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                                                                    EXHIBIT 10.3






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                (Above space reserved for recording information)

                                OPTION AGREEMENT

         IN CONSIDERATION of the sum of One and 00/100 dollars ($1.00) and other
good and valuable consideration ("Option Price"), the receipt of which is here
by acknowledged, Earl & Cheryl Nellermoe, husband and wife and Daryl Nellermoe,
a single person, (collectively "Owners") grant to Granite Falls Community
Ethanol Plant, LLC, (GFCEP), an exclusive option ("Option") to purchase
approximately 25.3 acres more or less of real property described as follows, to
wit:

         Part of the East one-half of the Northeast Quarter (E 1/2NE 1/4) of
         Section One (1), Township One Hundred Fifteen (T115N), Range
         Thirty-Nine (R39W), Excepting therefrom the right of way of Minnesota
         Highway 23

Located in Chippewa County, Minnesota, (the "Option Property") and on the terms
and conditions set forth below:

         1. TIME TO EXERCISE OPTION. This Option shall be exercised at any time
by written notice delivered to Owners by certified mail postmarked no later than
December 31, 2004, or by personally delivering the notice to Owners no later
than December 31, 2004 at 5:00 p.m. This Option is exclusive to GFCEP for the
duration of the Option period and Owners shall not grant any options or agree to
sell, grant or otherwise convey any other interest in the Option Property to any
other persons or entities at any time while the Option granted herein remains
exercisable. The term, duration and period of the Option shall run from the date
of execution hereof until 5:00 p.m. on December 31, 2004.

         2. LAND PURCHASE PRICE. The purchase price, in the event of the
exercise of the Option shall be in the sum of One Hundred Sixty Eight Thousand
and 00/100 Dollars ($168,000.00), which includes the Option Price set forth
above.

         3. TEST AND INVESTIGATIONS ON PROPERTY. GFCEP shall, at GFCEP's sole
costs and expenses, have the right to conduct tests and investigations on the
Option Property prior to the time of exercise of this Option. GFCEP agrees to
indemnify and hold Owners harmless from and against all costs, expenses,
damages, claims, and causes of action arising out of GFCEP's activities on the
Option Property prior to the time of exercise of the Option. GFCEP's activities
on the Option Property may include, but not be limited to:

         a.       Soil test and soil borings.


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         b.       Any well drilling or other tests with respect to investigation
                  of the adequacy and quality of water resources.

         c.       Any search of the Option Property or property of owners
                  adjacent thereto for purposes of verifying that no abandoned
                  wells are in existence within the vicinity of the facility.

         d.       The parties understand that the foregoing tests are intended
                  to include but do not limit GFCEP from performing all other
                  tests and investigations as may be necessary to determine the
                  suitability of the Option Property for construction and
                  operation of an Ethanol plant and related facilities and
                  fixtures (the "Plant").

         e.       GFCEP agrees that the testing and investigation shall be
                  conducted, to the extent reasonably possible at a time and in
                  a manner so as to not unduly interfere with farming operations
                  being conducted on or about the Option Property. To the extent
                  any crop damage occurs as a result of GFCEP's testing or
                  investigation, GFCEP agrees to reimburse Owners $300/Acre for
                  the damaged crop.

4. PRELIMINARY WORK. Prior to exercising its Option, GFCEP may, after notifying
Owners, perform such preliminary earth moving or other initial site preparation
or other investigation of the site so long as GFCEP provides financial assurance
to Owners that is adequate to restore the Option Property if the Option is not
exercised by GFCEP.

5. PERMITTING. Owners understand that GFCEP will be required to obtain permits
and/or certifications from Federal, State, County and/or local governmental
units prior to construction and operation of the Plant. Owners agree to permit
GFCEP to do such things as may be necessary to obtain such permits and agrees to
offer reasonable assistance in providing any information or complying with any
directives or orders issued or otherwise required by said governmental units
which may arise during any permitting or approval process.

6. SURVEY AND ROAD. The parties agree that on or before closing, they must
mutually agree on:

         a.       A survey of 25.3 acres more or less describing the property
                  which is the subject matter of this Option.

         b.       Enter into an Agreement with respect to maintenance, upkeep
                  and repair of any driveway servicing the property and the
                  costs of any such maintenance which shall be allocated on the
                  basis of usage made to the driveway by the respective parties.

7. CLOSING. The closing shall take place at such time and place mutually agreed
to between the parties within thirty (30) days of completion of the survey of
the Option property and following GFCEP's exercise of this Option. In the event
that GFCEP exercises this Option, then Owners shall immediately forward to GFCEP
(at Owner's expense) an updated abstract for examination of title. GFCEP shall
be allowed 20 days after receipt of the abstract to make any objections with
regard to title which shall be made in writing and delivered to the Owners. If
any objections are made, Owners shall have 90 days to make title marketable.
Pending correction of title, the date of closing shall be postponed, but upon
correction of title within ten days after written notice thereof to GFCEP, the
closing shall be held. If title is not corrected, to the reasonable satisfaction
of GFCEP, within the time provided for herein, then at GFCEP's Option, this
Agreement shall be null and void and the Option Price shall be refunded to it.

8. MISCELLANEOUS.

         a.       POSSESSION. Possession shall be delivered to Granite Falls
                  Community Ethanol Plant, LLC at closing.





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         b.       CLOSING COSTS. Each party shall be responsible for paying
                  those expenses normally paid by a purchaser or seller of like
                  kind real estate in the State of Minnesota.

         c.       TAXES AND ASSESSMENTS.

                  i.       All real estate taxes and assessments due and payable
                           in the year of closing shall be pro rated between the
                           parties.

                  ii.      In the event that the sale of the Option Property
                           accelerates the payment of real estate taxed and any
                           other special assessments on Owner's property other
                           than the Option Property, then Owners agree that all
                           such accelerated taxes shall be paid by Owners at the
                           time of closing.

         d.       CROPS. If the date of closing occurs and there are growing
                  crops on the Option Property, then Granite Falls Community
                  Ethanol Plant, LLC may, at its option, do the following

                  i.       Take title of the growing crops on the Option
                           Property, and pay Owners the mutually agreed value of
                           such crops, or

                  ii.      Permit Owners to enter upon the Option Property and
                           promptly harvest such crops for Owner's sole benefit.

         e.       WARRANTY. Owners represent and warrant that they are the sole
                  fee title owners of the Option Property. Owners further
                  represent and warrant that there are no active or abandoned
                  wells or underground storage tanks on the Option Property.

         f        EXPIRATION. If GFCEP does not exercise the Option granted
                  hereunder, this Agreement shall terminate upon the expiration
                  of the Option term and GFCEP will deliver to Owners an
                  instrument in writing and in recordable form acknowledging the
                  termination of this Agreement and the non-exercise of its
                  Option to purchase. In addition, GFCEP agrees to pay Owners a
                  sum of $7,222.00 (Seven thousand two hundred twenty two
                  dollars) to cover Owners' cost for property title transfer.
                  Upon such payment, this Agreement shall be null and void and
                  neither party shall have any claim or further responsibility
                  to or for the other.

         g.       NOTICES. All notice and other communications required or
                  permitted to be given or served under this Agreement shall be
                  in writing and shall be deemed to have been duly given if
                  delivered in person or deposited in the U.S. Mail, postage
                  prepaid, for mailing by certified mail, return receipt
                  requested, as follows:

                           OWNERS:

                           Earl & Cheryl Nellermoe
                           12798 U. S. Hwy. 212
                           Sacred Heart, MN  56285

                           Daryl Nellermoe
                           316 Oehlke Avenue
                           Enderlin, ND 58027

                           GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
                           c/o Paul Enstad
                           P.O. Box 216
                           2448-540th Street, Suite1
                           Granite Falls, MN  56241-0216


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         h.       SUCCESSORS BOUND. This Agreement is binding upon the heirs,
                  successors and assigns of the parties. Any assignment of this
                  Option Agreement by either party shall require the advance
                  written consent of the other.


Dated this _____ day of February, 2003.

                                   OWNERS

                                            /s/ Earl Nellermoe
                                   -------------------------------------------
                                   Earl Nellermoe


                                            /s/ Cheryl Nellermoe
                                   -------------------------------------------
                                   Cheryl Nellermoe


                                            /s/ Daryl Nellermoe
                                   -------------------------------------------
                                   Daryl Nellermoe

                                   GRANITE FALLS COMMUNITY ETHANOL
                                   PLANT, LLC


                                   By:      /s/ Paul Enstad
                                       ---------------------------------------

                                       Its:          Chairman
                                            ----------------------------------

State of Minnesota              )
                                ) ss.
County of Yellow Medicine       )

         On the 21st day of February, 2003, Before me, personally appeared Paul
Enstad, to me personally known, who, being by me duly sworn, did say that he is
the Chairman of Granite Falls Community Ethanol Plant, LLC, the limited
liability named in the foregoing instrument, and that said instrument was signed
and sealed on behalf of said limited liability company by authority of its
Governors, and said Paul Enstad, Acknowledged said instrument to be the free act
and deed of said limited liability company.




                                             /s/ Michele L. Lund
                                    -------------------------------------------
                                    Notary Public

State of Minnesota              )
                                ) ss.
County of Renville              )

         The foregoing instrument was acknowledged before me this 18 day of
March, 2003, by Earl Nellermoe and Cheryl Nellermoe, husband and wife.


                                             /s/ Michele S. Mahlum
                                    -------------------------------------------
                                    Notary Public




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State of North Dakota           )
                                ) ss.
County of Ransom                )

         The foregoing instrument was acknowledged before me this 14th day of
March, 2003, by Daryl Nellermoe, a single person.


                                             /s/ Debra Thielges
                                    -------------------------------------------
                                    Notary Public