Commitments and Contingencies

Environmental

We are required to comply with various environmental laws and regulations incidental to our normal business operations. In order to meet our compliance requirements, we establish reserves for the probable future costs of remediation of identified issues, which are included in cost of goods sold and marketing, general and administrative in our Consolidated Statements of Operations. The resolution of any such matters may affect consolidated net income for any fiscal period; however, management believes any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year.

Contingencies

In May 2013, we initiated a voluntary recall of certain soy protein products produced at our Ashdod, Israel facility following one customer's report to us of a positive test result for salmonella in product purchased from us. We notified applicable food safety regulators, including the Israel Ministry of Health and the U.S. Food and Drug Administration, of both the positive test result and our determination to conduct a voluntary recall. We have received no reports of salmonella-related illness in relation to the recalled products. We estimate our claims loss associated with this recall to be $18.0 million. As of August 31, 2014, $11.5 million of claims had been settled. We maintain product liability and general liability insurance (which includes product liability coverage), which we believe will offset some related product liability expenses. However, as of August 31, 2014, no insurance recoveries have been recorded related to this incident.

Other Litigation and Claims

We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal course of our business. The resolution of any such matters may affect consolidated net income for any fiscal period; however, management believes any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year.

Guarantees

We are a guarantor for lines of credit and performance obligations of related companies. Our bank covenants allow maximum guarantees of $1.0 billion, of which $105.2 million was outstanding on August 31, 2014. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. The underlying loans to the counterparties for which we provide guarantees are current as of August 31, 2014.

Credit Commitments

CHS Capital has commitments to extend credit to customers as long as there is no violation of any condition established in the contracts. As of August 31, 2014, CHS Capital’s customers have additional available credit of $1.1 billion.

Lease Commitments

We are committed under operating lease agreements for approximately 3,000 rail cars with remaining terms of one to 12 years. In addition, we have commitments under other operating leases for various refinery, manufacturing and transportation equipment, vehicles and office space. Some leases include purchase options at not less than fair market value at the end of the lease terms.

Total rental expense for all operating leases was $91.8 million, $81.5 million and $74.6 million for the years ended August 31, 2014, 2013 and 2012, respectively.

Minimum future lease payments required under noncancelable operating leases as of August 31, 2014 were as follows:



	Rail Cars		Vehicles		Equipment and Other		Total
	(Dollars in thousands)
2015	$	24,329	$	15,344	$	61,653	$	101,326
2016	23,286		10,568		40,635		74,489
2017	21,926		7,761		36,286		65,973
2018	17,027		5,309		28,349		50,685
2019	11,682		2,406		20,102		34,190
Thereafter	11,261		1,791		90,039		103,091
Total minimum future lease payments	$	109,511	$	43,179	$	277,064	$	429,754

Unconditional Purchase Obligations

Unconditional purchase obligations are commitments to transfer funds in the future for fixed or minimum amounts or quantities of goods or services at fixed or minimum prices. Our long-term unconditional purchase obligations primarily relate to pipeline and grain handling take-or-pay and through-put agreements. Minimum future payments required under these agreements as of August 31, 2014 are as follows:



	Payments Due by Period
	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
	(Dollars in thousands)
Long-term unconditional purchase obligations	$	485,739	$	68,008	$	124,367	$	87,809	$	205,555

The discounted, aggregate amount of the minimum required payments under long-term unconditional purchase obligations, based on current exchange rates at August 31, 2014, was $415.0 million. Total payments under these arrangements were $65.5 million, $62.4 million and $47.8 million for the years ended August 31, 2014, 2013 and 2012, respectively.