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Commitments and Contingencies
12 Months Ended
Oct. 31, 2013
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES

Corn Storage and Grain Handling Agreement and Purchase Commitments

GFE has a corn storage and grain handling agreement with Farmers Cooperative Elevator (FCE), a member. Under the agreement, the Company agrees to purchase all of the corn needed for the operation of the plant FCE. The price of the corn purchased will be the bid price FCE establishes for the plant plus a set fee of per bushel.

At October 31, 2013, GFE had basis contracts for forward corn purchase commitments with FCE for 350,000 bushels for delivery in November 2013. At October 31, 2013, the Company also had 550,000 bushels of stored corn totaling approximately $2,346,000 with FCE that is included in inventory.

The Company purchased approximately $153,216,000 of corn from the member during fiscal 2013, of which approximately $4,002,000 is included in corn payable at October 31, 2013. The Company purchased approximately $148,289,000 of corn from the member during fiscal 2012, of which approximately $1,996,000 is included in corn payable at October 31, 2012. The Company purchased approximately $123,676,000 of corn from the member during fiscal 2011.

Ethanol Marketing Agreement

GFE currently has an Ethanol Marketing Agreement (“Eco Agreement”) with Eco-Energy, Inc. (“Eco-Energy”). Pursuant to the Eco Agreement, Eco-Energy agrees to purchase the entire ethanol output of GFE's ethanol plant and to arrange for the transportation of ethanol; however, GFE is responsible for securing all of the rail cars necessary for the transport of ethanol by rail. GFE will pay Eco-Energy a certain percentage of the FOB plant price in consideration of Eco-Energy's services. The contract had an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party.

Ethanol marketing fees and commissions totaled approximately $796,000, $743,000, and $1,006,000 for the fiscal years ended October 31, 2013, 2012 and 2011 respectively, and are included net within revenues.

During the fourth quarter of fiscal year 2013, HLBE entered into a new marketing agreement with Eco-Energy, for the sale of ethanol. Under this ethanol agreement, Eco-Energy will purchase, market and resell 100% of the ethanol produced at the Company's ethanol production facility and the Company will pay Eco-Energy a marketing fee based on a percentage of the applicable sale price of the ethanol. The marketing fee was negotiated based on prevailing market-rate conditions for comparable ethanol marketing services.

Ethanol Contracts

At October 31, 2013, GFE had forward contracts to sell approximately $6,283,000 of ethanol for various delivery periods from November 2013 through December 2013 which approximates 36% of its anticipated ethanol sales during that period.

At October 31, 2012, GFE had forward contracts to sell approximately $8,747,000 of ethanol for delivery in November 2012.

Distillers Grain Marketing Agreement

GFE has a Marketing Agreement with RPMG, an unrelated party, for the purpose of marketing and selling all distillers grains produced by the Company. The contract commenced on February 1, 2011 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Distillers grain commissions totaled approximately $745,000, $650,000 and $460,000 for the fiscal years ended October 31, 2013, 2012 and 2011 respectively, and are included net within revenues.

At October 31, 2013, GFE had forward contracts to sell approximately $3,052,000 of distillers grains for delivery in November 2013 through March 2014 which approximates 27% of its anticipated distillers grain sales during that period.
At October 31, 2012, GFE had forward contracts to sell approximately $1,773,000 of distillers grains for delivery in November 2012 which approximates 65%.

Gavilon Ingredients, LLC serves as the distillers' grains marketer for HLBE pursuant to an off-take agreement that became effective as of November 1, 2013. Under this agreement, Gavilon Ingredients, LLC purchases all of the distillers' grains produced at our Heron Lake ethanol plant in exchange for a service fee.

Corn Oil Marketing Agreement

GFE has a Marketing Agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by the Company. The contract commenced on April 29, 2010 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Corn oil commissions totaled approximately $74,000, $55,000 and $44,000 for the fiscal years ended October 31, 2013, 2012 and 2011 respectively, and are included net within revenues.

Natural Gas Contracts

At October 31, 2013, GFE had no forward contracts to purchase natural gas.

At October 31, 2012, GFE had forward contracts to purchase $719,000 of natural gas at prices with delivery periods from November 2012 through March 2013.    

HLBE has natural gas agreements with a minimum purchase commitment of approximately 1,600,000 MMBTU per year until October 31, 2014.

Contract for Natural Gas Pipeline to Plant

GFE has an agreement with an unrelated company for the construction of and maintenance of 9.5 miles of natural gas pipeline that will serve the plant. The agreement requires the Company to receive a minimum of 1,400,000 DT of natural gas annually through the term of the agreement. The Company is charged a fee based on the amount of natural gas delivered through the pipeline.

This agreement will continue in effect until December 31, 2015 at which time it will automatically renew for consecutive terms of one year. A twelve months prior written notice is required to be given by either party to terminate this agreement.

At the HLBE plant, we have a facilities agreement with Northern Border Pipeline Company which allows us access to an existing interstate natural gas pipeline located approximately 16 miles north from the plant. Agrinatural Gas, LLC ("Agrinatural Gas"), owned by our subsidiary, HLBE Pipeline Company, LLC, and Rural Energy Solutions, was formed to own and operate the pipeline and transports gas to HLBE pursuant to a transportation agreement. HLBE Pipeline Company, LLC owns 73% of Agrinatural Gas. HLBE also has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy—Gas Division, LLC ("Constellation"). HLBE buys all of its natural gas from Constellation and this agreement runs for a three year period from November 1, 2011 to October 31, 2014.