[Al_The_Man]

Apart from Fanuc themselves there are not many options apart from ebay etc, in Canada you could try North American Industrial in Mississauga (905) 565-6166,(also in Quebec).
They may be a better price than Fanuc.
The machine will run without it, but functions that use the encoder like constant surface feed and threading etc will not work.
If you want to get creative, find out the counts/rev and replace with a cheaper encoder, the plug would have to be changed, however.
Al.