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Leases

12 Months Ended

Oct. 31, 2021

Lessor Arrangements

The Company enters into leasing transactions in which it rents certain of its assets and the Company is the lessor. These lease contracts are typically classified as operating leases with remaining terms ranging from one month to 21 years, with various renewal terms available. All of the residential rentals have month-to-month lease terms.

The following table presents the components of the Company’s operating lease portfolio included in property, plant and equipment, net as of October 31 (in thousands):


	2021		2020
Land	$	3,516	$	3,522
Buildings, equipment and building improvements	18,712		18,516
Less: accumulated depreciation	(6,331)		(5,691)
Property, plant and equipment, net under operating leases	$	15,897	$	16,347

Depreciation expense for assets under operating leases was approximately $669,000 and $664,000 for the fiscal years 2021 and 2020, respectively.

The Company’s rental operations revenue consists of the following (in thousands):


	Year ended October 31,
	2021		2020
Operating lease revenue	$	4,329	$	4,287
Variable lease revenue	317		335
Total lease revenue	$	4,646	$	4,622

13. Leases (continued)

Lessor Arrangements (continued)

The future minimum lease payments to be received by the Company related to these operating lease agreements as of October 31, 2021 are as follows (in thousands):


2022	$	1,274
2023	1,100
2024	822
2025	823
2026	167
Thereafter	675
Total	$	4,861

The Company’s rental operations revenue included contingent rental revenue of $355,000 for fiscal year 2019.

Lessee Arrangements

The Company enters into leasing transactions in which the Company is the lessee. These lease contracts are classified as either operating or finance leases. The Company’s lease contracts are generally for agricultural land and packinghouse equipment with remaining lease terms ranging from one to 16 years, with various term extensions available. The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Operating lease costs were $606,000 and $559,000 and variable lease costs were $288,000 and immaterial, for the fiscal years 2021 and 2020, respectively, which are primarily included in agribusiness costs and expenses in the Company’s consolidated statements of operations. Finance lease costs and short term lease costs were immaterial for both years.

Supplemental balance sheet information related to leases consists of the following as of October 31 (in thousands):


	Classification	2021			2020
Assets
Operating lease ROU assets	Other assets	$	2,041		$	2,053
Finance lease assets	Other assets	1,142			—
		$	3,183		$	2,053

Liabilities
Current operating lease liabilities	Accrued liabilities and payables to related parties	$	488		$	521
Current finance lease liabilities	Accrued liabilities	249			—
Non-current operating lease liabilities	Other long-term liabilities	1,648			1,610
Non-current finance lease liabilities	Other long-term liabilities	884			—
Total operating lease liabilities		$	3,269		$	2,131

Weighted-average remaining lease term (in years)
Operating leases		10.9			11.0
Finance leases		4.9			—
Weighted-average discount rate
Operating leases		3.7		%	3.8		%
Finance leases		3.3		%	—

13. Leases (continued)

Lessee Arrangements (continued)

Supplemental cash flow information related to leases consists of the following (in thousands):


	Year ended October 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	603	$	559
Operating cash outflows from finance leases	$	3	$	—
Financing cash outflows from finance leases	$	18	$	—
ROU assets obtained in exchange for new operating lease liabilities	$	271	$	108
Leased assets obtained in exchange for new finance lease liabilities	$	1,151	$	—

Future minimum lease payments under non-cancellable leases for each of the subsequent five fiscal years and thereafter are as follows (in thousands), which excludes $448,000 of operating lease payments for leases that have been signed but not commenced:


	Operating		Finance		Total
2022	$	488	$	249	$	737
2023	312		249		561
2024	281		249		530
2025	210		249		459
2026	134		229		363
Thereafter	1,192		—		1,192
Total lease payments	2,617		1,225		3,842
Less: Imputed interest	(481)		(92)		(573)
Present value of lease liabilities	$	2,136	$	1,133	$	3,269

In addition to operating and finance lease commitments, the Company also has a contract for pollination services which does not meet the definition of a lease, with minimum future payments of $307,000 and $51,000 in fiscal years 2022 and 2023, respectively.

Total lease expense for fiscal year 2019 was $733,000, which was included in agribusiness costs and expenses in the Company’s consolidated statements of operations.

Leases

Lessor Arrangements

The following table presents the components of the Company’s operating lease portfolio included in property, plant and equipment, net as of October 31 (in thousands):


	2021		2020
Land	$	3,516	$	3,522
Buildings, equipment and building improvements	18,712		18,516
Less: accumulated depreciation	(6,331)		(5,691)
Property, plant and equipment, net under operating leases	$	15,897	$	16,347

Depreciation expense for assets under operating leases was approximately $669,000 and $664,000 for the fiscal years 2021 and 2020, respectively.

The Company’s rental operations revenue consists of the following (in thousands):


	Year ended October 31,
	2021		2020
Operating lease revenue	$	4,329	$	4,287
Variable lease revenue	317		335
Total lease revenue	$	4,646	$	4,622

13. Leases (continued)

Lessor Arrangements (continued)

The future minimum lease payments to be received by the Company related to these operating lease agreements as of October 31, 2021 are as follows (in thousands):


2022	$	1,274
2023	1,100
2024	822
2025	823
2026	167
Thereafter	675
Total	$	4,861

The Company’s rental operations revenue included contingent rental revenue of $355,000 for fiscal year 2019.

Lessee Arrangements

Supplemental balance sheet information related to leases consists of the following as of October 31 (in thousands):


	Classification	2021			2020
Assets
Operating lease ROU assets	Other assets	$	2,041		$	2,053
Finance lease assets	Other assets	1,142			—
		$	3,183		$	2,053

Liabilities
Current operating lease liabilities	Accrued liabilities and payables to related parties	$	488		$	521
Current finance lease liabilities	Accrued liabilities	249			—
Non-current operating lease liabilities	Other long-term liabilities	1,648			1,610
Non-current finance lease liabilities	Other long-term liabilities	884			—
Total operating lease liabilities		$	3,269		$	2,131

Weighted-average remaining lease term (in years)
Operating leases		10.9			11.0
Finance leases		4.9			—
Weighted-average discount rate
Operating leases		3.7		%	3.8		%
Finance leases		3.3		%	—

13. Leases (continued)

Lessee Arrangements (continued)

Supplemental cash flow information related to leases consists of the following (in thousands):


	Year ended October 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	603	$	559
Operating cash outflows from finance leases	$	3	$	—
Financing cash outflows from finance leases	$	18	$	—
ROU assets obtained in exchange for new operating lease liabilities	$	271	$	108
Leased assets obtained in exchange for new finance lease liabilities	$	1,151	$	—


	Operating		Finance		Total
2022	$	488	$	249	$	737
2023	312		249		561
2024	281		249		530
2025	210		249		459
2026	134		229		363
Thereafter	1,192		—		1,192
Total lease payments	2,617		1,225		3,842
Less: Imputed interest	(481)		(92)		(573)
Present value of lease liabilities	$	2,136	$	1,133	$	3,269

Total lease expense for fiscal year 2019 was $733,000, which was included in agribusiness costs and expenses in the Company’s consolidated statements of operations.