What changed in this filing

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Item 1. Business

2022-11-02 compared with 2021-11-04 · 41 added, 81 removed, 223 unchanged (35% of the section changed)

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rather, a proportionate share of the income or loss from those equity investments and joint ventures is included as a component of our net income using the equity method of accounting.

For the year ended August 31, 2021, our total revenues were $38.4 billion and net income attributable to CHS was $554.0 million.

For the year ended August 31, 2022, our total revenues were $47.8 billion and net income attributable to CHS was $1.7 billion.

We have aligned our segments based on an assessment of how our businesses operate and the products and services they sell.

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Our Nitrogen Production segment consists of our equity method investment in CF Industries Nitrogen, LLC ("CF Nitrogen"), and allocated expenses.

Our Foods segment consists of our equity method investment in Ventura Foods, LLC ("Ventura Foods"), and allocated expenses.

Our other business operations, primarily our financing and hedging businesses, are included in Corporate and Other because of the nature of their products and services, as well as the relative amount of revenues from those businesses.

In addition, our nonconsolidated wheat milling joint venture is included in Corporate and Other.

Prior to August 31, 2021, our equity method investment in Ventura Foods was reported as a component of Corporate and Other and, accordingly, reported segment results and balances prior to that time have been recast to reflect the addition of our Foods segment.

In addition, our nonconsolidated food production and distribution joint venture, Ventura Foods, LLC ("Ventura Foods"), and our nonconsolidated wheat milling joint venture, Ardent Mills, LLC ("Ardent Mills"), are included in Corporate and Other.

For the year ended August 31, 2021, our equity method investment in Ventura Foods was reported separately as our Foods segment.

Segment results and balances prior to fiscal 2022 have been recast to reflect Ventura Foods as a component of Corporate and Other.

Our earnings from cooperative business are allocated to members and to a limited extent to nonmembers with which we have agreed to do business on a patronage basis based on the volume of business they do with us.

We allocate these earnings to our patrons in the form of patronage refunds (which are also called patronage dividends), which may be in cash, patrons' equities (in the form of capital equity certificates) or both.

We allocate these earnings to our patrons in the form of patronage refunds, which are also called patronage dividends, and which may be in cash, patrons' equities in the form of capital equity certificates or both.

Patrons' equities may be redeemed over time solely at the discretion of our Board of Directors.

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The information contained on our website is not part of, and is not incorporated in, this Annual Report on Form 10-K or any other report we file with or furnish to the Securities and Exchange Commission ("SEC").

CHANGES FROM PRIOR PERIODIC REPORTS

In this Annual Report on Form 10-K, we have complied with the disclosures required by the SEC Release No.

33-10825 "Modernization of Regulation S-K Items 101, 103 and 105" and SEC Release No.

33-10890 "Management's Discussion and Analysis, Selected Financial Data and Supplementary Financial Information."

Modernization of Regulation S-K Items 101, 103 and 105

Following its effective date of November 9, 2020, we have adopted and incorporated changes to modernize the description of business, legal proceedings and risk factor disclosures that registrants are required to make pursuant to Regulation S-K promulgated by the SEC.

Specifically, we have provided additional disclosures relating to our human capital resources, restructured our risk factor disclosures and increased the threshold for disclosure of environmental proceedings to which the government is a party.

Management's Discussion and Analysis, Selected Financial Data and Supplementary Financial Information

Following its release in November 2020, we adopted and incorporated changes to modernize, simplify and enhance certain financial disclosure requirements in Regulation S-K promulgated by the SEC.

Specifically, the SEC eliminated the requirement for selected financial data, except for quarterly disclosures when there are retrospective changes affecting comprehensive income, and amended the matters required to be presented under Management's Discussion and Analysis of Financial Condition and Results of Operations to, among other things, eliminate the requirement of the contractual obligations table.

With the adoption of this release, we have eliminated the items discussed above that are no longer required from this Annual Report on Form 10-K.

Information on our contractual obligations is still disclosed in a narrative within the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of this Annual Report on Form 10-K.

We are the nation's largest cooperative energy company based on revenues and identifiable assets, with operations that include petroleum refining and pipelines;

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McPherson refinery.

Our McPherson, Kansas, refinery processes approximately 60% low- and medium-sulfur crude oil and approximately 40% heavy-sulfur crude oil into gasoline, diesel fuel and other distillates, propane and other products.

The refinery sources its crude oil through its own pipelines, as well as common carrier pipelines.

The refinery sources its crude oil through its own pipelines, as well as through joint venture and common carrier pipelines.

Low- and medium-sulfur crude oil is sourced from Kansas, Colorado, North Dakota, Oklahoma and Texas, and heavy-sulfur crude oil is sourced from Canada and Wyoming.

Our McPherson refinery processes approximately 110,000 barrels of crude oil per day to produce refined products that consist of approximately 54% gasoline, 39% diesel fuel and other distillates, 2% propane and 5% other products.

Our McPherson refinery processes approximately 114,000 barrels of crude oil per day to produce refined products that consist of approximately 50% gasoline, 43% diesel fuel and other distillates, 5% petroleum coke and 2% other products.

These products are loaded into trucks at the McPherson refinery or shipped via common carrier pipelines to other markets.

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Demand for crude oil and energy products is driven by the condition of local and worldwide economies, local and regional weather patterns and taxation relative to other energy sources, which can significantly affect the price of refined fuel products.

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

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

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 usage by our agricultural customers is highest and is subject to domestic supply and demand forces.

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

More fuel-efficient equipment, reduced crop tillage, depressed prices for crops, weather conditions and government programs that encourage idle acres may all reduce demand for our energy products.

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and investigation and remediation of the release of hazardous materials.

Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible recalls of products.

Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible product recalls.

Our hedging transactions and activities are subject to the rules and regulations of the exchanges we use and to governing bodies, such as the Chicago Mercantile Exchange ("CME"), the New York Mercantile Exchange ("NYMEX") and the U.S.

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The first area includes the Midwest and Northern Plains.

Competition at the wholesale level in this area includes major oil companies, as well as independent refiners and

wholesale brokers and/or suppliers.

Competition at the wholesale level in this area includes major oil companies, as well as independent refiners and wholesale brokers and/or suppliers.

This area has a robust spot market and is influenced by the large refinery center along the Gulf Coast.

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The last area includes much of Washington and Oregon.

We compete with the major oil companies in this area.

This area is known for volatile prices and an active spot market.

We compete with the major oil companies in this area, which is known for volatile prices and an active spot market.

Our Ag segment includes global grain and processing, country operations and wholesale agronomy businesses.

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We also maintain locations in Europe, the Middle East, the Pacific Rim and South America for marketing, merchandising and/or sourcing grains and crop nutrients.

We primarily conduct our global grain marketing operations directly, but do conduct some of our operations through joint ventures, including TEMCO, LLC, a 50%-owned joint venture with Cargill, Incorporated ("Cargill"), focused on exports, primarily to Asia.

We primarily conduct our global grain marketing operations directly, but do conduct some of our operations through joint ventures, including TEMCO, LLC ("TEMCO"), a 50%-owned joint venture with Cargill, Incorporated ("Cargill"), that focuses on exports, primarily to Asia.

Our processing business includes our oilseed processing and renewable fuels production businesses.

Oilseed processing is conducted at facilities that can crush approximately 140 million bushels of oilseeds on an annual basis, producing approximately 2.9 million short tons of meal and flour and 1.8 billion pounds of edible oil annually.

Oilseed processing is conducted at facilities that crush approximately 132 million bushels of oilseeds on an annual basis, producing approximately 2.7 million short tons of meal and flour and 1.7 billion pounds of edible and inedible oil annually.

We purchase our oilseeds from members, other CHS businesses and third parties that have tightly integrated connections with our global grain marketing operations and country operations business.

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Most of these locations purchase grain from farmers and sell agronomy, energy, feed and seed products to those same producers and others, although not all locations provide every product and service.

We also manufacture animal feed through eight of our owned plants and four limited liability companies.

We also manufacture animal feed through nine owned plants and three limited liability companies.

Wholesale agronomy.

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Our wholesale crop nutrients business delivers products directly to our customers and our country operations business from the manufacturer or through our 11 warehouse terminals and other nonowned storage facilities located throughout the United States.

To supplement what is purchased domestically, our Galveston, Texas, deep-water port and terminal receives fertilizer by vessel from origins such as Asia and the Caribbean Basin where significant volumes of urea are produced.

To supplement what is purchased domestically, our Galveston, Texas, deepwater port and terminal receives fertilizer by vessel from origins such as Asia and the Caribbean Basin where significant volumes of urea are produced.

The fertilizer is then shipped by rail to destinations within crop-producing regions of the United States.

Our wholesale crop protection business operates out of our network of 27 warehouses from which we deliver products directly to

our member cooperatives and independent retailers.

Our wholesale crop protection business operates out of our network of 28 warehouses from which we deliver products directly to our member cooperatives and independent retailers.

We also operate a bulk chemical rail terminal in Brooten, Minnesota, where we handle and store bulk crop protection products for some of the crop protection industry's largest chemical manufacturers.

This facility has approximately 6 million gallons of chemical storage capacity.

This facility has approximately six million gallons of chemical storage capacity.

Products and Services

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These customers include member and nonmember producers, local cooperatives, elevators, grain dealers, grain processors and crop nutrient and crop protection retailers.

We sell our edible oils and soyflour to food companies.

We sell our edible oils and soyflour to food companies and our inedible oils may be sold to energy companies.

The soybean meal we produce is sold to integrated livestock producers and feed mills.

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Many of the business activities in our Ag segment are highly seasonal and, consequently, the operating results for our Ag segment will typically vary throughout the year.

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

For example, 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.

In addition, our Ag segment operations may be adversely affected by relative levels of supply and demand, both domestic and international, commodity price levels and transportation costs and conditions.

Supply is affected by weather conditions, plant disease, insect damage, acreage planted and government regulations and policies.

Demand may be affected by foreign governments and their programs, relationships of foreign countries with the United States, the affluence of foreign countries, acts of war, currency exchange fluctuations and substitution of commodities.

Supply is affected by weather conditions, plant disease, insect damage, acreage planted, wars and civil unrest, and government regulations and policies.

Demand may be affected by foreign governments and their programs, relationships of foreign countries with the United States, affluence of foreign countries, wars and civil unrest, currency exchange fluctuations and substitution of commodities.

Demand may also be affected by changes in eating habits, population growth, per capita consumption of some products and renewable fuels production levels.

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Department of Agriculture, the U.S.

Food and Drug Administration and other federal, state, local and foreign governmental agencies that govern processing, packaging, storage, distribution, advertising, labeling and the quality and safety of feed and grain products.

Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible recalls of products.

Food and Drug Administration and other federal, state, local and foreign governmental agencies that govern processing, packaging, storage, distribution, advertising, labeling, and quality and safety of feed and grain products.

Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible product recalls.

The hedging transactions and activities of our global grain and processing and country operations businesses are subject to the rules and regulations of the exchanges we use and to the governing bodies, such as the CME, the Chicago Board of Trade ("CBOT"), the Minneapolis Grain Exchange ("MGEX") and the CFTC.

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There is also significant competition from products sourced from other regions of the world.

Our Foods segment consists of our equity investment in Ventura Foods and allocated expenses.

Ventura Foods is a joint venture between CHS and Mitsui & Co., with each company owning 50% interest.

We account for our investment in Ventura Foods using the equity method of accounting, and the investment balance was equal to $388.6 million on August 31, 2021.

See Note 6, Investments , of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for additional information.

Ventura Foods currently has 16 manufacturing and distribution locations across the United States and Canada.

Ventura Foods sources its raw materials, which consist primarily of soybean oil, canola oil, palm and/or coconut oil, peanut oil and other ingredients and supplies, from various domestic and international suppliers, including our oilseed processing operations.

Products and Services

Ventura Foods produces and distributes edible, oil-based products, including packaged oils, margarines, flavored dressings and sauces, mayonnaises and other food products.

In addition to products for which Ventura Foods owns the brand, Ventura Foods also produces a variety of nonbranded items and products for third parties.

Some of the products produced and distributed by Ventura Foods have product formulations and processes that are proprietary to either Ventura Foods or its customers.

Sales and Marketing;

Ventura Foods sells its products to foodservice distributors, retail outlets and secondary manufacturers who use edible oils as ingredients in products they manufacture for resale.

Ventura Foods is subject to laws and related regulations and rules designed to protect the environment that are administered by the EPA, the DOT and similar government agencies.

These laws, regulations and rules govern the discharge of materials into the environment, air and water;

reporting storage of hazardous wastes and other hazardous materials;

the transportation, handling and disposal of wastes and other materials;

and the investigation and remediation of the release of hazardous materials.

In addition, environmental laws impose a liability on owners and operators for investigation and remediation of contaminated property, and a party who sends hazardous materials to those contaminated properties for treatment, storage, disposal or recycling.

In some instances, that liability exists regardless of fault.

Ventura Foods is also subject to laws and related regulations and rules administered by the USDA, the FDA and other federal, state, local and foreign governmental agencies that govern the processing, packaging, storage, distribution, advertising, labeling and the quality and safety of food products.

Failure to comply with these laws, regulations and rules could subject Ventura Foods to administrative penalties, injunctive relief, civil remedies and possible recalls of products.

Competition .

Ventura Foods competes with a variety of companies in the food manufacturing industry.

Competitors in the oils segment of the business include multinational oilseed processing companies as well as smaller oil packaging firms.

Ventura Foods also competes with large consumer packaged goods companies and smaller regional manufacturers that produce margarines, flavored dressings and sauces, and mayonnaises for the foodservice, retail and industrial sectors.

Competitive dynamics vary by product category.

In commodity categories such as oils, price and service are significant factors in customer decisions.

For value-added products, such as dressings and sauces, service and culinary capabilities play a larger role in securing new business and maintaining customer relationships.

CORPORATE AND OTHER

CHS Capital .

Our wholly-owned financing subsidiary, CHS Capital, LLC ("CHS Capital"), provides local cooperatives with a variety of loans that meet commercial agriculture needs.

Our wholly-owned financing subsidiary, CHS Capital, LLC ("CHS Capital"), provides member cooperatives with a variety of loans that meet commercial agriculture needs.

These loans include operating, term, revolving and other short- and long-term options.

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CHS Hedging is also the FCM for the majority of our commodity futures trading.

Ventura Foods is a joint venture between CHS and Mitsui & Co., with each company owning a 50% interest.

Ventura Foods produces and distributes edible oil-based products.

We account for our investment in Ventura Foods using the equity method of accounting, and the investment balance was equal to $410.1 million on August 31, 2022.

See Note 6, Investments , of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for additional information.

Wheat milling.

Ardent Mills, LLC ("Ardent Mills"), the largest flour miller in the United States, is a joint venture with CHS, Cargill and Conagra Brands, Inc.

Ardent Mills, the largest flour miller in the United States, is a joint venture with CHS, Cargill and Conagra Brands, Inc.

In connection with the Ardent Mills joint venture, CHS, Cargill and Conagra have various ancillary and noncompete agreements including, among other things, an agreement for us to supply Ardent Mills with certain wheat and durum products.

We hold a 12% interest in Ardent Mills and account for our investment as an equity method investment due to our ability to exercise significant influence through our ability to appoint a member of the Board of Shareholders and Board of Managers of Ardent Mills.

On August 31, 2021, our investment in Ardent Mills was

$220.1 million.

We hold a 12% interest in Ardent Mills and account for our investment as an equity method investment due to our ability to exercise significant influence by appointing a member of the Board of Shareholders and Board of Managers of Ardent Mills.

On August 31, 2022, our investment in Ardent Mills was $250.9 million.

See Note 6, Investments , of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for additional information.

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Of that total, 2,486 were employed in our Energy segment, 6,314 were employed in our Ag segment and 1,214 were employed in Corporate and Other.

In addition to those individuals directly employed by us, many individuals work for or support our joint ventures, including CF Nitrogen in our Nitrogen Production segment, Ventura Foods in our Foods segment and Ardent Mills in our Corporate and Other category, and are not included in these totals.

As of August 31, 2021, we had 12 collective bargaining agreements with unions covering approximately 9% of our employees in the United States, with collective bargaining agreements expiring on various dates through June 30, 2026.

In addition to those individuals directly employed by us, many individuals work for or support our joint ventures, including CF Nitrogen in our Nitrogen Production segment and Ventura Foods and Ardent Mills in our Corporate and Other category, and are not included in these totals.

As of August 31, 2022, we had 12 collective bargaining agreements with unions covering approximately 9% of our employees in the United States, with collective bargaining agreements expiring on various dates through August 31, 2026.

We believe that our relations with our employees are strong.

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Mozaiko, which promotes ethnic diversity and inclusion at CHS while creating an inclusive environment for all employees;

a veterans employee resource group that provides support, camaraderie and resources for employees formerly serving or currently serving in the military;

and Women in Leadership, which supports women in the workplace who are excited and energized to grow personally and professionally.

VERG, which provides support, camaraderie and resources for employees formerly or currently serving in the military;

Women in Leadership, which supports women in the workplace who are excited and energized to grow personally and professionally;

and CultivateHER, a cohort within Women in Leadership, which supports women across our Ag segment.

Learning and development .

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These tools and opportunities include access to thousands of on-demand learning modules;

various internally- and externally-led trainings that cover continuous improvement, public speaking, financial and accounting topics and other topics;

various internal and external trainings that cover continuous improvement, public speaking, financial and accounting topics and other topics;

tuition and professional certification reimbursement;

as well as other opportunities focused on developing the future leaders of CHS.

With the ongoing COVID-19 pandemic during fiscal 2020 and fiscal 2021, many of these opportunities for learning and development were adjusted to a virtual delivery model to ensure that employee development could continue in a safe manner.

Health and safety .

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During fiscal 2022, our Occupational Safety & Health Administration ("OSHA") incident rate was 2.9 incidents per 100 full-time workers, as compared to an average of 3.5 incidents per 100 full-time workers during the three previous years, a reduction of 17%, and our DOT crash rate was in the top 4% of all carriers in our industry segment for the entirety of fiscal 2022.

Beginning in February 2020 and throughout the course of the COVID-19 pandemic, our Environmental Health and Safety team continuously monitored and assessed the evolving situation, while implementing safety precautions to protect the health and well-being of our employees, customers and communities, including the use of personal protective equipment, facility cleaning and sanitation protocols and remote work initiatives for employees whose roles could be conducted remotely.

Community involvement .

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We have designed our compensation and benefits programs to attract and retain qualified employees and to motivate employees to optimize member-owner returns and to achieve our long-term strategies.

In addition to offering competitive compensation that includes annual variable pay linked to our performance, we also offer a wide array of benefits programs that include health insurance and wellness benefits;

In addition to

offering competitive compensation that includes annual variable pay linked to our performance, we also offer a wide array of benefits programs that include health insurance and wellness benefits;

retirement benefits including a company-matched 401(k) contribution and a pension for qualifying employees;

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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 1. Business