Milling & Baking News - July 24, 2012 - 16

Business 

With strong Ag Business results, CHS earnings rise 13% in quarter
ST. PAUL, MINN. — Net income at CHS Inc. in the third quarter ended May 31 increased to $405,062,000, up 13% from $358,484,000 in the same period a year ago. Revenues for the period also advanced, rising 4% to $11,022,955,000 from $10,471,672,000 in the same period a year ago. CHS said earnings for the third quarter reflected strong performance across its energy segment. The company’s Ag Business segment, which consists of CHS’s agronomy, grain marketing and retail operations, posted operating earnings of $139,857,000, up 33% from $104,837,000 in the same period a year ago. Sales in the segment totaled $7,999,120,000, up 7% from $7,507,069,000 a year ago. “Grain revenues in our Ag Business segment totaled $5.1 billion and $5.5 billion during the three months ended May 31, 2012, and 2011, respectively,” CHS said in a July 12 filing with the Securities and Exchange Commission. “Of the grain revenues decrease of $413.1 million (8%), $437.5 million was related to a decrease in volume of 8%, partially offset by a $24.4 million increase in the average grain selling prices during

the three months ended May 31, 2012, compared to the same period in the prior fiscal year. The average sales price of all grain and oilseed commodities sold was relatively flat compared to the same three-month period in fiscal 2011. Soybeans had increased volumes, while corn and wheat had decreased volumes compared to the three months ended May 31, 2011. “Our oilseed processing revenues

in our Ag Business segment of $413.3 million increased $79.6 million (24%) during the three months ended May 31, 2012, compared to the three months ended May 31, 2011. The net increase in revenues is comprised of $10.3 million from an increase in the average selling price of our oilseed products and an increase of $69.3 million related to increased volumes, as compared to the three months ended May 31, 2011. Typically, changes in average selling prices of oilseed products are primarily driven by the average market prices of soybeans. The increase in volumes is primarily related to our acquisitions of Solbar and an oilseed crushing facility in Creston, Iowa.” Energy earnings in the third quarter rose 50% to $346,450,000 from $230,251,000, while sales increased 3% to $3,117,272,000 from $3,038,831,000. For the nine months ended May 31, overall net income was 899,740,000, up 19% from $754,807,000 in the same period a year ago. Net revenues rose 12% to $29,600,926,000 from $26,312,895,000. MBN organic yeast is commercially available. That is, a baker should not be required to use dried organic yeast in place of fresh conventional yeast where the end product will be compromised by such a substitution.” The National List of Allowed and Prohibited Substances spells out the non-synthetic, non-agricultural (non-organic) ingredients permitted in processed organic foods under the National Organic Program. The National Organics Standards Board reviews the list every five years, which is known as the sunset review. The recent sunset review led to the removal of exemptions for pectin (low-methoxy), which typically is used in low-sugar and low-acid foods, and sulfur dioxide, a rodenticide. The two removals from the National List of Allowed and Prohibited Substances went into effect June 27. The board let stand the exemption for non-amidated forms of pectin. One rule change altered the status of colors derived from agricultural sources to stipulate that they could not be made with synthetic solvents, carriers or preservatives. It went into effect June 27. MBN
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Organic rule changes affect yeast, pectin, colors
WASHINGTON — National Organic Program rule changes approved in June involved yeast and several other items related to the baking industry, including pectin, a rodenticide and colors. The rule changes followed recommendations by the National Organic Standards Board in accordance with a sunset review held every five years. They were found in the June 6 Federal Register, pages 33290 to 33302. The board ruled that when yeast is used as food or a fermentation agent in products labeled as organic, the yeast must be organic if its end use is human consumption. The amendment is effective Oct. 21. It covers autolysate, bakers, brewers, nutritional and smoked yeasts. “It is our understanding that organic yeast is required only in products labeled as organic, which category is reserved for products comprised of at least 95% organic ingredients,” said Lee Sanders, senior vice-president, government relations and public affairs at the
16 / July 24, 2012 Milling & Baking News

American Bakers Association, Washington. “Bakery products labeled as ‘made with organic (specific ingredients/food groups)’ do not need to be made with organic yeast, as U.S.D.A. confirms on Page 33296 in the Federal Register and is consistent with U.S.D.A.’s general rules for the ‘made with organic ...’ product category.” In the ruling on yeast, the board said non-organic yeast may be used when organic yeast is not commercially available. The U.S. Department of Agriculture’s National Organics Program defines “commercially available” as the ability to obtain a production input in an appropriate form, quality or quantity to fulfill an essential function in a system or organic production or handling, as determined by the certifying agent in the course of reviewing the organic plan. Ms. Sanders said, “Determining commercial availability is left to the certifying agent, who must consider issues of functionality and quality when determining whether

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Milling & Baking News - July 24, 2012

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