Related-Party Transactions

9 Months Ended

Jun. 30, 2013

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 could 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.

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 was six months from the date of the notice, October 10, 2012. 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. Accrued interest payable to Key is $20,548 and none as of June 30, 2013 and 2012, respectively. On January 10, 2013, the Company began originating its own corn.

The Company purchased corn from Key totaling $10,084,927 and $73,106,359 for the three and nine months endedJune 30, 2013.  There were corn purchases of $26,049,305 and $90,508,021 for the three and nine months endedJune 30, 2012. As of June 30, 2013, the Company has a cash corn contract with Key representing 127,653 bushels of corn, for a commitment of $907,613. The cash contract will be delivered in July 2013.   The Company also has several corn basis contracts that will mature at various dates through October 2013 and total 1,001,000 bushels of corn.

The Company has made some fuel and propane purchases from Key amounting to $13,140 and $54,790, respectively, for the three and nine months endedJune 30, 2013. There were miscellaneous purchases of $90,427 and $134,623 for the three and nine months ended June 30, 2012. As of June 30, 2013 the amount due to Key is $534,291.

For the three and nine months endedJune 30, 2013, the Company purchased corn totaling $875,929 and $4,490,644 from Heartland Co-op, a member of the Company. For both the three and nine months ended June 30, 2012, the Company had no purchases from Heartland Co-op. The Company has a corn cash contract with Heartland Co-op that will be delivered in July 2013. The cash contract represents 7,416 bushels of corn for a commitment of $55,840. The Company also has a corn basis contract that matures July 2013 and totals 150,000 bushels of corn. As of June 30, 2013 the amount due to Heartland Co-op is $34,909.

For the three and nine months endedJune 30, 2013, the Company purchased corn totaling $3,897,395 and $5,492,158 from Mid Iowa Cooperative, a member of the Company. For both the three and nine months ended June 30, 2012, the Company had no purchases from Mid Iowa Cooperative. The Company also has a corn basis contract that will mature July 2013 and totals 200,000 bushels of corn. As of June 30, 2013 the amount due to Mid Iowa Cooperative is $61,971.

For the three and nine months endedJune 30, 2013, the Company purchased corn from several other members totaling $1,630,954 and $2,111,495, respectively. As of June 30, 2013, the Company entered into several cash corn contracts with several members representing 65,661 bushels and a commitment of $453,040. These contracts mature at various dates through March 2014. As of June 30, 2013 the amount due to other members is $180,730

The Company is also purchasing anhydrous ammonia and propane from Innovative Ag Services, a member of the Company.  Total purchases for the three and nine months endedJune 30, 2013 is $18,250 and $243,080, respectively. Total purchases for the three and nine months ended June 30, 2012 is $1,393 and $19,546, respectively.