternative reference rates, new methods of calculating LIBOR or other reforms could cause the dividends we pay on our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock following the applicable Initial Reset Date to be materially different than expected, which could have an adverse effect on our financial position, results of operations and liquidity and cause us to attempt to amend the terms of our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock, including by seeking shareholder approval of any such amendment.

In addition, the overall financial market may be disrupted as a result of the phaseout or replacement of LIBOR.

In addition, the terms of our Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2 ("Class B Series 2 Preferred Stock"), and our Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3 ("Class B Series 3 Preferred Stock"), provide that, beginning on March 24, 2024, in the case of our Class B Series 2 Preferred Stock, or on September 30, 2024, in the case of our Class B Series 3 Preferred Stock ("Initial Reset Date"), dividends on such preferred stock will accumulate at a rate equal to three-month LIBOR plus an applicable spread, not to exceed 8% per annum.

In 2017, the United Kingdom's Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced that it intended to phase out LIBOR by the end of 2021.

On March 5, 2021, the FCA announced that representative LIBOR rates will no longer be available after June 30, 2023, in the case of overnight and one-, three-, six- and 12-month U.S.

dollar LIBOR rates, and December 31, 2021, in the case of all other LIBOR rates.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, has announced the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to U.S.

dollar LIBOR.

The composition and characteristics of SOFR are not the same as LIBOR.

As a result, there can be no assurance that SOFR or any other alternative reference rate will perform in the same manner as LIBOR would have at any time including without limitation, as a result of changes in interest and yield rates in the market, market volatility, or global or regional economic, financial, political, regulatory, judicial or other events.

For example, since publication of SOFR began on April 3, 2018, daily changes in SOFR have, on occasion, been more volatile than daily changes in comparable benchmark or other market rates.

With limited operating history, it remains unknown whether SOFR will be broadly accepted, whether it will continue to evolve and what the effects of its implementation may be on the markets for financial instruments.

The use of SOFR or another alternative reference rate could cause the interest rates on our borrowings under our applicable credit facilities to be materially different than expected, which could have an adverse effect on our financial position, results of operations and liquidity and cause us to attempt to renegotiate such credit facilities.

In addition, even if SOFR or another alternative reference rate becomes widely accepted, we may continue to be subject to risk on outstanding instruments that rely on LIBOR.

For example, although the rate at which dividends accumulate on our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock may not exceed 8% per annum, there is uncertainty regarding the calculation of such rates following the applicable Initial Reset Date in the event that LIBOR ceases to exist.

The use of SOFR or another alternative reference rate or other reforms relating to the calculation of dividends on our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock could cause the dividends we pay on our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock following the applicable Initial Reset Date to be materially different than expected, which could have an adverse effect on our financial position, results of operations and liquidity and cause us to attempt to amend the terms of our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock, including by seeking shareholder approval of any such amendment.

In addition, the overall financial market may be disrupted as a result of the phaseout and replacement of LIBOR.

Disruption in the financial market could have an adverse effect on our financial position, results of operations and liquidity.

UNRESOLVED STAFF COMMENTS

As of the date hereof, there were no unresolved comments from the SEC staff regarding our periodic or current reports.

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Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors