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Commitments and Contingencies
12 Months Ended
Oct. 31, 2015
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, 2015, GFE had 380,000 bushels of stored corn totaling approximately $1,300,000 with FCE that is included in inventory. At October 31, 2015, GFE had no forward corn purchase commitments.

The Company purchased approximately $75,018,000 of corn from the member during fiscal 2015, of which approximately $1,486,000 is included in corn payable at October 31, 2015. The Company purchased approximately $82,955,000 of corn from the member during fiscal 2014, of which approximately $1,998,000 is included in corn payable at October 31, 2014. The Company purchased approximately $153,216,000 of corn from the member during fiscal 2013.

At October 31, 2015, HLBE had cash and basis contracts for forward corn purchase commitments for approximately 2,604,000 bushels for deliveries through October 2016.

Ethanol Marketing Agreement

GFE currently has an Ethanol Marketing Agreement (“Eco Agreement”) with Eco-Energy, Inc., an unrelated party (“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 except for 43 rail cars leased to GFE by Eco-Energy under the Eco Agreement. GFE will pay Eco-Energy a fixed fee per gallon of ethanol sold in consideration of Eco-Energy's services, as well as a fixed lease fee for rail cars leased from Eco-Energy to the GFE. In September 2013, the initial term of the agreement was extended to December 31, 2016, with automatic renewals for additional three terms of three year periods unless terminated by either party by providing written notice to the other party at least 3 months prior to the end of the then current term.

HLBE has a marketing agreement with Eco-Energy, an unrelated party, for the sale of ethanol. Under this ethanol agreement, Eco-Energy purchases, markets and resells 100% of the ethanol produced at the Company's ethanol production facility and arranges for the transportation of ethanol. HLBE will pay Eco-Energy a fixed marketing fee per gallon of ethanol sold, as well as a fixed lease fee for rail cars leased from Eco-Energy to the HLBE. The marketing fee was negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. The term of HLBE ethanol marketing agreement continues through December 31, 2016, with automatic renewals for additional three terms of three year periods unless terminated by either party by providing written notice to the other party at least 3 months prior to the end of the then current term.

Ethanol marketing fees and commissions totaled approximately $1,234,000, $1,318,000 and $1,031,000 for the fiscal years ended October 31, 2015, 2014 and 2013 respectively, and are included net within revenues.

Ethanol Contracts

At October 31, 2015, GFE had forward contracts to sell approximately $2,389,000 of ethanol for various delivery periods from November 2015 through December 2015 which approximates 15% of its anticipated ethanol sales during that period.

At October 31, 2015, HLBE had forward contracts to sell approximately $2,366,000 of ethanol for various delivery periods from November 2015 through December 2015 which approximates 15% of its anticipated ethanol sales during that period.

Distillers Grain Marketing Agreement

GFE has a Marketing Agreement with RPMG, Inc., 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 $421,000, $518,000 and $745,000 for the fiscal years ended October 31, 2015, 2014 and 2013 respectively, and are included net within revenues.

At October 31, 2015, GFE had forward contracts to sell approximately $1,923,000 of distillers grain for deliveries in November 2015 through January 2016 which approximates 45% of its anticipated distillers grain sales during that period.

Gavilon Ingredients, LLC ("Gavilon") 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 purchases all of the distillers' grains produced at our Heron Lake ethanol plant in exchange for a service fee. The contract commenced on November 1, 2013 with an initial term of six months, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 60 days to the other party.

At October 31, 2015, HLBE had forward contracts to sell approximately $151,000 of distillers' grains for delivery in October 2015.

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.

HLBE 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 November 1, 2013 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 $125,000, $112,000 and $74,000 for the fiscal years ended October 31, 2015, 2014 and 2013 respectively, and are included net within revenues.

At October 31, 2015, GFE had forward contracts to sell approximately $220,000 of corn oil for delivery through November 2015.

At October 31, 2015, HLBE had forward contracts to sell approximately $383,000 of corn oil for delivery through November 2015.

Natural Gas Contracts

At October 31, 2015, GFE had forward basis contracts to buy natural gas for deliveries in November 2015 through March 2016 which approximates 75% of its anticipated natural gas purchases during that period.    

At October 31, 2015, HLBE had no forward contracts to buy natural gas.


Contract for Natural Gas Pipeline to Plant

HLBE has 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 was formed to own and operate the pipeline and transports gas to the Company pursuant to a transportation agreement The Company also has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy-Gas Division, LLC ("Constellation"). HLBE has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy-Gas Division, LLC pursuant to which it buys all of its natural gas from Constellation. This agreement runs until March 31, 2016.

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.