Related-Party Transactions

3 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

The Company entered into an agreement on January 24, 2006 with the Heart of Iowa Coop , dba Key Cooperative (Key), a member of the Company, to provide 100% of the requirement of corn for use in the operation of the ethanol plant. The agreement may be terminated before the end of the term by providing six months' notice of termination and paying the other party $2,000,000, reduced by $50,000 for each completed year of the agreement.  The Company purchased corn totaling $41,257,123 for the three months endedDecember 31, 2012.  There were corn purchases of $29,791,413 for the three months endedDecember 31, 2011. As of December 31, 2012, the Company had several cash corn contracts with Key representing 228,254 bushels of corn, for a commitment of $1,722,132.  The contracts mature on various dates through March 2013.  The Company also has made some fuel and propane purchases from Key amounting to $23,658 and $30,068, respectively for the three months endedDecember 31, 2012 and 2011 . As of December 31, 2012 the amount due to Key is $547,055.

On April 10, 2012, the Company delivered notice to Key to terminate the Amended and Restated Grain Handling Agreement they hold with Key. The termination of the agreement will be six months from the date of the notice, effective October 10, 2012. The Company will begin to originate corn in house at the time of the termination. The Company recorded a termination cost of $1,700,000 as required under the agreement, which was expensed for the quarter ending June 30, 2012. Payments of $425,000 will be made annually over a four year period with interest at the prime rate on the date of termination, due on January 1 of each year. On December 28, 2012 the first payment of $425,000 plus $12,412 of accrued interest was made.

The Company is also purchasing anhydrous ammonia and propane from Innovative Ag Services, a member of the Company.  Total purchases for the three months endedDecember 31, 2012 and 2011 is $96,482 and $16,520, respectively. As of December 31, 2012 there is $94,954 due to Innovative Ag Services.