10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the quarterly period ended July 31, 2013
	OR
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
	For the transition period from               to               .
	COMMISSION FILE NUMBER 000-51277

GRANITE FALLS ENERGY, LLC

(Exact name of registrant as specified in its charter)

Minnesota	41-1997390
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
15045 Highway 23 SE, Granite Falls, MN 56241-0216
(Address of principal executive offices)
(320) 564-3100
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes     o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes     o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer o	Accelerated Filer  o
Non-Accelerated Filer x	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes     x No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of September 16, 2013 there were 30,606 membership units outstanding.

1

INDEX

	Page Number
PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures about Market Risk	28
Item 4. Controls and Procedures	30
PART II. OTHER INFORMATION	30
Item 1. Legal Proceedings	30
Item 1A. Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Mine Safety Disclosures	31
Item 5. Other Information	31
Item 6. Exhibits	32
SIGNATURES	33

2

PART I    FINANCIAL INFORMATION

Item 1. Financial Statements

GRANITE FALLS ENERGY, LLC

Condensed Consolidated Balance Sheets

ASSETS	July 31, 2013		October 31, 2012
	(Unaudited)
Current Assets
Cash	$	1,660,078	$	685,828
Restricted cash	922,955		494,000
Accounts receivable	9,774,497		7,356,534
Inventory	10,147,915		12,013,169
Commodity derivative instruments	688		—
Prepaid expenses and other current assets	1,277,519		165,519
Total current assets	23,783,652		20,715,050
Property, Plant and Equipment
Land and improvements	12,307,063		7,095,172
Railroad improvements	7,961,096		4,121,148
Process equipment and tanks	109,777,711		64,678,860
Administration building	666,100		279,734
Office equipment	265,792		154,072
Rolling stock	1,691,856		1,305,395
Construction in progress	1,686,683		3,831,263
	134,356,301		81,465,644
Less accumulated depreciation	44,517,699		41,047,562
Net property, plant and equipment	89,838,602		40,418,082
Goodwill	1,099,579		—
Other Assets	924,252		—
Total Assets	$	115,646,085	$	61,133,132

Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this Statement.

3

GRANITE FALLS ENERGY, LLC

Condensed Consolidated Balance Sheets

LIABILITIES AND EQUITY	July 31, 2013		October 31, 2012
	(Unaudited)
Current Liabilities
Current portion of long-term debt	$	3,329,924	$	114,718
Promissory note payable - bank	5,000,000		—
Promissory note payable - related party	4,024,500		—
Accounts payable	2,538,717		3,527,840
Corn payable to FCE	15,711		1,995,997
Commodity derivative instruments	—		45,563
Accrued liabilities	759,167		318,819
Total current liabilities	15,668,019		6,002,937
Revolving Term Loan, less current portion	11,372,149		—
Long-Term Debt, less current portion	26,538,674		5,274,870
Commitments and Contingencies
Equity
Controlling interest in equity consists of 30,606 units authorized, issued and outstanding	55,282,396		49,855,325
Noncontrolling interest	6,784,847		—
Total Equity	62,067,243		49,855,325
Total Liabilities and Equity	$	115,646,085	$	61,133,132

Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this Statement.

4

GRANITE FALLS ENERGY, LLC

Condensed Consolidated Statements of Operations

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	July 31, 2013			July 31, 2012			July 31, 2013			July 31, 2012
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	48,884,076		$	42,435,763		$	144,021,800		$	125,206,661
Cost of Goods Sold	46,173,897			42,381,070			136,849,505			120,806,601
Gross Profit	2,710,179			54,693			7,172,295			4,400,060
Operating Expenses	513,021			651,880			1,658,681			1,906,097
Operating Income (Loss)	2,197,158			(597,187		)	5,513,614			2,493,963
Other Income (Expense)
Other income, net	393			34,357			24,617			99,905
Interest income	395			2,452			491			17,733
Interest expense	(24,245		)	(5,259		)	(111,651		)	(18,484		)
Total other income (expense), net	(23,457		)	31,550			(86,543		)	99,154
Net Income (Loss)	$	2,173,701		$	(565,637	)	$	5,427,071		$	2,593,117
Weighted Average Units Outstanding - Basic and Diluted	30,606			30,606			30,606			30,617
Net Income (Loss) Per Unit - Basic and Diluted	$	71.02		$	(18.48	)	$	177.32		$	84.70
Distributions Per Unit - Basic and Diluted	$	—		$	—		$	—		$	300.00

Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this Statement.

5

GRANITE FALLS ENERGY, LLC

Condensed Consolidated Statements of Cash Flows

	Nine Months Ended			Nine Months Ended
	July 31, 2013			July 31, 2012
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities
Net income	$	5,427,071		$	2,593,117
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	3,470,137			3,191,960
Change in fair value of derivative instruments	(369,902		)	1,251,437
Changes in operating assets and liabilities:
Restricted cash	82,000			801,000
Derivative Instruments	323,651			(902,475		)
Accounts receivable	587,158			(1,795,150		)
Inventory	4,168,411			1,635,449
Prepaid expenses and other current assets	(4,975		)	(23,209		)
Accounts payable	(3,906,302		)	(1,080,012		)
Accrued liabilities	40,725			(92,296		)
Net Cash Provided by Operating Activities	9,817,974			5,579,821
Cash Flows from Investing Activities
Proceeds from sale of land	540,000			—
Payments for capital expenditures	(1,804,883		)	(2,270,322		)
Payment for acquisition of Project Viking, net of cash acquired	(6,977,236		)	—
Payments for land acquisition	—			(3,467,199		)
Net Cash Used in Investing Activities	(8,242,119		)	(5,737,521		)
Cash Flows from Financing Activities
Payments on long-term debt	(601,605		)	(73,345		)
Member distributions paid	—			(9,196,800		)
Net Cash Used in Financing Activities	(601,605		)	(9,270,145		)
Net Increase (Decrease) in Cash	974,250			(9,427,845		)
Cash - Beginning of Period	685,828			13,064,560
Cash - End of Period	$	1,660,078		$	3,636,715
Supplemental Cash Flow Information
Cash paid during the period for:
Interest expense	$	24,245		$	18,484

Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this Statement.

6

GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying financial statements consolidate the operating results and financial position of Granite Falls Energy, LLC (“GFE” or the “Company”), and its wholly owned subsidiary, Project Viking, L.L.C. ("Project Viking") which owns 63.3% of Heron Lake BioEnergy, LLC (“HLBE”). The remaining 36.7% ownership of HLBE is included in the consolidated financial statements as a non-controlling interest. All intercompany balances and transactions are eliminated in consolidation. See Note 3 for details of acquisition.

The accompanying condensed consolidated balance sheet as of October 31, 2012 is derived from audited financial statements. The unaudited interim condensed consolidated financial statements of the Company reflect all adjustments consisting only of normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations and cash flows. The results for the three and nine month periods ended July 31, 2013 are not necessarily indicative of the results that may be expected for a full fiscal year. Certain information and note disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) are condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), although the Company believes that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in its annual report for the year ended October 31, 2012 filed on Form 10-K with the SEC.

Nature of Business

GFE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers grains, and crude corn oil near Granite Falls, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. GFE's plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 70 million gallons of undenatured ethanol on a twelve month rolling sum basis.

HLBE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers grains, and crude corn oil near Heron Lake, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. HLBE's plant has an approximate annual production capacity of 50 million gallons, but is currently permitted to produce up to 59.2 million gallons.

Accounting Estimates

Management uses estimates and assumptions in preparing these condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others: economic lives of property, plant, and equipment, valuation of commodity derivatives and inventory, the assumptions used in the impairment analysis of long-lived assets, and the assumptions used to estimate the fair market value of acquired assets and liabilities. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made.

Revenue Recognition

The Company generally sells ethanol and related products pursuant to marketing agreements. Revenues from the production of ethanol and the related products are recorded when the customer has taken title and assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Ethanol and related products are generally shipped free on board (FOB) shipping point. The Company believes there are no ethanol sales, during any given month, which should be considered contingent and recorded as deferred revenue.

In accordance with the Company's agreements for the marketing and sale of ethanol and related products, marketing fees and commissions due to the marketers are deducted from the gross sales price as earned. These fees and commissions are recorded

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GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

net of revenues, as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. Shipping costs paid by the Company to the marketer in the sale of ethanol are not specifically identifiable and, as a result, are recorded based on the net selling price reported to the Company from the marketer. Shipping costs incurred by the Company in the sale of distillers grains and corn oil are included in cost of goods sold.

Derivative Instruments

From time to time the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives in the balance sheets at fair value.

In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings.

Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our condensed consolidated financial statements.

In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes.

The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 5.

Business Combinations

The Company allocates the total purchase price of a business combination to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date, with the excess purchase price recorded as goodwill. The Company used current market data to assist them in determining the fair value of the assets acquired and liabilities assumed, including goodwill, based on recognized business valuation methodology. Subsequent to the acquisition but not to exceed one year from the acquisition date, the Company will record any material adjustments retrospectively to the initial estimate based on new information obtained about facts and circumstances that existed as of the acquisition date. The Company expenses any acquisition-related costs as incurred in connection with business combinations. An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired or liabilities assumed in a business combination. The income valuation method represents the present value of future cash flows over the life of the asset using (i) discrete financial forecasts, which rely on management's estimates of revenue and operating expenses, (ii) long-term growth rates, and (iii) an appropriate discount rate. The market valuation method uses prices paid for a reasonably similar asset by other purchasers in the market, with adjustments relating to any differences between the assets. The cost valuation method is based on the replacement cost of a comparable asset at prices at the time of the acquisition reduced for depreciation of the asset.

8

GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

Goodwill

Goodwill represents the cost in excess of the fair value of net assets acquired. The Company will conduct impairment assessments annually or when events indicate a triggering event has occurred.

2. RISKS AND UNCERTAINTIES

The Company has certain risks and uncertainties that it experiences during volatile market conditions. These volatilities can have a severe impact on operations.  The Company's revenues are derived from the sale and distribution of ethanol, distillers grains, and corn oil to customers primarily located in the United States. Corn for the production process is supplied to our plant primarily from local agricultural producers and from purchases on the open market.  Ethanol sales typically average 80-85% of total revenues and corn costs typically average 70-80% of cost of goods sold.

The Company's operating and financial performance is largely driven by the prices at which they sell ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, the weather, government policies and programs, and unleaded gasoline prices and the petroleum markets as a whole. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. Our largest cost of production is corn.  The cost of corn is generally impacted by factors such as supply and demand, the weather, government policies and programs, and our risk management program used to protect against the price volatility of these commodities.

3. BUSINESS COMBINATION

On July 31, 2013, the Company acquired 63.3% of the outstanding membership units of Heron Lake BioEnergy, LLC (“HLBE”) through its purchase of 100% of the membership units of Project Viking, L.L.C. (“Project Viking”), for a total purchase price of $17,024,500. HLBE is a 50 million gallon per year ethanol plant located in Heron Lake, Minnesota. Project Viking was formed by the previous investor to only hold equity interests in HLBE and the debt incurred to obtain those interests and did not have any other assets or liabilities. The previous owner of Project Viking also owned approximately 12.82% of the outstanding membership units of the Company at July 31, 2013.

Immediately following the closing, the Company, through its 100% ownership of Project Viking, owned 24,080,949 Class A units and 15,000,000 Class B units of HLBE, for a total of 39,080,949 units, or 63.3% of the 61,697,104 units. As a result, under HLBE's member control agreement, Project Viking is entitled to appoint five (5) of the nine (9) governors to HLBE's board of governors.

On July 31, 2013, the Company entered into a Management Services Agreement with HLBE. Under the Management Services Agreement, the Company agreed to supply its own personnel to act as part-time officers and managers of HLBE for the positions of Chief Executive Officer, Chief Financial Officer, and Commodity Risk Manager. The initial term of the Management Services Agreement is three years. The Company will be paid $35,000 per month by HLBE for the first year of the Management Services Agreement. During years two and three of the agreement, HLBE agreed to pay the Company 50% of the total salary, bonuses, and other expenses and costs incurred by the Company for the three management positions. At the expiration of the initial term, the Management Services Agreement will automatically renew for successive one-year terms unless and until the Company or HLBE gives the other party 90-days written notice of termination prior to expiration of the initial term or the start of a renewal term.

The acquisition date fair value of the consideration transferred consisted of the following:

Cash	$	8,000,000
Note payable	4,024,500
Assumption of note payable to Granite Falls Bank	5,000,000
Total Consideration	$	17,024,500

The assets and liabilities of Project Viking were recorded at their respective estimated fair values as of the date of the acquisition using generally accepted accounting principles for business combinations. The Company used a combination of the market and cost approaches and unobservable level 3 inputs, to estimate the fair values of the assets acquired and liabilities assumed. The fair

9

GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

value of the long-term debt acquired was determined based on the present value of future contractual cash flows discounted at an interest rate that reflects the current borrowing rates available to the Company for loans with similar terms. The value of the 36.66% noncontrolling interest was determined by using the fair value method by using the most recent arms-length transaction of HLBE's units that did not include a control premium. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

Cash	$	1,022,764
Restricted cash	510,955
Accounts receivable	3,005,121
Inventory	2,303,157
Prepaid expenses	1,107,025
Property, plant, and equipment	51,625,774
Other assets	924,252
Goodwill	1,099,579
Total assets acquired	$	61,598,627
Accounts payable	$	(936,893	)
Accrued expenses	(399,623		)
Notes payable	(36,452,764		)
Non-controlling interest	(6,784,847		)
Net purchase price	$	17,024,500

Since the acquisition occurred on the last day of the Company's fiscal third quarter, there were no revenues or expenses consolidated in the Company's statement of operations. As such, there was also no portion of the Company's net income attributable to non-controlling interests during the three or nine month periods ended July 31, 2013. The following represents the pro forma consolidated statement of operations as if the transaction occurred at the beginning of the following periods:

	For the three month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	94,461,603	$	83,407,497
Net income (loss), including portion attributable to noncontrolling interest of $834,036 and $171,232, respectively	$	4,446,282	$	(99,065	)
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	118.02	$	(8.83	)

	For the nine month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	269,219,558	$	246,226,425
Net income, including portion attributable to noncontrolling interest of $191,471 and $1,150,813, respectively	$	5,948,791	$	5,728,847
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	188.11	$	149.58

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each of the periods presented.

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GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

4. INVENTORY

Inventories consist of the following:

	July 31, 2013		October 31, 2012
	(Unaudited)
Raw materials	$	5,370,347	$	8,977,820
Spare parts	1,544,897		682,896
Work in process	2,044,754		1,183,188
Finished goods	1,187,917		1,169,265
Totals	$	10,147,915	$	12,013,169

The Company performs a lower of cost or market analysis on inventory to determine if the market values of certain inventories are less than their carrying value, which is attributable primarily to decreases in market prices of corn and ethanol. Based on the lower of cost or market analysis, the Company did not record a lower of cost or market adjustment on certain inventories for the three or nine month periods ended July 31, 2013 and 2012.

5. DERIVATIVE INSTRUMENTS

As of July 31, 2013, the total notional amount of the Company's outstanding corn derivative instruments was approximately 890,000 bushels that were entered into to hedge forecasted corn purchases through August 2013. There may be offsetting positions that are shown on a net basis that could lower the notional amount of positions outstanding as disclosed above.

The following tables provide details regarding the Company's derivative instruments at July 31, 2013, none of which are designated as hedging instruments:

	Balance Sheet location	Assets		Liabilities
Corn contracts	Commodity Derivative instruments	$	688	$	—
Totals		$	688	$	—

In addition, as of July 31, 2013 the Company maintained $412,000 of restricted cash related to margin requirements for the Company's commodity derivative instrument positions.

As of October 31, 2012, the total notional amount of the Company's outstanding corn derivative instruments was approximately 1,235,000 bushels that were entered into to hedge forecasted corn purchases through March 2013. There may be offsetting positions that are shown on a net basis that could lower the notional amount of positions outstanding as disclosed above.

The following tables provide details regarding the Company's derivative instruments at October 31, 2012, none of which are designated as hedging instruments:

	Balance Sheet location	Assets		Liabilities
Corn contracts	Commodity Derivative instruments	$	—	$	(45,563	)
Totals		$	—	$	(45,563	)

In addition, as of October 31, 2012 the Company maintained $494,000 of restricted cash related to margin requirements for the Company's commodity derivative instrument positions.

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GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

The following tables provide details regarding the gains and (losses) from Company's derivative instruments in statements of operations, none of which are designated as hedging instruments:

	Statement of Operations location	Three Months Ended July 31
		2013		2012
Corn contracts	Cost of Goods Sold	$	343,320	$	49,813
Total Gain		$	343,320	$	49,813

	Statement of Operations location	Nine Months Ended July 31
		2013		2012
Corn contracts	Cost of Goods Sold	$	369,902	$	(1,251,437	)
Total Gain (Loss)		$	369,902	$	(1,251,437	)

6.    REVOLVING LINE OF CREDIT AND LONG-TERM DEBT

Granite Falls Energy:

GFE has two credit facilities with a lender. The first is a seasonal revolving operating loan facility in the amount of $6,000,000. The second is a revolving term loan facility in the amount of $8,000,000. However, the amount available for borrowing under this facility reduces by $1,000,000 every six months, beginning September 1, 2013, with final payment due March 1, 2017.

The interest rates for both facilities are based on the bank's "One Month LIBOR Index Rate," plus 2.65% and 2.9% on the seasonal and revolving term commitments, respectively. Both facilities are available through March 2017. The outstanding balance on the revolving term loan on July 31, 2013 and October 31, 2012 was $4,375,970 and $4,891,952, respectively. GFE currently has no outstanding balance on the seasonal revolving operating loan facility.

The credit facilities require GFE to comply with certain financial covenants. As of July 31, 2013 and October 31, 2012, GFE was in compliance with these financial covenants and expects to be in compliance throughout fiscal 2013.

The credit facilities are secured by substantially all assets of the Company. There are no savings account balance collateral requirements as part of this new credit facility.

At July 31, 2013, GFE also had letters of credit totaling $337,928 with the bank as part of a credit requirement of Northern Natural Gas. These letters of credit reduce the amount available under the seasonal revolving operating loan to approximately $5,662,000.

As part of the acquisition of Project Viking discussed in Note 3, GFE assumed a note payable with Granite Falls Bank with a principal amount of $5,000,000. The note was due upon the demand of Granite Falls Bank, or if no demand is made, on September 23, 2013. Interest accrued on the note at a rate of 3.99% per annum and was secured by all of Project Viking's assets. This note was paid in full on August 19, 2013.

Also, as part of the acquisition of Project Viking discussed in Note 3, GFE issued a note payable to the previous owners of Project Viking with a principal amount of $4,024,500. The note matured on August 30, 2013 and interest accrued on the note at a rate of 4% per annum. This note was paid in full on August 26, 2013.

12

GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

Heron Lake BioEnergy:

Line of Credit

On May 17, 2013, HLBE renegotiated its revolving line of credit to extend the maturity date of the revolving line of credit to September 2016. Amounts borrowed by HLBE under the term revolving loan and repaid or prepaid may be re-borrowed at any time prior to maturity date of the term revolving loan, provided that outstanding advances may not exceed the amount of the term revolving loan commitment. Amounts outstanding on the term revolving loan bear interest at a variable rate equal to the greater of a LIBOR rate plus 3.50% or 5.0%, payable monthly.  At July 31, 2013, the revolving line of credit carried an interest rate of LIBOR plus 3.50% but not less than 5.00%. HLBE also pays an unused commitment fee on the unused portion of the term revolving loan commitment at the rate of 0.35% per annum, payable in arrears in quarterly installments during the term of the term revolving loan. At July 31, 2013, the outstanding balance on this line of credit was $10,650,377, plus a fair value adjustment premium of approximately $722,000 as part of the GFE acquisition. At July 31, 2013, HLBE had an additional $9,800,000 available under this revolving line of credit. The amount available under the revolving line of credit is reduced by $2,000,000 at October 31st each year until September 2016 when the unpaid balance is due.

Term Note

On May 17, 2013, HLBE renegotiated its term loan with AgStar in the amount of $17,400,000. HLBE must make equal monthly payments of principal and interest on the term loan based on a 10-year amortization, provided the entire principal balance and accrued and unpaid interest on the term loan is due and payable in full on the maturity date of September 1, 2016.  In addition, HLBE is required to make additional payments annually on debt for up to 25% of the excess cash flow, as defined by the agreement, up to $2,000,000 per year. Through September 1, 2014, the loan bears interest at 5.75% as long as HLBE is in compliance with their debt covenants. On September 1, 2014, the interest term loan will be adjusted to LIBOR plus 3.50% but not less than 5%. The loan agreements are secured by substantially all business assets and are subject to various financial and non-financial covenants that limit distributions and debt and require minimum debt service coverage, net worth, and working capital requirements.  As described above, HLBE was in compliance with the covenants of its master loan agreement with AgStar as of July 31, 2013.

Subordinated Debt

On May 17, 2013, HLBE's Board of Governors loaned HLBE $1,407,000 in convertible secured subordinated debt. The notes bear interest at 7.25% and are due in the aggregate principal amount during May 2018. On October 1, 2014, or immediately prior to the effective time of any sale of all or substantially all of HLBE assets, each holder has the right at the holder's option to irrevocably convert all of such holder's interim subordinated notes into class A units of HLBE, at the rate of $0.30 per class A unit. HLBE reserves the right to issue class B units upon conversion if the principal balance of the 7.25% subordinated secured notes exceeds the authorized class A units at the conversion rate.

13

GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

Long-term debt consists of the following:

	July 31, 2013			October 31, 2012
Granite Falls Energy:
Capital One Equipment Leasing/Finance (GFE):
Shuttlewagon Railcar Mover (5 year term at 3.875%)	$	412,013		$	497,636
Revolving Term Loan (GFE)	4,375,970			4,891,952
Heron Lake BioEnergy:
Term note payable to lending institution (HLBE) (including premium of approximately $1.4m)	18,505,863			—
Assessments Payable (HLBE) (including premium of approximately $223k)	2,981,353			—
Notes payable to electrical company (HLBE)	312,500			—
Corn oil recovery system note payable (HLBE)	750,835			—
Notes payable on pipeline assets (HLBE)	1,123,064			—
Subordinated Debt (HLBE)	1,407,000			—
Total debt	29,868,598			5,389,588
Less: Current Maturities	(3,329,924		)	(114,718		)
Total Long-Term Debt	$	26,538,674		$	5,274,870

7. LEASES

GFE has a lease agreement with Trinity Industries Leasing Company (“Trinity”) for 75 hopper cars to assist with the transport of distiller's grains by rail through April 2018. GFE will pay Trinity $620 per month plus $0.03 per mile traveled in excess of 36,000 miles per year. Rent expense for these leases was approximately $139,500 for the three month periods ended July 31, 2013 and 2012. Rent expense for these leases was approximately $418,500 for the nine month periods ended July 31, 2013 and 2012.

GFE has lease agreements with three leasing companies for 176 rail car leases for the transportation of GFE's ethanol with various maturity dates through October 2017. The rail car lease payments are due monthly in the aggregate amount of approximately $121,000. Rent expense for these leases was approximately $361,000 and $318,000 for the three month periods ended July 31, 2013 and 2012, respectively. Rent expense for these leases was approximately $1,067,000 and $955,000 for the nine month periods ended July 31, 2013 and 2012, respectively.

HLBE leases equipment, primarily rail cars, under operating leases through 2017. Rent expense for the three months ended July 31, 2013 and 2012 was approximately $406,000 and $650,000, respectively.  Rent expense for the nine months ended July 31, 2013 and 2012 was approximately $1,313,000 and $1,400,000, respectively.

8. MEMBERS' EQUITY

GFE has one class of membership units.   The units have no par value and have identical rights, obligations and privileges.  Income and losses are allocated to all members based upon their respective percentage of units held. As of July 31, 2013 and October 31, 2012, GFE had 30,606 membership units authorized, issued, and outstanding.

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GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

9. FAIR VALUE

The following table provides information on those derivative assets measured at fair value on a recurring basis at July 31, 2013:

	Carrying Amount in Balance Sheet July 31, 2013		Fair Value July 31, 2013		Fair Value Measurement Using
					Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial Assets:
Commodity derivative instruments	$	688	$	688	$	688	$	—	$	—

The following table provides information on those derivative liabilities measured at fair value on a recurring basis at October 31, 2012:

	Carrying Amount in Balance Sheet October 31, 2012			Fair Value October 31, 2012			Fair Value Measurement Using
							Quoted Prices in Active Markets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial Liabilities:
Commodity derivative instruments	$	(45,563	)	$	(45,563	)	$	(45,563	)	$	—	$	—

GFE determines the fair value of commodity derivative instruments by obtaining fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the Chicago Board of Trade market and New York Mercantile Exchange.

10. COMMITMENTS AND CONTINGENCIES

Corn Storage and Grain Handling Agreement and Purchase Commitments

GFE has a corn storage and grain handling agreement with Farmers Cooperative Elevator Company (FCE), a member. Under the current agreement, GFE agrees to purchase all of the corn needed for the operation of the plant from FCE. The price of the corn purchased will be the bid price the member establishes for the plant plus a set fee per bushel. At July 31, 2013, GFE had basis contracts for forward corn purchase commitments with FCE for 1,455,000 bushels for deliveries in August and September 2013. At July 31, 2013, GFE also had 375,000 bushels of stored corn totaling approximately $2,775,000 with FCE that is included in inventory.

Ethanol Contracts

At July 31, 2013, GFE had forward contracts to sell approximately $15,980,000 of ethanol for deliveries in August 2013 through December 2013 which approximates 29% of its anticipated ethanol sales during that period.

Distillers Grain Contracts

At July 31, 2013, GFE had forward contracts to sell approximately $1,580,000 of distillers grain for deliveries in August 2013 through December 2013 which approximates 17% of its anticipated distillers grain sales during that period.

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GRANITE FALLS ENERGY, LLC

Notes to UNAUDITED Condensed Consolidated Financial Statements

July 31, 2013

Natural Gas

HLBE has natural gas agreements with a minimum purchase commitment of approximately 1.6 million MMBTU per year until October 31, 2014.

11.  LEGAL PROCEEDINGS

From time to time in the ordinary course of business, GFE and HLBE may be named as a defendant in legal proceedings related to various issues, including without limitation, workers' compensation claims, tort claims, or contractual disputes.  We are not currently a party to any material pending legal proceedings and we are not currently aware of any such proceedings contemplated by governmental authorities.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the three and nine month periods ended July 31, 2013, compared to the same period of the prior fiscal year. This discussion should be read in conjunction with the condensed financial statements and notes and the information contained in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2012.

Disclosure Regarding Forward-Looking Statements

This report contains historical information, as well as forward-looking statements. These forward-looking statements include any statements that involve known and unknown risks and relate to future events and our expectations regarding future performance or conditions. Words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “future,” “intend,” “could,” “hope,” “predict,” “target,” “potential,” or “continue” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements, and others we make from time to time, are subject to a number of risks and uncertainties. Many factors could cause actual results to differ materially from those projected in forward-looking statements. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include, but are not limited to:

• Changes in the availability and price of corn and natural gas;

• Demand for corn exceeding supply; and corresponding corn price increases;

• Changes in our business strategy, capital improvements or development plans;

• Our ability to profitably operate the ethanol plant and maintain a positive spread between the selling price of our products and our raw materials costs;

• Results of our hedging transactions and other risk management strategies;

• Decreases in the market prices of ethanol and distillers grains;

• Ethanol supply exceeding demand; and corresponding ethanol price reductions;

• Changes in the environmental regulations that apply to our plant operations and changes in our ability to comply with such regulations;

• Changes in plant production capacity or technical difficulties in operating the plant;

• The performance of Heron Lake BioEnergy, LLC, an ethanol production company in which we indirectly own approximately 63.3% of the outstanding membership units;

• Changes in general economic conditions or the occurrence of certain events causing an economic impact in the agriculture, oil or automobile industries;

• Lack of transport, storage and blending infrastructure preventing ethanol from reaching high demand markets;

• Changes in federal and/or state laws or regulations, including the elimination or modification of the federal renewable fuels standard;

• Changes and advances in ethanol production technology;

• Effects of mergers, consolidations or contractions in the ethanol industry;

• Competition from alternative fuel additives;

• The development of infrastructure related to the sale and distribution of ethanol;

• Our inelastic demand for corn, as it is the only available feedstock for our plant;

• Our ability to retain key employees and maintain labor relations;

• Changes to our current water intake system, or our ability to cost-effectively construct a modified water intake system;

• The imposition of tariffs or other duties on ethanol imported into Europe; and

• Volatile commodity and financial markets.

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We do not undertake any duty to update forward-looking statements after the date they are made or to conform forward-looking statements to actual results or to changes in circumstances or expectations. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits, completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

Overview

Granite Falls Energy, LLC (“Granite Falls Energy” or the “Company”) is a Minnesota limited liability company formed on December 29, 2000.

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We are currently producing fuel-grade ethanol, distillers grains and crude corn oil for sale. Our plant has an approximate annual production capacity of 60 million gallons of denatured ethanol, but is currently permitted to produce up to 70 million gallons of undenatured ethanol on a twelve month rolling sum basis. We intend to continue working toward increasing production to take advantage of the additional production allowed pursuant to our permit as long as we believe it is profitable to do so. 

Our operating results are largely driven by the prices at which we sell our ethanol, distillers grains, and corn oil as well as the other costs related to production. The price of ethanol has historically fluctuated with the price of petroleum-based products such as unleaded gasoline, heating oil and crude oil. The price of distillers grains has historically been influenced by the price of corn as a substitute livestock feed. We expect these price relationships to continue for the foreseeable future, although recent volatility in the commodities markets makes historical price relationships less reliable. Our largest costs of production are corn, natural gas, depreciation and manufacturing chemicals. Our cost of corn is largely impacted by geopolitical supply and demand factors and the outcome of our risk management strategies. Prices for natural gas, manufacturing chemicals and denaturant are tied directly to the overall energy sector, crude oil and unleaded gasoline.

On July 31, 2013, we indirectly acquired 63.3% of the outstanding membership units of Heron Lake BioEnergy, LLC (“HLBE”) through our purchase of 100% of the membership units of Project Viking, L.L.C. (“Project Viking”), for a total purchase price of $17,024,500. HLBE owns a 50 million gallon per year ethanol plant located in Heron Lake, Minnesota, but is currently permitted to produce up to 59.2 million gallons. Immediately following the closing of the transaction, Project Viking owned 24,080,949 Class A units and 15,000,000 Class B units of HLBE, for a total of 39,080,949 units, or 63.3% of the 61,697,104 total units outstanding. As a result, under HLBE's member control agreement, Project Viking is entitled to appoint five (5) of the nine (9) governors to HLBE's board of governors. As part of the acquisition, we entered into a Management Services Agreement with HLBE. Under the Management Services Agreement, we agreed to supply our personnel to act as part-time officers and managers of HLBE for the positions of Chief Executive Officer, Chief Financial Officer, and Commodity Risk Manager. The initial term of the Management Services Agreement is three years. At the expiration of the initial term, the Management Services Agreement will automatically renew for successive one-year terms unless and until either party gives the other party 90 days written notice of termination prior to expiration of the initial term or the start of a renewal term. The Management Services Agreement may also be terminated by either party for cause under certain circumstances.

The assets and liabilities of Project Viking were recorded at their respective estimated fair values as of the date of the acquisition using generally accepted accounting principles for business combinations. The value of the 36.7% noncontrolling interest was determined by using the fair value method by using the most recent arms-length transaction of HLBE's units that did not include a control premium. Since the acquisition occurred on the last day of our fiscal third quarter, there were no revenues or expenses of HLBE consolidated in our statement of operations. As such, there was also no portion of our net income attributable to non-controlling interests during the three or nine month periods ended July 31, 2013.

As of the date of this report, Granite Falls Energy has 37 full time employees. Ten of these employees are involved primarily in management and administration. The remaining employees are involved primarily in plant operations. We do not currently anticipate any significant change in the number of employees at our plant.

Results of Operations for the Three Months Ended July 31, 2013 and 2012

The following table shows the results of our operations and the approximate percentage of revenues, costs of goods sold, operating expenses and other items to total revenues in our unaudited consolidated statements of operations for the three months ended July 31, 2013 and 2012:

	2013					2012
Income Statement Data	Amount			%		Amount			%
Revenue	$	48,884,076		100.0	%	$	42,435,763		100.0	%
Cost of Goods Sold	46,173,897			94.5	%	42,381,070			99.9	%
Gross Profit	2,710,179			5.5	%	54,693			0.1	%
Operating Expenses	513,021			1.0	%	651,880			1.5	%
Operating Income (Loss)	2,197,158			4.5	%	(597,187		)	(1.4	)%
Other Income (Expense), net	(23,457		)	—	%	31,550			0.1	%
Net Income (Loss)	$	2,173,701		4.4	%	$	(565,637	)	(1.3	)%

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Revenues

Our revenues from operations come from three primary sources: sales of fuel ethanol, sales of distillers grains and sales of corn oil. Our results of operations will continue to be affected by volatility in the commodity markets. In the event that we experience a prolonged period of negative operating margins, our liquidity may be negatively impacted.

The following table shows the sources of our revenue for the three months ended July 31, 2013:

Revenue Sources	Amount		Percentage of Total Revenues
Ethanol sales	$	38,828,430	79.4	%
Distillers grains sales	8,609,775		17.6	%
Corn oil sales	1,445,871		3.0	%
Total Revenues	$	48,884,076	100.0	%

The following table shows the sources of our revenue for the three months ended July 31, 2012:

Revenue Sources	Amount		Percentage of Total Revenues
Ethanol sales	$	32,999,732	77.8	%
Distillers grains sales	8,054,122		19.0	%
Corn oil sales	1,381,909		3.2	%
Total Revenues	$	42,435,763	100.0	%

In the three month period ended July 31, 2013, ethanol sales comprised 79.4% of our revenues and distillers grains sales comprised 17.6% percent of our revenues, while corn oil sales comprised 3.0% of our revenues. For the three month period ended July 31, 2012, ethanol sales comprised 77.8% of our revenue, distillers grains sales comprised 19.0% of our revenue, while corn oil sales comprised 3.2% of our revenues.

The average ethanol sales price we received for the three month period ended July 31, 2013 was approximately 13.1% higher than our average ethanol sales price for the comparable 2012 period. Management attributes the increase in our average ethanol sales price to decreased ethanol inventories and a decrease in ethanol production in the industry compared to the prior year. Downward pressure on ethanol prices throughout much of calendar year 2012, combined with increased corn prices particularly during the last half of calendar 2012, have caused some ethanol plants to suspend or reduce production, leading to the decrease in ethanol inventories and production. As ethanol prices increase, some plants that have suspended or reduced production may resume or increase production, which may once again pressure ethanol prices downward. Management anticipates that the price of ethanol will continue to be volatile during the remainder of our 2013 fiscal year. Our volume of ethanol sold during the three month period ended July 31, 2013 was approximately 4.1% higher than the volume sold for the comparable 2012 period as we have continued to increase production efficiencies.

Our revenues from distillers grains increased during the three months ended July 31, 2013 compared to the same period of 2012 as a result of higher prices and greater quantities of distillers grains produced and sold during the three months ended July 31, 2013 compared to the same period of 2012. The price we received for our dried distillers grains in the three month period ended July 31, 2013 was approximately 5.7% higher than the price we received during the three months ended July 31, 2012. Management believes these higher distillers grains prices are a result of the high price of other feed products available to livestock producers. We anticipate that the market price of our dried distillers grains will continue to be volatile as a result of changes in the price of corn and competing animal feed substitutes such as soybean meal. Recent downward pressure on corn prices may contribute to lower distillers grains prices moving forward. Volatility in distillers grains supplies related to changes in ethanol production is another factor that may impact the sales price of our distillers grains. As plants that have suspended or reduced production begin to resume or increase production, distillers grains prices may be pushed downward. Additionally, our quantity of distillers grains sold increased approximately 2.2% in the three month period ended July 31, 2013 compared to the three months ended July 31, 2012. This increase in quantity sold was largely a result of increased production during the three months ended July 31, 2013 as compared to the three months ended July 31, 2012. Although we had higher prices and greater quantities of distillers grains produced and sold, distillers grains sales comprised a smaller percentage of our total revenues during the three

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months ended July 31, 2013 relative to the same period during the prior year, due to increases in the price and quantity sold of ethanol discussed above.

Corn oil revenues increased during the three months ended July 31, 2013 compared to the same period of 2012. Corn oil sales accounted for approximately 3.0% of our revenues during our quarter ended July 31, 2013 compared to 3.2% for our quarter ended July 31, 2012. The price we received for our corn oil decreased by approximately 11.0% during the three months ended July 31, 2013 compared to the same period of 2012. However, offsetting this price decrease, our total volume of corn oil sold increased by 17.5% as a result higher production rates at our facility and increased extraction efficiencies. Management attributes the decrease in corn oil prices to additional corn oil entering the market. However, increased use of corn oil by biodiesel producers and animal feeders have continued to support demand.

Cost of Goods Sold

Our costs of goods sold as a percentage of revenues were 94.5% for the three month period ended July 31, 2013 compared to 99.9% for the same period of 2012. Our two largest costs of production are corn (79.7% of cost of goods sold for our three months ended July 31, 2013) and natural gas (3.7% of cost of goods sold for our three months ended July 31, 2013). Our total cost of goods sold increased to $46,173,897 for the three months ended July 31, 2013 from $42,381,070 in the three months ended July 31, 2012. The volume of corn we processed was up 0.3% for the three months ended July 31, 2013 as compared to the same period for our 2012 fiscal year. Additionally, our per bushel corn costs decreased by approximately 0.3% for the three months ended July 31, 2013 as compared to the same period for our 2012 fiscal year. Tight corn supply following last growing season's drought continued to place upward pressure on corn prices during the first two months of the three month period ended July 31, 2013. Although the 2012 drought did not impact corn production in Minnesota to the same extent as other corn producing states, as a local consumer of corn we must nevertheless be cost competitive when sourcing corn in order to procure sufficient quantities for ethanol production. However, during the last month of the three month period ended July 31, 2013, corn prices began to soften as harvest for the 2013 growing season neared. The USDA's World Agricultural Supply and Demand Estimates published on August 12, 2013 projects domestic corn production of 13.76 billion bushels for the 2013 growing season, a decrease from previous estimates but still a significant increase over the estimate of 10.78 billion bushels produced during the 2012 growing season. However, weather conditions, including the possibility of early frosts, remain a threat to the 2013 crop. Management anticipates that corn prices will remain volatile for the duration of our 2013 fiscal year.

For the three month period ended July 31, 2013, we experienced an increase of approximately 3.7% in our overall natural gas costs compared to the same period of 2012. Natural gas prices continue to remain low compared to historic averages. We expect the market price for natural gas to remain steady in the near term as we continue to enjoy an abundant supply of domestic natural gas, due in part to the continued commissioning of new, highly productive natural gas wells.

We occasionally engage in hedging activities with respect to corn. We recognize the gains or losses that result from the changes in the value of our derivative instruments in cost of goods sold as the changes occur. As corn prices fluctuate, the value of our derivative instruments are impacted, which affects our financial performance. We anticipate continued volatility in our cost of goods sold due to the timing of the changes in value of the derivative instruments relative to the cost and use of the commodity being hedged.

We experienced an approximate $343,000 combined realized and unrealized gain for the three month period ended July 31, 2013 related to our corn derivative instruments, which decreased our cost of goods sold. By comparison, we experienced an approximate $50,000 combined realized and unrealized gain for the three months ended July 31, 2012 related to our corn derivative instruments, which decreased our cost of goods sold. We recognize the gains or losses that result from the changes in the value of our derivative instruments from corn in cost of goods sold as the changes occur.  As corn prices fluctuate, the value of our derivative instruments are impacted, which affects our financial performance.

Operating Expenses

Our operating expenses as a percentage of revenues decreased to 1.0% for the three month period ended July 31, 2013 from 1.5% for the same period ended July 31, 2012. Our total operating expenses for the three months ended July 31, 2013 as compared to the same period for our 2012 fiscal year decreased. We continue to focus on increasing our operating efficiency and we strive to lower our operating expenses.

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Operating Income (Loss)

Our income (loss) from operations for the three months ended July 31, 2013 was income of approximately $2,197,000 compared to a loss from operations of approximately $597,000 for the three months ended July 31, 2012. This increase in our operating income is primarily due to more favorable operating margins.

Other Income (Expense), Net

Our other income (expense), net for the three months ended July 31, 2013 was an expense of approximately $23,000, compared to income of approximately $32,000 for the three months ended July 31, 2012. This change is primarily a result of increased interest expense during the quarter ended July 31, 2013 as compared to the same period the prior year, attributable to borrowings on our United FCS credit facilities, as well as decreased other income attributable to a decrease in miscellaneous income.

Results of Operations for the Nine Months Ended July 31, 2013 and 2012

The following table shows the results of our operations and the percentage of revenues, cost of goods sold, operating expenses and other items to total revenues in our unaudited consolidated statement of operations for the nine months ended July 31, 2013 and 2012:

	2013					2012
Income Statement Data	Amount			%		Amount		%
Revenue	$	144,021,800		100.0	%	$	125,206,661	100.0	%
Cost of Goods Sold	136,849,505			95.0	%	120,806,601		96.5	%
Gross Profit	7,172,295			5.0	%	4,400,060		3.5	%
Operating Expenses	1,658,681			1.2	%	1,906,097		1.5	%
Operating Income	5,513,614			3.8	%	2,493,963		2.0	%
Other Income (Expense), net	(86,543		)	(0.1	)%	99,154		0.1	%
Net Income	$	5,427,071		3.7	%	2,593,117		2.1	%

Revenues

The following table shows the sources of our revenue for the nine months ended July 31, 2013:

Revenue Sources	Amount		Percentage of Total Revenues
Ethanol sales	$	111,323,925	77.3	%
Distillers grains sales	28,861,379		20.0	%
Corn oil sales	3,836,496		2.7	%
Total Revenues	$	144,021,800	100.0	%

The following table shows the sources of our revenue for the nine months ended July 31, 2012:

Revenue Sources	Amount		Percentage of Total Revenues
Ethanol sales	$	100,447,367	80.2	%
Distillers grains sales	21,616,740		17.3	%
Corn oil sales	3,142,554		2.5	%
Total Revenues	$	125,206,661	100.0	%

Our total revenues were higher for the nine months ended July 31, 2013 compared to the same period of 2012. With respect to ethanol, we sold approximately 4.4% more gallons of ethanol during the nine months ended July 31, 2013 than we did

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in the same period of 2012. Additionally, the price we received for our ethanol was approximately 6.2% higher for the nine months ended July 31, 2013 compared to the same period of 2012.

The average price we received for our distillers grains was approximately 24.5% higher for the first nine months of our 2013 fiscal year compared to the same period of 2012. We also sold approximately 7.3% more tons of distillers grains during the first nine months of our 2013 fiscal year compared to the same period of 2012.

We sold approximately 36.5% more pounds of corn oil during the first nine months of our 2013 fiscal year compared to the same period of 2012. However, offsetting our increase in corn oil sales, our average price per pound of corn oil decreased by approximately 10.6% for the first nine months of our 2013 fiscal year compared to the same period of 2012.

Cost of Goods Sold

Our costs of goods sold were higher for the first nine months of our 2013 fiscal year compared to the same period of our 2012 fiscal year. However, our costs of good sold as a percentage of our revenues decreased for the first nine months of our 2013 fiscal year compared to the same period of our 2012 fiscal year. Our average cost per bushel of corn was approximately 7.6% higher during the first nine months of our 2013 fiscal year compared to the same period of 2012. Additionally, we ground approximately 4.3% more corn during the first nine months of our 2013 fiscal year compared to the same period of 2012 due to our increased production.

Our natural gas costs increased during the first nine months of our 2013 fiscal year compared to the same period of 2012. Our total cost of natural gas was approximately 15.8% higher during the first nine months of our 2013 fiscal year compared to the same period of 2012.

We experienced an approximate $370,000 combined realized and unrealized gain for the nine months ended July 31, 2013 related to our corn derivative instruments, which decreased our cost of goods sold. By comparison, we experienced an approximately $1,251,000 combined realized and unrealized loss for the nine months ended July 31, 2012 related to our corn derivative instruments, which increased our cost of goods sold. We recognize the gains or losses that result from the changes in the value of our derivative instruments from corn in cost of goods sold as the changes occur.  As corn prices fluctuate, the value of our derivative instruments are impacted, which affects our financial performance.

Operating Expenses

Our total operating expenses and our operating expenses as a percentage of revenues decreased in the nine months ended July 31, 2013 when compared to the same period ended July 31, 2012. The decrease in our operating expenses for the nine months ended July 31, 2013 as compared to the same period for our 2012 fiscal year is due primarily to a decrease in personnel expenses following the accrual of our former Chief Executive Officer's bonus and vacation during the nine months ended July 31, 2012 in connection with his departure from the Company, as well as a decrease in professional service expense in the nine months ended July 31, 2013 compared to the nine months ended July 31, 2012, when we conducted studies related to our rail infrastructure and water intake.

Other Income (Expense), Net

We had other expense, net for the nine months ended July 31, 2013 of approximately $87,000 compared to other income, net of approximately $99,000 for the nine months ended July 31, 2012. This change resulted primarily from increased interest expense during the nine months ended July 31, 2013 as compared to the same period the prior year, attributable to borrowings on our United FCS credit facilities, as well as decreased miscellaneous income.

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Changes in Financial Condition for the Nine Months Ended July 31, 2013

The following table highlights our financial condition at July 31, 2013 and October 31, 2012:

	July 31, 2013		October 31, 2012
Current Assets	$	23,783,652	$	20,715,050
Current Liabilities	$	15,668,019	$	6,002,937
Revolving Term Loan	$	11,372,149	$	—
Long-Term Debt	$	26,538,674	$	5,274,870
Members' Equity	$	55,282,396	$	49,855,325
Non-controlling Interest	$	6,784,847	$	—

On July 31, 2013, we indirectly acquired 63.3% of the outstanding membership units of HLBE through our purchase of 100% of the membership units of Project Viking for a total purchase price of $17,024,500. This acquisition impacted our financial condition as of July 31, 2013. The assets and liabilities of Project Viking were recorded at their respective estimated fair values as of the date of the acquisition using generally accepted accounting principles for business combinations.

Our total assets were approximately $115,646,000 at July 31, 2013 compared to approximately $61,133,000 at October 31, 2012. Included in our total assets is an approximate $49,421,000 increase in net property, plant and equipment resulting primarily from our acquisition of Project Viking, as HLBE owns a 50 million gallon per year ethanol plant. Current assets totaled approximately $23,784,000 at July 31, 2013, which is more than our current assets as of October 31, 2012, which totaled approximately $20,715,000.

Total current liabilities increased and totaled approximately $15,668,000 at July 31, 2013 and approximately $6,003,000 at October 31, 2012. This increase was mainly due to promissory notes totaling approximately $9,025,000 related to our acquisition of Project Viking.

At October 31, 2012 we had no revolving term loan, as compared to a revolving term loan of approximately $11,372,000 as of July 31, 2013. This revolving term loan reflects amounts owed by HLBE to its lender plus a premium related to a fair value adjustment.

Our long-term debt increased from approximately $5,275,000 at October 31, 2012 to approximately $26,539,000 at July 31, 2013, resulting primarily from our acquisition of Project Viking, as HLBE has a term note payable to its lender of approximately $17,137,000 as well as other long-term liabilities.

Plant Operations

We are currently producing fuel-grade ethanol, distillers grains and crude corn oil for sale. Our plant has an approximate annual production capacity of 60 million gallons of denatured ethanol. We have obtained an amendment to our environmental permits allowing us to produce up to 70 million gallons of undenatured ethanol on a twelve month rolling sum basis. We intend to continue working to increase production to take advantage of the additional capacity our permits allow us to produce.  Any plant bottlenecks are assessed and a cost benefit analysis is performed prior to further capital investment.

We have completed several de-bottlenecking projects and we are in the process of completing our remaining projects. Each of these projects help our facility to be more efficient, productive and improve the environmental aspects of our process. For the three and nine month periods ended July 31, 2013 we have incurred approximately $120,000 and $1,152,000, respectively, in costs associated with our equipment construction projects. For the three and nine month periods ended July 31, 2012 we incurred approximately $985,000 and $4,985,000, respectively, in costs associated with our equipment construction projects. Since starting our de-bottlenecking projects we have incurred approximately $6,287,000 associated with the cost of these equipment improvements.

We expect to have sufficient cash generated by continuing operations and current lines of credit to cover our usual operating costs, which consist primarily of our corn supply, our natural gas supply, de-bottlenecking projects, staffing expense, office expense, audit and legal compliance, working capital costs and debt service obligations.

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HLBE also produces fuel-grade ethanol, distillers grains and crude corn oil for sale. HLBE's plant has an approximate annual production capacity of 50 million gallons of ethanol. Our Chief Executive Officer and Chief Financial Officer also hold those same offices with HLBE pursuant to the Management Services Agreement between us and HLBE.

Trends and Uncertainties Impacting the Ethanol and Distillers Grains Industries and Our Future Revenues

Our revenues primarily consist of sales of the ethanol and distillers grains we produce; however, we also realize revenue from the sale of corn oil we separate from our distillers syrup. The ethanol industry needs to continue to expand the market for ethanol and distillers grains in order to maintain current price levels.

The following chart shows the average cash price per gallon of ethanol in Minnesota from January 2011 through September 1, 2013, as compiled by the USDA Agricultural Marketing Service.

According to the Renewable Fuels Association (“RFA”), as of September 7, 2013, there were 209 ethanol plants nationwide with the capacity to produce approximately 14.7 billion gallons of ethanol annually. The RFA estimates that plants with an annual production capacity of approximately 13.4 billion gallons are currently operating and that approximately 8.5% of the nameplate production capacity is not currently operational. Management believes the production capacity of the ethanol industry is greater than ethanol demand which may depress ethanol prices.

Currently, ethanol is primarily blended with conventional gasoline for use in standard (non-flex fuel) vehicles to create a blend which is 10% ethanol and 90% conventional gasoline. Estimates indicate that approximately 135 billion gallons of gasoline are sold in the United States each year. However, gasoline demand may be shrinking in the United States as a result of the global economic slowdown and improved fuel efficiency. Assuming that all gasoline in the United States is blended at a rate of 10% ethanol and 90% gasoline, the maximum demand for ethanol is 13.5 billion gallons. This is commonly referred to as the “blend wall”, which represents a limit where more ethanol cannot be blended into the national gasoline pool. This is a theoretical limit since it is believed it would not be possible to blend ethanol into every gallon of gasoline that is used in the United States and it discounts higher percentage blends of ethanol such as E15 and E85 used in flex fuel vehicles.

In April 2012, the U.S. Environmental Protection Agency ("EPA") approved the first applications for registering ethanol for use in making a blend of fifteen percent ethanol, known as E15. Since that time, our application with the EPA to register ethanol for use in making E15 has also been approved. We do not anticipate that the EPA's approval of applications for registering ethanol for use in making E15 will impact ethanol demand or pricing in the near term.

According to industry sources, United States ethanol industry exports decreased approximately 38% in 2012 as compared to 2011. The Company, through its ethanol marketer, has in the past exported a portion of its ethanol production to foreign markets. The European Union recently imposed a five-year tariff of approximately $83 per metric ton on imported U.S. ethanol. This tariff may further slow overall demand for U.S. ethanol. The exportation of domestic ethanol had helped to mitigate the effects of the blend wall and had thereby helped to maintain ethanol price levels. Whether export markets will make economic sense for us in the future will depend on domestic ethanol blend rates as well as global supply and demand for our product.

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The federal Renewable Fuels Standard, known as RFS2, requires the use of a specified amount of renewable fuels in the United States. In 2013, RFS2 requires approximately 16.55 billion gallons, of which corn based ethanol can be used to satisfy approximately 13.8 billion gallons. This is an increase from 2012 levels, which required approximately 15.2 billion gallons, of which corn based ethanol could be used to satisfy approximately 13.2 billion gallons.

Certain legislators and certain industry groups and have advocated for changes to RFS2 and other statutes and regulations that, if adopted, would negatively impact our business. At various times over the past several months, legislation has been proposed that would repeal RFS2, repeal the corn based ethanol portion of RFS2, or ban E15. While the ethanol industry has resisted these proposals, we cannot be assured that RFS2 will remain in its current form going forward or that E15 or higher blends of ethanol will be widely available.

The ethanol production process requires a reliable water supply. The removal of a dam on the Minnesota River located downstream from our water intake structure has resulted in the water level lowering below our current intake structure. We have opted to upgrade our intake structure, finding that option preferable to acquiring ownership of the dam prior to its removal. We are working on plans for this upgrade and expect to complete the necessary modifications during the fourth quarter of our 2013 fiscal year. We currently estimate that this project will cost a total of $1,000,000 and anticipate using a combination of cash flows from fiscal 2013 operations and the Company's debt facilities to fund the entire upgrade. However, the actual cost may be different than our current estimate.

Trends and Uncertainties Impacting the Corn and Natural Gas Markets and Our Future Cost of Goods Sold

Our costs of our goods sold consist primarily of costs relating to the corn and natural gas supplies necessary to produce ethanol and distillers grains for sale. We grind approximately 1,800,000 bushels of corn each month at our ethanol plant in Granite Falls, Minnesota. For the quarter ended July 31, 2013, our average cost of corn per bushel, net of hedging activity, was approximately $0.018 less than our cost of corn for the same period ended July 31, 2012. HLBE also requires substantial quantities of corn for its ethanol plant in Heron Lake, Minnesota.

Corn prices remain above historical averages. Tight corn supply following last growing season's drought continued to place upward pressure on corn prices during the first two months of the three month period ended July 31, 2013. However, during the last month of the three month period ended July 31, 2013, corn prices began to soften as harvest for the 2013 growing season neared. The USDA's World Agricultural Supply and Demand Estimates published on August 12, 2013 projects domestic corn production of 13.76 billion bushels for the 2013 growing season, a decrease from previous estimates but still a significant increase over the estimate of 10.78 billion bushels produced during the 2012 growing season. However, weather conditions, including the possibility of early frosts, remain a threat to the 2013 crop. Management anticipates that corn prices will remain volatile for the duration of our 2013 fiscal year. If a period of high corn prices were to be sustained following the 2013 harvest, such pricing may reduce our ability to generate income because of the higher cost of operating our plant.

Natural gas is also an important input commodity to our manufacturing process. Our natural gas usage is approximately 120,000 million British thermal units (mmBTU) per month. We continue to work to find ways to limit our natural gas price risk through efficient usage practices, research of new technologies, and pricing and hedging strategies. We use a marketing firm and an energy consultant for our natural gas procurement and will work with them on an ongoing basis to mitigate our exposure to volatile gas prices.

Management anticipates that natural gas prices will be relatively stable in the next several months as a result of an ample amount of gas in the supply chain. However, should we experience any natural gas supply disruptions, including disruptions from hurricane activity, we may experience significant increases in natural gas prices.

Compliance with Environmental Laws

We are subject to extensive air, water and other environmental regulations and we have been required to obtain a number of environmental permits to construct and operate the plant. As such, any changes that are made to the plant or its operations must be reviewed to determine if amended permits need to be obtained in order to implement these changes.

Contracting Activity

Farmers Cooperative Elevator Company supplies corn to our Granite Falls, Minnesota ethanol plant. Eco-Energy, LLC markets our ethanol and Renewable Products Marketing Group, LLC (“RPMG”) markets our distillers grains and our corn oil produced at the Granite Falls plant. Each of these contracts is critical to our success and we are very dependent on each of these companies. Accordingly, the financial stability of these partners is critical to the successful operation of our business. We

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independently market a small portion of our ethanol production as E-85 to local retailers. HLBE also has a corn supply agreement for its ethanol production plant in Heron Lake, Minnesota and a product marketing agreement for the distillers grains and corn oil produced at that plant. Those agreements and any similar subsequent agreements will also be critical to our success.

Our Chief Executive Officer and Chief Financial Officer also hold those same offices with HLBE pursuant to the Management Services Agreement between us and HLBE. As the indirect owner of approximately 63.3% of HLBE's outstanding membership units, HLBE's financial condition and results of operations will impact our financial condition and results of operations. As such, the ability of our Chief Executive Officer and Chief Financial Officer to successfully manage HLBE is critical to our success.

Commodity Price Risk Protection

We occasionally seek to minimize the risks from fluctuations in the prices of corn, ethanol, denaturant and natural gas through the use of derivative instruments. In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. We do not use hedge accounting which would match the gain or loss on our hedge positions to the specific commodity contracts being hedged. Instead, we are using fair value accounting for our hedge positions, which means that as the current market price of our hedge positions changes, the gains and losses are immediately recognized in our revenue or cost of goods sold depending on the commodity that is hedged. The immediate recognition of hedging gains and losses under fair value accounting can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged.

As of July 31, 2013, we recorded a net asset for our derivative instruments in the amount of $688. As of October 31, 2012, we recorded a net liability for our derivative instruments in the amount of $45,563. There are several variables that could affect the extent to which our derivative instruments are impacted by fluctuations in the price of corn, ethanol, denaturant or natural gas. However, it is likely that commodity cash prices will have the greatest impact on the derivative instruments with delivery dates nearest the current cash price. As we move forward, additional protection may be necessary. As the prices of these hedged commodities move in reaction to market trends and information, our statement of operations will be affected depending on the impact such market movements have on the value of our derivative instruments. Depending on market movements, crop prospects and weather, these price protection positions may cause immediate adverse effects, but are expected to produce long-term positive growth for Granite Falls Energy.

At July 31, 2013, we had fixed basis contracts for forward corn purchase commitments totaling approximately 1,455,000 bushels. We also had 375,000 bushels of stored corn included in inventory at July 31, 2013.

The derivative accounts are reported at fair value. We have categorized the cash flows related to the hedging activities with cash provided by operations, in the same category as the item being hedged.

Critical Accounting Estimates

Management uses estimates and assumptions in preparing our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others: economic lives of property, plant, and equipment, valuation of commodity derivatives and inventory, the assumptions used in the impairment analysis of long-lived assets, and the assumptions used to estimate the fair market value of acquired assets and liabilities. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made.

Liquidity and Capital Resources

The following table shows our cash flows for the nine months ended July 31, 2013 and 2012:

	2013			2012
Net cash provided by operating activities	$	9,817,974		$	5,579,821
Net cash used in investing activities	(8,242,119		)	(5,737,521		)
Net cash used in financing activities	(601,605		)	(9,270,145		)

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Operating Cash Flows.Cash provided by operating activities was approximately $9,818,000 for the nine months ended July 31, 2013, as compared to cash provided by operations of approximately $5,580,000 for the nine months ended July 31, 2012. Currently, our capital needs are being adequately met through cash flows from our operating activities and our currently available credit facilities.

Investing Cash Flows.Cash used in investing activities was approximately $8,242,000 for the nine months ended July 31, 2013, compared to cash used in investing activities of approximately $5,738,000 for the nine months ended July 31, 2012. During the nine months ended July 31, 2013 we paid approximately $6,977,000 for Project Viking, net of cash acquired. We also made payments totaling approximately $1,805,000 for capital expenditures during the nine months ended July 31, 2013, compared to payments of approximately $2,270,000 for the nine months ended July 31, 2012. Additionally, during the nine months ended July 31, 2013 we received proceeds from the sale of land of approximately $540,000, as compared to the nine months ended July 31, 2012, when we made payments totaling approximately $3,467,000 for land acquisitions.

Financing Cash Flows.Cash used in financing activities was approximately $602,000 for the nine months ended July 31, 2013, consisting entirely of payments made on our credit facilities. For the the nine months ended July 31, 2012, our cash used in financing activities was approximately $9,270,000, most of which was used to pay a distribution to our members.

Indebtedness

Granite Falls Energy

In August 2012, the Company entered into two credit facilities, one short-term and one long-term, with United FCS. CoBank serves as administrative agent for United FCS for these credit facilities. These facilities replaced the Company's prior $6,000,000 revolving line of credit with Minnwest Bank M.V. of Marshall, MN.

Short-Term Debt Sources

The Company's short-term credit facility with United FCS is a revolving line of credit. This facility allows us to borrow, repay, and reborrow up to $6,000,000 subject to a borrowing base calculation. Final payment of amounts borrowed under this credit facility is due August 1, 2014. Amounts borrowed under the revolving line of credit bear interest at one of three interest rate options selected by us, (i) at a variable weekly rate equal to 2.65% above the rate quoted by the British Bankers Association for the offering of one-month U.S. Dollar deposits, (ii) at a fixed rate to be quoted by CoBank, or (iii) at a fixed rate for up to 12 months equal to LIBOR plus 2.65%. Interest on amounts borrowed is payable monthly in arrears. We expect to utilize this credit facility to finance inventory and receivables as needed. As of July 31, 2013, we have not yet made any advances on this line of credit.

The Company also has letters of credit totaling $337,928 as part of a credit requirement of Northern Natural Gas. In August 2012, these letters of credit were transferred to United FCS as part of the new credit facilities. These letters of credit reduce the amount available under our line of credit to approximately $5,662,000.

On July 31, 2013, the Company indirectly acquired 63.3% of the outstanding membership units of HLBE through our purchase of 100% of the membership units of Project Viking for a total purchase price of $17,024,500. The purchase price included the Company's issuance of a promissory note in the amount of $4,024,500 due to the prior owners of Project Viking. This note matured on August 30, 2013 and was paid off in full by the Company on August 26, 2013 using cash from operations. The Company's purchase price for the acquisition of Project Viking also included the Company's assumption of the obligations under a $5,000,000 promissory due to Granite Falls Bank. This note was due upon the demand of Granite Falls Bank, or if no demand was made, then on September 23, 2013. The Company paid off this note in full on August 19, 2013 using cash from operations.

Long-Term Debt Sources

The Company's long-term credit facility with United FCS is a revolving term loan. Under this facility we may borrow, repay, and reborrow up to $8,000,000. However, the amount available for borrowing under this facility reduces by $1,000,000 every six months, beginning September 1, 2013, with final payment due March 1, 2017. Amounts borrowed under the revolving term loan bear interest at one of three interest rate options selected by us, (i) at a variable weekly rate equal to 2.90% above the rate quoted by the British Bankers Association for the offering of one-month U.S. Dollar deposits, (ii) at a fixed rate to be quoted by CoBank, or (iii) at a fixed rate for up to 12 months equal to LIBOR plus 2.90%. Interest on amounts borrowed is payable monthly in arrears. We have used this credit facility to fund our rail infrastructure improvement project and working capital. As of July 31, 2013, the outstanding balance on our revolving term loan was $4,375,970 and the interest rate as of that date was 3.09%.

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The Company's credit facilities with United FCS require the Company to comply with certain financial covenants. As of July 31, 2013, we were in compliance with our financial covenants and expect to remain in compliance throughout our 2013 fiscal year.

Our credit facilities with United FCS are secured by substantially all our assets. There are no savings account balance collateral requirements as part of our credit facilities.

In December 2011, the Company purchased a shuttlewagon railcar mover for use at its facility. The Company financed the entire purchase price through Capital One Equipment Leasing and Finance. As of July 31, 2013, the loan balance was approximately $412,000, of which approximately $294,000 is classified as long-term debt. The note is on a five-year term at a fixed annual interest rate of 3.875%.

Heron Lake BioEnergy

HLBE has a $20.5 million revolving line of credit, which matures in September 2016. Amounts borrowed by HLBE under the term revolving loan and repaid or prepaid may be re-borrowed at any time prior to maturity date of the term revolving loan, provided that outstanding advances may not exceed the amount of the term revolving loan commitment. Amounts outstanding on the term revolving loan bear interest at a variable rate equal to the greater of a LIBOR rate plus 3.50% or 5.0%, payable monthly.  At July 31, 2013, the revolving line of credit carried an interest rate of LIBOR plus 3.5%, but the total interest rate may not be less than 5.0%. HLBE also pays an unused commitment fee on the unused portion of the term revolving loan commitment at the rate of 0.35% per annum, payable in arrears in quarterly installments during the term of the term revolving loan. At July 31, 2013, the amount borrowed under the revolving line of credit was $10,650,377 plus a fair value adjustment premium of approximately $722,000. At July 31, 2013, HLBE had an additional $9.8 million available under this revolving line of credit. The amount available under the revolving line of credit is reduced by $2 million at October 31 each year until September 2016, when the unpaid balance is due.

HLBE also has a term loan with its lender. The amount outstanding on the term loan as of July 31, 2013 was approximately $17,137,000. HLBE must make equal monthly payments of principal and interest on the term loan based on a 10-year amortization, provided the entire principal balance and accrued and unpaid interest on the term loan is due and payable in full on the maturity date of September 1, 2016.  In addition, HLBE is required to make additional payments annually on debt for up to 25% of the excess cash flow, as defined by the agreement, up to $2 million per year. Through September 1, 2014, the loan bears interest at 5.75% as long as HLBE is in compliance with its debt covenants. On September 1, 2014, the interest rate on the term loan will be adjusted to LIBOR plus 3.50%, but the total interest rate may not be less than 5.0%. The loan agreements are secured by substantially all of HLBE's business assets and are subject to various financial and non-financial covenants that limit distributions and debt and require minimum debt service coverage, net worth, and working capital requirements.  HLBE was in compliance with the covenants of its master loan agreement with its lender as of July 31, 2013.

On May 17, 2013, HLBE issued approximately $1.4 million in convertible secured subordinated debt. The notes bear interest at 7.25% and are due in the aggregate principal amount during May 2018. On October 1, 2014, or immediately prior to the effective time of any sale of all or substantially all of HLBE's assets, each holder has the right at the holder's option to irrevocably convert all of such holder's interim subordinated notes into class A units of HLBE, at the rate of $0.30 per class A unit. HLBE reserves the right to issue class B units upon conversion if the principal balance of the 7.25% subordinated secured notes exceeds the authorized class A units at the conversion rate.    

Off-Balance Sheet Arrangements.

We currently have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to the impact of market fluctuations associated with interest rates and commodity prices as discussed below. We have no exposure to foreign currency risk as all of our business is conducted in U.S. Dollars. We use derivative financial instruments as part of an overall strategy to manage market risk. We use cash, futures and option contracts to hedge changes to the commodity prices of corn, ethanol and natural gas. We do not enter into these derivative financial instruments for trading or speculative purposes, nor do we designate these contracts as hedges for accounting purposes pursuant to the requirements of Generally Accepted Accounting Principles ("GAAP").

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Interest Rate Risk

We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from our credit facilities with United FCS, PCA. Specifically, we have $4,375,969 outstanding in variable rate debt as of July 31, 2013. The specifics of these credit facilities are discussed in greater detail in “Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Indebtedness.”

Below is a sensitivity analysis we prepared regarding our income exposure to changes in interest rates. The sensitivity analysis below shows the anticipated effect on our income from a 10% adverse change in interest rates for a one-year period.

Outstanding Variable Rate Debt at July 31, 2013	Interest Rate at July 31, 2013		Interest Rate Following 10% Adverse Change		Annual Adverse Change to Income
$4,375,969	3.09	%	3.4	%	$13,522

The variable rate debt of HLBE is not included in the table above because such debt is subject to a minimum 5% interest rate. At July 31, 2013, HLBE's variable rate debt carried an interest rate of LIBOR plus 3.5%, subject to the 5% minimum rate. At July 31, 2013, even if LIBOR as of that date increased by 10%, HLBE's variable rate debt would remain at the minimum 5% interest rate.

Commodity Price Risk

We seek to minimize the risks from fluctuations in the prices of raw material inputs, such as corn and natural gas, and finished products, such as ethanol and distillers grains, through the use of hedging instruments. In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. Although we believe our hedge positions accomplish an economic hedge against our future purchases and sales, management has chosen not to use hedge accounting, which would match the gain or loss on our hedge positions to the specific commodity purchase being hedged. We are using fair value accounting for our hedge positions, which means as the current market price of our hedge positions changes, the realized or unrealized gains and losses are immediately recognized in our cost of goods sold or as an offset to revenues. The immediate recognition of hedging gains and losses under fair value accounting can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged.

As corn prices move in reaction to market trends and information, our income statement will be affected depending on the impact such market movements have on the value of our derivative instruments. Depending on market movements, crop prospects and weather, these price protection positions may cause immediate adverse effects, but are expected to produce long-term positive growth for us.

A sensitivity analysis has been prepared to estimate our exposure to ethanol, corn and natural gas price risk. Market risk related to these factors is estimated as the potential change in income resulting from a hypothetical 10% adverse change in the fair value of our corn and natural gas prices and average ethanol price as of July 31, 2013, net of the forward and future contracts used to hedge our market risk for corn and natural gas usage requirements. The volumes are based on our expected use and sale of these commodities for both the Granite Falls, Minnesota and Heron Lake, Minnesota production plants for a one year period from July 31, 2013. The results of this analysis, which may differ from actual results, are as follows:

	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price as of July 31, 2013		Approximate Adverse Change to Income
Natural Gas	3,095,100	MMBTU	10	%	$	1,331,000
Ethanol	114,433,000	Gallons	10	%	$	25,175,000
Corn	41,930,000	Bushels	10	%	$	25,997,000

Participation in Captive Reinsurance Company

We participate in a captive reinsurance company (“Captive”). The Captive reinsures losses related to workman's compensation, commercial property and general liability. Premiums are accrued by a charge to income for the period to which the premium relates and is remitted by our insurer to the captive reinsurer. The Captive reinsures losses in excess of a predetermined

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amount. The Captive insurer has estimated and collected a premium amount in excess of expected losses but less than the aggregate loss limits reinsured by the Captive. We have contributed limited capital surplus to the Captive that is available to fund losses should the actual losses sustained exceed premium funding. So long as the Captive is fully-funded through premiums and capital contributions to the aggregate loss limits reinsured, and the fronting insurers are financially strong, we cannot be assessed over the amount of our current contributions.

Item 4.  Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.

Our management, including our Chief Executive Officer and General Manager (the principal executive officer), Steve Christensen, along with our Chief Financial Officer (the principal financial officer), Stacie Schuler, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of July 31, 2013. Based upon this review and evaluation, these officers have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission; and to ensure that the information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Our management, including our principal executive officer and principal financial officer, have reviewed and evaluated any changes in our internal control over financial reporting that occurred during the quarter ended July 31, 2013 and there has been no change that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time in the ordinary course of business, Granite Falls Energy, LLC and Heron Lake BioEnergy, LLC may be named as a defendant in legal proceedings related to various issues, including workers' compensation claims, tort claims, or contractual disputes. We are not currently involved in any material legal proceedings.

Item 1A. Risk Factors

There have been no material changes, except as described below, to the risk factors disclosed in Item 1A of our Form 10-K for the fiscal year ended October 31, 2012. Additional risks and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition and/or results of operations.

Risks Related to Regulation and Government Action

Changes to the Renewable Fuels Standard or to permissible levels of ethanol blended into gasoline could negatively impact our profitability. RFS2 requires the use of a specified amount of renewable fuels in the United States. Additionally, the EPA has approved the use of E15, gasoline which is blended at a rate of 15% ethanol and 85% gasoline, in vehicles manufactured in the model year 2001 and later. These two measures, taken together, help ensure that there is a market for the ethanol we produce. However, certain legislators and certain industry groups have advocated for changes to RFS2 and other statutes and regulations that, if adopted, would negatively impact our business. At various times over the past several months, legislation has been proposed that would repeal RFS2, repeal the corn based ethanol portion of RFS2, or ban E15. While the ethanol industry has resisted these proposals, we cannot be assured that RFS2 will remain in its current form going forward or that E15 or higher blends of ethanol will be widely available, which may negatively impact the demand for ethanol.

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Risks Relating to Our Business

Our purchase of membership units of Heron Lake BioEnergy, LLC will impact our financial condition and results of operations. On July 31, 2013, we indirectly acquired 63.3% of the outstanding membership units of Heron Lake BioEnergy, LLC (“HLBE”) through our purchase of 100% of the membership units of Project Viking, L.L.C. (“Project Viking”), for a total purchase price of $17,024,500. As a result of this acquisition, HLBE's financial condition and results of operations will impact our financial condition and results of operations. HLBE owns a 50 million gallon per year ethanol plant located in Heron Lake, Minnesota. As an ethanol production company, HLBE faces many of the same risks that we face. If HLBE's financial condition deteriorates or HLBE's results of operations are unfavorable, the value of our membership units may be reduced.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

None.

Item 5.Other Information

None.

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Item 6. Exhibits.

(a) The following exhibits are included in this report.

Exhibit No.	Exhibit
10.1	Membership Interest Purchase Agreement effective July 31, 2013 by and between Granite Falls Energy, LLC and Roland J. Fagen and Diane K. Fagen.*
10.2	Subscription Agreement Including Investment Representations, dated July 31, 2013, by and between Heron Lake BioEnergy, LLC and Project Viking, L.L.C.*
10.3	Subscription Supplement Agreement dated July 31, 2013, by and among Heron Lake BioEnergy, LLC, Granite Falls Energy, LLC and Project Viking, L.L.C.*
10.4	Management Services Agreement effective as of July 31, 2013 between Granite Falls Energy, LLC and Heron Lake BioEnergy, LLC.*
10.5	Secured Promissory Note dated July 31, 2013, between Roland (Ron) J. Fagen and Diane K. Fagen, jointly as Holder, and Granite Falls Energy, LLC, as Borrower.*
10.6	Promissory Note, dated July 23, 2013, between Granite Falls Bank, as Lender, and Project Viking, L.L.C. and Roland J. (Ron) Fagen, as Borrower.*
10.7	Assumption Agreement among Granite Falls Energy, LLC, Project Viking, L.L.C., Roland J. Fagen and Granite Falls Bank.*
10.8	Creditor and Debtors Agreement dated July 31, 2013 by and among Granite Falls Energy, LLC, Project Viking, L.L.C., Roland “Ron” J. Fagen and Granite Falls Bank.*
10.9	Revolving Credit Supplement dated July 26, 2013 between United FCS, PCA and Granite Falls Energy, LLC.*
31.1	Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a)*
31.2	Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a)*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350*
101	The following financial information from Granite Falls Ethanol, LLC's Quarterly Report on Form 10-Q for the quarter ended July 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of July 31, 2013 and October 31, 2012, (ii) Condensed Statements of Operations for the three and nine months ended July 31, 2013 and 2012, (iii) Statements of Cash Flows for the nine months ended July 31, 2013 and 2012, and (iv) the Notes to Condensed Financial Statements.**

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		GRANITE FALLS ENERGY, LLC
Date:	September 16, 2013	/s/ Steve Christensen
		Steve Christensen
		Chief Executive Officer
Date:	September 16, 2013	/s/ Stacie Schuler
		Stacie Schuler
		Chief Financial Officer

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EX-10.1

EXHIBIT 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

This MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Agreement”)is made effective this 31st day of July, 2013, by and between GRANITE FALLS ENERGY, LLC, a Minnesota limited liability company (the “Buyer”) and ROLAND J. FAGENand DIANE K. FAGEN (the “Sellers”).

The Sellers collectively own 100% of the membership interests of Project Viking, L.L.C., a Minnesota limited liability company (the “Company”).

The Buyer and the Sellers desire that the Buyer purchase 100% of the membership interests of the Company under the terms and conditions of this Agreement.

Therefore, in consideration of the mutual agreements contained herein, the parties hereby agree as follows:

SECTION 1

THE MEMBERSHIP INTEREST PURCHASE

1.1    Purchase and Sale of Membership Interest. Pursuant to the terms and conditions of this Agreement, the Sellers agree to sell to the Buyer and the Buyer agrees to purchase from the Sellers, 100% of the membership interests of the Company (the “Membership Interests”) for an aggregate purchase price of Seventeen Million Twenty-Four Thousand Five Hundred Dollars ($17,024,500) (the “Purchase Price”). At the Closing, Buyer shall pay the Purchase Price as follows:

(a)     Buyer shall pay $8,000,000 of the Purchase Price by wire transfer of immediately available funds to an account specified in writing by the Sellers;

(b)    Buyer shall issue to the Sellers a secured promissory note in the form attached hereto as Exhibit A (the “Note”) in the original principal amount of $4,024,500; and

(c)     Buyer shall assume all of the Sellers’ and the Company’s obligations under that certain Promissory Note in the principal amount of $5,000,000 having Loan Number 28407, dated July 23, 2013, in favor of Granite Falls Bank (the “GF Note”) as of the Effective Date. Buyer shall execute and deliver an Assumption Agreement, in the form attached hereto as Exhibit B (the “Assumption”), evidencing such assumption and the consent of Granite Falls Bank to such assumption.

1.2    Closing. The closing of the sale and purchase of the Membership Interests (the “Closing”) will take place simultaneously with the execution of this Agreement at the offices of Leonard Street and Deinard Professional Association, located at 150 South Fifth Street, Suite 2300, Minneapolis, Minnesota at 10:00 a.m. local time, or by such other method or at such other place or different time as may be mutually acceptable to the Buyer and the Sellers.

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1.3    Closing Deliveries. At the Closing, in addition to delivering a duly executed copy of this Agreement:

(a)    the Buyer will pay the Purchase Price and deliver a duly executed Note, a duly executed Assumption, and a duly executed Assignment in Blank (defined below) to the Sellers in accordance with Section 1.1 above; and

(b)    the Sellers will deliver duly executed assignments for the uncertificated Membership Interests to the Buyer.

SECTION 2

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

In order to induce Buyer to purchase the Membership Interests from Sellers, the Sellers hereby represent and warrant to the Buyer, as of the date hereof, as follows:

2.1    Organization; Good Standing; Assets. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of Minnesota and has all requisite corporate power and authority to conduct its business as currently conducted.

2.2    Capitalization of the Company. The Membership Interests constitute 100% of the issued and outstanding equity interests of the Company. There are no outstanding options, warrants, convertible or exchangeable securities or other rights, agreements, arrangements or commitments obligating the Sellers or the Company, directly or indirectly, to issue, sell (other than the transactions contemplated by this Agreement), purchase, acquire or otherwise transfer or deliver any equity interest in the Company, or any agreement, document, instrument or obligation convertible or exchangeable therefor.

2.3    Title to Membership Interests. The Sellers own of record and beneficially the Membership Interests, which are, subject to any provisions contained in the GF Note, free and clear of any obligation, lien, claim, pledge, security interest, liability, charge, contingency or other encumbrance or claim of any nature whatsoever (a “Lien”). Upon sale of the Membership Interests to the Buyer hereunder, the Buyer will acquire the entire legal and beneficial interest in the Membership Interests, free and clear of any Lien except such Liens that may be imposed by the Note and/or the GF Note.

SECTION 3

REPRESENTATIONS AND WARRANTIES OF THE BUYER

In order to induce the Sellers to sell the Membership Interests to the Buyer, the Buyer hereby represents and warrants to the Sellers as of the date hereof, as follows:

3.1    Organization, Standing of Buyer. The Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Minnesota. The

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Buyer has full power and authority under applicable law to own, lease and operate its properties and to carry on the business in which it is engaged.

3.2    Due Authorization. The Buyer has all requisite power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transaction contemplated hereby. The execution and delivery by the Buyer of this Agreement, the performance by the Buyer of its obligations hereunder, and the consummation by the Buyer of the transaction contemplated hereby have been duly authorized by all requisite limited liability company action on the part of the Buyer. This Agreement has been duly executed and delivered by the Buyer and (assuming due execution and delivery by the Sellers) this Agreement constitutes a legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms.

3.3    No Violation. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby does not and will not violate or conflict with the constituting documents of Buyer or any subsidiary, or violate any legal requirement or order applicable to the Buyer or any subsidiary. The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby by the Buyer does not and will not require any third-party action, or conflict with or constitute a default under, or result in the acceleration or right of acceleration, of any obligations, or any termination or right of termination under any contract. No consent of any third party is required as a result of, or in connection with, the execution, delivery and performance of this Agreement or the consummation of the transaction contemplated hereby.

3.4    Financing. The Buyer has or shall have sufficient cash on hand or other sources of immediately available funds to enable it to make payment in full of all obligations under the Note and the GF Note on or prior to August 30, 2013.

SECTION 4

OTHER COVENANTS

4.1    Publicity. No party hereto will issue or make, or allow to have issued or made, any press release or public announcement concerning the transactions contemplated by this Agreement without the prior written consent of all other parties.

4.2    Resignations. Effective as of the Closing, the Sellers hereby resign from all officer, manager, director, and other roles and positions he or she holds with the Company.

4.3    SEC Filings. The Buyer shall promptly cause to be made on behalf of the Company all filings with the Securities and Exchange Commission required as a result of the transactions contemplated by this Agreement or the subscription by the Company to purchase additional equity of Heron Lake BioEnergy, LLC.

4.4    Grant of Security Interest. The Buyer hereby pledges and grants to the Sellers, and hereby creates a continuing first priority lien and security interest in favor of the Sellers in and to all of its right, title and interest in and to the Membership Interest (the “Collateral”). The

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Collateral secures the due and prompt payment and performance of: (a) the obligations of the Buyer from time to time arising under the Note and this Agreement with respect to the due and prompt payment of (i) the principal of and interest on the Note (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, or otherwise and (ii) all other monetary obligations, including fees, costs, attorneys’ fees and disbursements, reimbursement obligations, contract causes of action, expenses and indemnities, whether primary, secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Buyer under or in respect of the Note and this Agreement. The Buyer shall, from time to time, as may be required by the Sellers with respect to all Collateral, immediately take all actions as may be requested by the Sellers to perfect the security interest of the Sellers in the Collateral. In connection with the granting of the security interest in the Collateral, the Buyer shall execute and deliver to the Sellers an assignment in blank in the form attached hereto as Exhibit C (the “Assignment in Blank”). The Buyer hereby irrevocably authorizes the Sellers at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by the Buyer hereunder, without the signature of the Buyer where permitted by law, including the filing of a financing statement describing the Collateral as all Membership Interest in Project Viking, L.L.C. now owned or hereafter acquired by the Buyer, or words of similar effect. The Buyer agrees to provide all information required by the Sellers pursuant to this Section 4.4 promptly to the Sellers upon request. The Buyer shall not issue any additional equity in the Company to any third party, grant any Lien on the Collateral that has a priority over the Sellers’ security interest in the Collateral, or take any other action which may harm the Sellers’ interest and rights in the Collateral, at any time prior to payment in full of all amounts owed to the Sellers and Granite Falls Bank pursuant to the terms of this Agreement. If the Buyer shall fail to pay the Note when due or otherwise be in default under the Note, and such default is continuing, the Sellers, without any other notice to or demand upon the Buyer, may assert all rights and remedies of a secured party under the UCC or other applicable law, including, without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral.

SECTION 5

MISCELLANEOUS

5.1    Survival; Indemnification. The parties agree that the representations and warranties of each party shall survive and remain in full force and effect after the execution of this Agreement and after payment for the delivery of the Membership Interests. Each party agrees to indemnify and hold harmless the other party from and against any and all loss, damage or liability due to or arising out of, a breach of any agreement or representation or warranty in this Agreement by such party. Notwithstanding anything in this Agreement to the contrary, the

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maximum amount that the Sellers shall be entitled to recover from the Buyer pursuant to the indemnity obligation of this Agreement shall in no event exceed the Purchase Price and the maximum amount that the Buyer shall be entitled to recover from the Sellers pursuant to this Agreement shall in no event exceed the Purchase Price.

5.2    Expenses. Whether or not the transaction contemplated by this Agreement is consummated, the Seller and the Buyer shall each pay their own fees and expenses incident to the negotiation, preparation, execution, delivery and performance hereof, including, without limitation, the fees and expenses of their respective counsel, accountants and other experts.

5.3    Complete Agreement; Waiver and Modification; No Third Party Beneficiaries. This Agreement, together with the Note, constitutes the entire agreement between the parties pertaining to the subject- matter hereof and supersedes all prior agreements and understandings of the parties with the respect to the subject-matter hereof. There are no representations or warranties by any party except those expressly stated for herein, any implied warranties being hereby expressly disclaimed by both parties. There are no covenants or conditions except those expressly stated herein. No amendment, supplement or termination of or to this Agreement, and no waiver of any of the provisions hereof, shall be binding on a party unless made in a writing signed by such party. This Agreement may be modified by mutual agreement of the parties. Nothing in this Agreement shall be construed to give any person other than the express parties hereto any rights or remedies.

5.4    Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be given by delivery (by mail or otherwise) or transmitted to the address or facsimile number listed below, and will be effective (in all cases) upon receipt. Without limiting the generality of the foregoing, a mail, express, messenger or other receipt signed by any person at such address shall conclusively evidence delivery to and receipt at such address, and any printout showing successful facsimile transmission of the correct total pages to the correct facsimile number shall conclusively evidence transmission to and receipt at such facsimile number.

(a)    If to the Buyer:

Granite Falls Energy, LLC

15045 Hw. 23 SE, P.O. Box 216

Granite Falls, MN 56241-0216    

Attention:    Paul Enstad        

Facsimile:    (320) 564-3190    

with copy to:

STONEBERG, GILES & STROUP, P.A.

300 South O’Connell Street, Marshall, MN 56258-2638

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Attention:    Kevin K. Stroup    

Facsimile:    (507) 532-3498    

(b)    If to the Sellers:

Roland and Diane Fagen

P.O. Box 159

501 West Highway 212

Granite Falls, MN 56242

Facsimile: (320) 564-3278

with copy to:

Leonard, Street and Deinard Professional Association

The Army and Navy Club Building

1627 Eye Street NW, Suite 610

Washington, DC 20006

Attn: Jonathan W. Gottlieb, Esq.

Facsimile: (202) 974-6101

5.5    Law Governing. This Agreement shall be interpreted in accordance with and governed by the laws of the State of Minnesota.

5.6    Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators and successors of the parties hereto, but no right or liability or obligation arising hereunder may be assigned by any party hereto.

5.7    Counterparts, Separate Signature Pages. This Agreement may be executed in any number of counterparts, or using separate signature pages. Each such executed counterpart and each counterpart to which such signature pages are attached shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same instrument. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

5.8    Severability. In the event any of the provisions of this Agreement shall be declared by a court or arbitrator to be void or unenforceable, then such provision shall be severed from this Agreement without affecting the validity and enforceability of any of the other provisions hereof, and the parties shall negotiate in good faith to replace such unenforceable or void provisions with a similar clause to achieve, to the extent permitted under law, the purpose and intent of the provisions declared void and unenforceable.

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5.9    Brokers. The parties represent they have not used a broker in connection with this Agreement, and therefore neither party will incur, directly or indirectly, any liability for brokerage or agent commissions or any other similar charges.

[Signatures follow on next page.]

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IN WITNESS WHEREOF, the parties have executed this Membership Interest Purchase Agreement.

BUYER

GRANITE FALLS ENERGY, LLC

By:/s/ Paul Enstad        

Its: Chairman        

SELLERS

/s/ Roland J. Fagen    

Roland J. Fagen

/s/ Diane K. Fagen    

Diane K. Fagen

EX-10.2

EXHIBIT 10.2

HERON LAKE BIOENERGY, LLC

SUBSCRIPTION AGREEMENT

INCLUDING INVESTMENT REPRESENTATIONS

THIS SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into and made effective on July 31, 2013, by and between Heron Lake BioEnergy, LLC, a Minnesota limited liability company with its principal executive office located at 91246 390^th Avenue, P.O. Box 198, Heron Lake, Minnesota 56137 (the “Company”), and Project Viking, L.L.C., a Minnesota limited liability company (“Subscriber”).

W I T N E S S E T H

In consideration of the mutual promises contained herein, and other good and valuable consideration, Subscriber hereby agrees, represents and warrants as follows:

1.    Agreement of Subscription.

a.    Subscriber hereby subscribes to purchase ** 8,075,000 ** Class A capital units of the Company and ** 15,000,000 ** Class B capital units of the Company (collectively, the “Units”), which Units quantify membership interests in the Company, at a purchase price of $0.30 per Unit, upon the terms and conditions as set forth in this Subscription Agreement, for a Total Purchase Price for the Units of ** $6,922,500.00 **. All capitalized terms used in this Subscription Agreement and not otherwise defined herein shall have the meaning ascribed to such terms in the Company’s Confidential Disclosure Statement dated June 11, 2013, including appendices (the “Disclosure Statement”).

b.    This subscription is irrevocable. The Company will accept this subscription by having one of its officers countersign this Subscription Agreement and return a copy of the signature page to you to confirm acceptance. Upon acceptance, this Subscription Agreement is binding on Subscriber, and the obligations of Subscriber hereunder are unconditional.

c.     Upon the acceptance of this Subscription Agreement, Subscriber agrees to deliver by wire transfer on the same business day of the acceptance the amount of the Total Purchase Price for the Units (100% payment is due upon Subscription). Subscriber agrees that the Units shall be governed by and that Subscriber is bound by the Company’s Member Control Agreement dated effective September 23, 2004, as amended August 30, 2011, a copy of which is included in the Disclosure Statement as Appendix B (the “Member Control Agreement”). Subscriber acknowledges that Subscriber is a current member of the Company and therefore has received a copy of the Disclosure Statement including the Member Control Agreement.

d.    Subscriber acknowledges and agrees that 100% of Subscriber’s purchase price of the Units constitutes “AT-RISK” capital and will not be placed into any type of escrow. Immediately following acceptance of this Subscription by the Company and tender of the payment for the Units, the Company will use such funds to pay down the Company’s term revolver note with AgStar Financial Services, PCA (“AgStar”). Subscriber acknowledges that the payment of the proceeds of this subscription to AgStar is the specified use of the funds from this subscription.

HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

e.    Upon acceptance of this Subscription Agreement and tender of full payment of the entire subscription amount, the Company will issue the Units to Subscriber for the Units purchased hereunder and issue a certificate to Subscriber for the Units purchased hereunder, dated as of the date of such acceptance and full payment. Subscriber acknowledges and agrees that Subscriber is bound by the Company’s Articles of Organization, a copy of which is included in the Disclosure Statement as Appendix A (the “Articles”) and the Member Control Agreement.

2.    Representations and Warranties of Subscriber.

In consideration of the Company's offer to sell the Units, and in order to induce the Company to sell and issue the Units to Subscriber, Subscriber hereby represents and warrants to the Company and its agents as follows:

a.    SEC Reporting Company and Reporting Obligations; Information About the Company, the Units and the Notes Offering. Subscriber acknowledges that the Company is a public reporting company under the Securities Exchange Act of 1934, and that Subscriber has immediate reporting obligations under such Act as a result of its purchase of the Units hereunder and Subscriber’s ownership of membership interests in the Company and the number of Units purchased. Subscriber, or its representative(s), has received, read and understands the business, financial and operating information, and the risk factors affecting the Company and its business and the value of the Units being purchased hereunder, as described in or set forth in the periodic reports and schedules filed by the Company with the SEC (including all exhibits and financial statement schedules attached thereto or included therewith), including but not limited to: (1) FORM 10-K Annual Report filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “34’ Act”) for the fiscal year ended October 31, 2012; (2) FORM 10-Q Quarterly reports under Section 13 or 15(d) of the Act for the fiscal quarters ended January 31, 2013 and April 30, 2013; (3) the SCHEDULE 14A Definitive Proxy Statement relating to merger or acquisition and Additional Definitive Proxy soliciting materials and Rule 14a-12 materials; and (4) all FORM 8-K reports filed in the past twelve months, including but not limited to the Form 8-K reports filed in connection with the termination of the Asset Purchase Agreement entered into with Guardian Energy, the amendments to the forbearance agreements and related loan agreements between the Company and AgStar Financial Services, PCA, and the amended and restated loan agreement and interim subordinated loan agreements entered into on May 17, 2013. In addition, Subscriber acknowledges it has received the Company’s unaudited, non-public, financial statements for May 31, 2013 and June 30, 2013 and the 7-month and 8-month periods then ended, by reason of its appointees to the Company’s Board of Governors. Without limiting the foregoing, Subscriber acknowledges that the Company has affirmative covenants and payment obligations to AgStar in its loan agreements with AgStar, and that there are no assurances that the covenants and payment obligations will be met, that the Company will not violate loan covenants or payment obligations in the future, or that AgStar will not declare an event of default and exercise all of their rights and remedies under the loan agreement if the Company cannot cure any such defaults or violations.

Subscriber acknowledges and represents and warrants to the Company that Subscriber has received and carefully read: (i) the Company’s Confidential Disclosure Statement dated June 11, 2013, including appendices; (ii) the form of Indenture dated as of _______________, 2013 among the Company and U.S. Bank National Association attached as Appendix E to the Disclosure Statement (the “Indenture”); (iii) the form of Note to be delivered under and governed by the Indenture attached as Exhibit A to the Indenture; (iv) the form of Indenture Subordination Agreement dated effective as of _______________, 2013 by and between AgStar Financial Services, PCA and U.S. Bank National Association; and (v) all other information incorporated by reference into the Disclosure Statement relating to the Company, its business, or the Company’s offering of its 7.25% Secured Subordinated Notes due 2018 (the “Notes”) pursuant to the terms

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HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

and conditions of the Disclosure Statement (the “Notes Offering”), as supplemented in accordance with the Subscription Supplement Agreement referenced herein. Subscriber acknowledges and understands that the Company will amend the Notes Offering and require subscribers to the Notes to confirm their subscription in accordance with the Subscription Supplement Agreement of even date herewith by and among Subscriber, the Company, and Granite Falls Energy, LLC (“Subscription Supplement Agreement”).

b.    Access to Information. Subscriber represents that it or its representatives has been given access to full and complete information regarding the Company and has had an opportunity to obtain, and has received, any and all additional information deemed necessary by Subscriber in order to form a decision regarding an investment in the Company, and Subscriber has utilized such access to Subscriber’s satisfaction. As a result, Subscriber believes it has sufficient knowledge about the business, management and financial affairs of the Company, the Company’s ethanol plant and subsidiaries and the operations thereof, the planned used of proceeds of this subscription, the terms and conditions of this Subscription Agreement, the Notes Offering described in the Disclosure Statement, the planned amendment and confirmation procedures with respect to the Notes Offering, the Articles and Member Control Agreement, the terms and conditions of the purchase of Units contemplated hereby, and any other relevant matters, to make an informed investment decision regarding an investment in the Company and the purchase of Units contemplated hereby.

.

c.    High Degree of Risk. Subscriber realizes that an investment in the Units involves a high degree of risk, including, but not limited to, the risks of receiving no return on the investment and of losing Subscriber's entire investment in the Company.

d.Ability to Bear the Risk. Subscriber is able to bear the economic risk of investment in the Units, including the total loss of such investment.

e.No Market for Units; Restrictions on Transfer. Subscriber realizes that (i) there are substantial restrictions on the transfer of the Units, both under the Securities Act and State Laws, as well as under the Articles and the Member Control Agreement; (ii) there is not currently, and it is unlikely that in the future there will exist, a public market for the Units; and (iii) accordingly, for the above and other reasons, Subscriber may not be able to liquidate an investment in the Units for an indefinite period. Subscriber realizes that the Units have not been registered for sale under the Securities Act of 1933, as amended (the “Securities Act”) or applicable state securities laws (the “State Laws”). Subscriber acknowledges and agrees that the Units may be sold only pursuant to registration under the Securities Act and State Laws, or an opinion of counsel acceptable to the Company that such registration is not required, and in accordance with the Articles and the Member Control Agreement.

f.Suitability. Subscriber believes that the investment in the Units is suitable for the undersigned based upon Subscriber's investment objectives and financial needs, and Subscriber has adequate means for providing for his, her or its current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Units. Subscriber has such knowledge and experience in financial and business matters that he, she or it is capable of evaluating the merits and risks of an investment in the Units or Subscriber has obtained, to the extent Subscriber deems necessary, his, her or its own professional advice with respect to the risks inherent in the investment in the Units, and the suitability of the investment in the Units in light of Subscriber's financial condition and investment needs.

g.Investment Intent. Subscriber has been advised that the Units are not being registered under the Securities Act or the relevant State Laws but are being offered and sold pursuant to exemptions from such laws and that the Company's reliance upon such exemptions is predicated in part on Subscriber's representations to it as contained herein. Subscriber represents and warrants that the Units are being

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HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

purchased for Subscriber's own account and for Subscriber's investment and without the intention of reselling or redistributing the same, that Subscriber has made no agreement with others regarding any of the Units and that Subscriber's financial condition is such that it is not likely that it will be necessary to dispose of any of the Units in the foreseeable future. Subscriber is aware that, in the view of the Securities and Exchange Commission, a purchase of the Units with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market values, or any change in the condition of the Company, or in connection with a contemplated liquidation or settlement of any loan obtained for the acquisition of the Units and for which the Units were pledged as security, would represent an intent inconsistent with the representations set forth above. Subscriber further represents and agrees that if, contrary to the foregoing stated intentions, Subscriber should later desire to dispose of or transfer any of the Units in any manner, he, she or it shall not do so without first obtaining the consent of the Company as required by the Company’s Articles and the Member Control Agreement and (i) the opinion of counsel satisfactory to the Company that such proposed disposition or transfer lawfully may be made without the registration of the Units pursuant to the Securities Act and applicable State Laws, or (ii) such registration (it being expressly understood that the Company shall not have any obligation to register such Units for such purpose).

h.Brokers or Finders. Subscriber has not taken any action that will cause the Company to incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Subscription Agreement.

i.Tax Liability. Subscriber has reviewed with Subscriber's own tax advisors the tax consequences of this investment and the transactions contemplated by this Subscription Agreement, and has and will rely solely on such advisors and not on any statements or representations of the Company or any of its agents. Subscriber understands that Subscriber (and not the Company) shall be responsible for Subscriber's own tax liability that may arise as a result of this investment or the transactions contemplated by this Subscription Agreement.

j.    Residency. Subscriber specifically represents and warrants to the Company that Subscriber is a resident of the State of Minnesota(please complete) and is not a resident of any other State.

Please check one indicating the basis for Subscriber’s residency:

	Subscriber is an individual that has, at the time of the offer and sale to him or her, his or her principal residence in Minnesota.
X	Subscriber is a corporation, partnership, trust or other form of business organization that has, at the time of the offer and sale to it, its principal office within Minnesota.
	Subscriber is a corporation, partnership, trust or other form of business organization that is organized for the specific purpose of acquiring Units and all of the beneficial owners of that organization are residents of the State of Minnesota.

STOP:  Subscriber must be a resident of the State of Minnesota in order to be eligible to subscribe for Units. If Subscriber is not a resident of Minnesota or is a resident of another State, Subscriber may not subscribe for Units.

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HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

3.    Accredited Status.

SECTION 3 IS REQUIRED IN CONNECTION WITH THE EXEMPTIONS FROM THE SECURITIES ACT AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH RESPECT TO THE OFFER AND SALE OF THE UNITS. SUBJECT TO SECURITIES LAWS REQUIREMENTS, ALL FINANCIAL INFORMATION IN SECTION 3 WILL BE KEPT CONFIDENTIAL, AND WILL BE REVIEWED ONLY BY THE COMPANY AND ITS COUNSEL, EXCEPT AS DISCLOSURE MAY BE REQUIRED OR COMPELLED UNDER APPLICABLE SECURITIES LAWS. The undersigned agrees to furnish any additional information that the Company or its counsel deems reasonably necessary in order to verify the responses set forth below.

Subscriber represents and warrants as follows (EACH SUBSCRIBER MUST COMPLETE. PLEASE CHECK ALL THAT APPLY – YOU MUST BE AN ACCREDITED INVESTOR TO PURCHASE THE NOTE):

INDIVIDUALS

______ (a)    Subscriber (hereinafter in this Section 3, “the undersigned”) is an individual with a net worth, or a joint net worth together with his or her spouse, in excess of $1,000,000. (In calculating net worth, the persons primary residence shall not be included as an asset, and indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of the securities, shall not be included as a liability, except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of acquisition of the primary residence, the amount of such excess shall be included as a liability. Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability. You may include equity in personal property and real estate, excluding your primary residence, cash, short-term investments, stock and securities. Equity in personal property and real estate, excluding your primary residence, should be based on the fair market value of such property minus debt secured by such property.)

______ (b)    The undersigned is an individual that had an individual income in excess of $200,000 in each of the prior two years and reasonably expects an income in excess of $200,000 in the current year.

______ (c)    The undersigned is an individual that had with his/her spouse joint income in excess of $300,000 in each of the prior two years and reasonably expects joint income in excess of $300,000 in the current year.

______ (d)    The undersigned is a director or executive officer or general partner (or its equivalent) of the Company.

ENTITIES

_____ (e)    The undersigned, if other than an individual, is an entity all of whose equity owners meet one of the tests set forth in (a) through (d) above. (If relying on this category alone, each equity owner must complete a separate copy of this Subscription Agreement.)

5

HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

x (f)    The undersigned is an entity, and is an "Accredited Investor" as defined in Rule 501(a) of Regulation D under the Securities Act. This representation is based on the following (check one or more, as applicable):

_____ (i)    The undersigned (or, in the case of a trust, the undersigned trustee) is a bank or savings and loan association as defined in Sections 3(a)(2) and 3(a)(5)(A), respectively, of the Securities Act acting either in its individual or fiduciary capacity.

_____ (ii)    The undersigned is an insurance company as defined in Section 2(13) of the Securities Act.

_____ (iii)    The undersigned is an investment company registered under the Investment Company Act of 1940 or a business development Company as defined in Section 2(a)(48) of that Act.

_____ (iv)    The undersigned is a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958.

_____ (v)    The undersigned is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 and either (check one or more, as applicable):

_____ (aa)    the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance Company, or registered investment adviser; or

_____ (bb)    the employee benefit plan has total assets in excess of $5,000,000; or

_____ (cc)    the plan is a self‑directed plan with investment decisions made solely by persons who are "Accredited Investors" as defined under the Securities Act.

_____ (vi)    The undersigned is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

x (vii)    The undersigned has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring securities of the Company and is one or more of the following (check one or more, as appropriate):

_____ (aa)    an organization described in Section 501(c)(3) of the Internal Revenue Code; or

x (bb)    a corporation or limited liability company; or

_____ (cc)    a Massachusetts or similar business trust; or

_____ (dd)    a partnership.

6

HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

_____ (viii)    The undersigned is a trust with total assets exceeding $5,000,000, which was not formed for the specific purpose of acquiring securities of the Company and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the investment in the Units.

4.    Entities.

If Subscriber is an entity, the individual signing on behalf of such entity and the entity jointly and severally agree and certify that:

a.    if entity is accredited solely by reason of the category described in Section 3(f)(vii) or (viii) above, then the undersigned entity was not organized for the specific purpose of acquiring the Units; and

b.    this Subscription Agreement has been duly authorized by all necessary action on the part of the undersigned entity, has been duly executed by an authorized officer or representative of the undersigned entity, and each is a legal, valid, and binding obligation of the undersigned entity enforceable in accordance with its terms.

5.    Relationship to Brokerage Firms.

(Please answer the following questions by checking the appropriate response.)

a.    _____YES xNO: Are you a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or employed by a brokerage firm?

b.    _____YES xNO: Is your spouse, father, mother, father‑in‑law, mother‑in‑law, or any of your brothers, sisters, brothers‑in‑law, sisters‑in‑law or children, or any relative which you support, a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or engaged by, a brokerage firm?

c.    _____YES xNO: Does Subscriber own voting securities of any brokerage firm?

d.    _____YES xNO: If the undersigned is an entity, is any director, officer, partner or 5% owner of the undersigned also a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or employed by, a brokerage firm?

e.    If the answer to any of the above items is "YES", please supply details below: ________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

6. Securities Law Exemptions.

Subscriber acknowledges that the offer and sale of the Units has not been registered under the Securities Act, or any state securities laws and that the Company will offer and sell the Units and the Units will be issued to Subscriber in reliance on exemptions from the registration requirements of the Securities Act and exemptions under applicable state securities laws and in reliance on the representations, warranties and agreements made by Subscriber herein. Without limiting the foregoing, the Units were offered and sold

7

HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

in reliance on exemptions from federal and state securities laws including without limitation section 4(2) of the Securities Act covering nonpublic offers and sales and section 3(a)(11) and Rule 147 of the Securities Act covering intrastate offers and sales of securities. Accordingly, Subscriber agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of the Units in the absence of: (i) an effective registration statement under the Securities Act as to the Units and registration or qualification of the Units under any applicable federal or state securities laws then in effect; or (ii) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. Additionally, the Units may be sold or transferred only to persons resident of the State of Minnesota during the period in which the Notes are being offered and sold by the Company and for a period of nine months from the date of last sale by the Company of such securities.

7.    Restrictive Legend.

In addition to the restrictions to transfer of the Units contained in the Articles and Member Control Agreement, and any corresponding restrictive legends required thereunder, Subscriber also agrees that the Company shall place a restrictive legend on any statement of interest prepared by the Company with respect to the Units containing substantially the following language:

The securities represented by this Statement of Interest have not been registered under the Securities Act of 1933, as amended (the “Act”) or under applicable state securities laws and are also subject to a Subscription Agreement. The securities may not be sold, transferred or pledged in the absence of such registration, unless pursuant to an exemption from the registration requirements of the Act and applicable state securities laws. The Company reserves the right to require an opinion of counsel satisfactory to it before effecting any transfer of the securities. Without limiting the foregoing, the Units were offered and sold in reliance on section 4(2) of the Act and section 3(a)(11) and Rule 147 of the Act covering intrastate offers and sales of securities. Accordingly, the Units may be sold or transferred only to persons resident of the State of Minnesota during the period in which the Notes are being offered and sold by the Company and for a period of nine months from the date of last sale by the Company of such securities.

8.    Miscellaneous.

a.Survival of Representations and Warranties; Indemnification. Subscriber understands the meaning and legal consequences of the agreements, representations and warranties contained herein, agrees that such agreements, representations and warranties shall survive and remain in full force and effect after the execution hereof and payment for the Units, and further agrees to indemnify and hold harmless the Company and each current and future employee, agent and member of the Company from and against any and all loss, damage or liability due to, or arising out of, a breach of any agreement, representation or warranty of the undersigned contained herein.

b.No Assignment or Revocation; Binding Effect. Neither this Subscription Agreement, nor any interest herein, shall be assignable by Subscriber without prior written consent of the Company. Subscriber hereby acknowledges and agrees that Subscriber is not entitled to cancel, terminate or revoke this Subscription Agreement and that it shall survive the death, incapacity, dissolution or bankruptcy of Subscriber. The provisions of this Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, legal representatives, successors and assigns.

c.Choice of Law. This Subscription Agreement shall be construed and interpreted in accordance with Minnesota law, without regard to its choice of law or conflicts of law provisions.

8

HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

9.    Representations and Warranties of the Company.

In consideration of Subscriber’s agreement to purchase the Units, the Company represents and warrants to Subscriber as follows:

a.    Existence. The Company is a duly organized and validly existing limited liability company under the laws of the State of Minnesota.

b.    Good Standing. The Company is in good standing under the laws of the State of Minnesota and there are no proceedings or actions pending to limit or impair any of its powers, rights, privileges, or to dissolve it.

c.    Due Authorization and Approval. The execution, delivery and performance of this Subscription Agreement and the consummation of the transactions contemplated hereby have been duly authorized by proper corporate action of the Company and do not contravene the Articles or Member Control Agreement or contractual restriction binding on or affecting the Company.

d.    Class B Units. Neither the Company nor its Board of Governors has increased the minimum ownership requirements of or placed other membership restrictions on the holders of Class B Units. The Class B Units issued pursuant to this Subscription Agreement are identical to the Company’s Class A Units with respect to all rights and privileges.

e.    Units. Upon receipt of full payment for the Units, the Units shall be duly authorized, fully-paid, validly issued and non-assessable Units of the Company.

10.    Additional Agreements.

a.    Subscription Supplement Agreement; Voting Agreement to Waive Purchase Option. As a material part of the consideration for each party to enter into and accept this Subscription Agreement, the parties acknowledge that they have entered into the Subscription Supplement Agreement and the Voting Agreement to Waive Purchase Option contemporaneously with this Subscription Agreement, and all respective representations, warranties, agreements and covenants of the parties thereunder shall be in addition to, and not limited by, superseded, or replaced by, the representations, warranties, agreements and covenants of the parties hereunder.

    * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

9

HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

SIGNATURE

/s/ Ron Fagen                    

Subscriber (Signature) Subscriber (Signature, if more than one investor)

Project Viking, LLC                

Print Name of Subscriber Print Name of Subscriber (If more than one investor)

/s/ Ron Fagen, President & Managing Member

Name and Title of Signatory (for entities)

Address:

501 W. Highway 212                

P.O. Box 159                    

Granite Falls, MN 56241            

NOTE: Please be certain to complete the Subscriber Information Page attached hereto and, if Subscriber is an entity, the attached Certificate of Signatory.

ACCEPTANCE OF SUBSCRIPTION AND AGREEMENT TO TERMS

The Company hereby accepts the subscription evidenced by this Subscription Agreement including Investment Representations, effective as of July 31, 2013.

HERON LAKE BIOENERGY, LLC

By: /s/ Robert Ferguson                    

Its: CEO            

10

EXHIBIT 10.2

SUBSCRIBER INFORMATION

Project Viking LLC                                            

(Please print name(s) in which the Note is to be issued)

25-1922419                        ________________________________

Taxpayer I.D. No.                    Taxpayer I.D. No.

(If more than one investor)

501 W. Hwy 212 – P.O. Box 159                                

Address

City: Granite Falls         State: MN         Zip Code:56241            

Telephone Number: (320) 564-3324                                

Name of Authorized Representative (if other than individual): Ron or Diane Fagen            

Form of Ownership: (check one)

__________ Individual Ownership         Tenants in Common

__________ Joint Tenants (JTWROS)         Corporation

x Limited Liability Company         Trust (Signature and title pages of Trust

Agreement and all amendments must

be enclosed)

Trustee Name:

Trust Date:

Other: Provide information below.

HERON LAKE BIOENERGY, LLC JULY 31, 2013

PRIVATE PLACEMENT

SUBSCRIPTION AGREEMENT

CERTIFICATE OF SIGNATORY

(To be completed if Units are being subscribed for by an Entity)

I, Ron Fagen                , am the President & Managing Member      of Project Viking, LLC                                     (the "Entity").

I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of this Subscription Agreement and to purchase and hold the Units pursuant to the terms of this Subscription Agreement and the Company’s Articles and the Member Control Agreement, and to act on behalf of the Entity with respect to any actions or consents of the Entity required thereunder or this Subscription Agreement. I further certify that this Subscription Agreement and such actions or consents been duly and validly executed on behalf of the Entity and each constitutes a legal and binding obligation of the Entity.

IN WITNESS WHEREOF, I have set my hand hereto effective July 31            , 2013.

/s/ Roland J. Fagen                    

(Signature)

President & Managing Member            

(Title)

Roland J. Fagen                    

(Please Print Name)

12

EX-10.3

EXHIBIT 10.3

SUBSCRIPTION SUPPLEMENT AGREEMENT

This Subscription Supplement Agreement (this “Agreement”) is made and entered into as of July 31, 2013 (the “Effective Date”), by and among Heron Lake BioEnergy, LLC (the “Company”), Granite Falls Energy, LLC, a Minnesota limited liability company (“GFE”) and Project Viking, L.L.C., a Minnesota limited liability company (“Project Viking”) (each of the Company, GFE and Project Viking, a “Party” to this Agreement, and collectively, the “Parties”).

RECITALS

WHEREAS, on the Effective Date, Project Viking subscribed for 8,075,000 Class A capital units and 15,000,000 Class B capital units of the Company (collectively, the “Purchased Units”), at a purchase price of $0.30 per capital unit, upon the terms and conditions set forth in a Subscription Agreement of even date herewith (the “Viking Subscription Agreement”), for a total purchase price for the Purchased Units of $6,922,500.00;

WHEREAS, immediately following execution and delivery of the Viking Subscription Agreement to the Company, acceptance by the Company, and delivery by wire transfer of the total purchase price for the Units by Project Viking, GFE acquired and fully-paid for 100% of the membership interests of Project Viking (including all governance rights and financial rights) from Roland J. Fagen and Diane K. Fagen pursuant to a Membership Interest Purchase Agreement of even date herewith, said acquisition effective on the Effective Date;

WHEREAS, to supplement the Viking Subscription Agreement, the Parties desire to make certain representations and warranties to one another as provided in this Agreement;

WHEREAS, the Company, GFE and Project Viking have reached agreement with respect to the appointment of governors to the Company’s Board of Governors (the “Board”), the voting of any Class A Units or Class B Units including the Purchase Units (collectively, the “Units”) held by Project Viking on certain matters, and certain other governance matters, as provided in this Agreement;

WHEREAS, the Company is also offering a maximum of $12 million in aggregate principal amount of promissory notes (the “Offering”) titled “7.25% Secured Subordinated Notes due 2018” (the “Notes”) pursuant to the terms of that certain Confidential Disclosure Statement dated June 11, 2013, as supplemented on June 21, 2013 (the “Disclosure Statement”);

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows:

1.Governance Agreements. The Company, Project Viking, GFE each agree as follows:

1

EXHIBIT 10.3

a.The Company acknowledges and agrees that following the issuance of the Purchased Units to Project Viking on the Effective Date, Project Viking owns ***24,080,949*** Class A Units of the Company and ***15,000,000*** Class B Units of the Company, for a total of ***39,080,949*** Units of the Company, which number of Units held by Project Viking constitutes a majority of the Units outstanding as of the Effective Date.

b.As of the close of business on the Effective Date, under Section 5.3(a)(iv) of the Member Control Agreement of the Company as amended through August 30, 2011 (the “Member Control Agreement”), a copy of which was attached to the Disclosure Statement as Appendix B, Project Viking is entitled to appoint five (5) governors to the Board.

c.One of the five (5) elected governors currently serving on the Board of Governors of the Company shall resign from the Board, effective as of the close of business on the Effective Date. The written resignation shall be made in writing and shall be delivered to the acting President of the Board on August 1, 2013, and said resignation shall not require acceptance of resignation to make it effective. The elected governor who resigns shall serve as an alternate to the remaining four (4) elected governors.

d.Project Viking hereby provides written notice to the Board and the Company that Kenton Johnson and Steve Core are removed from the Board, effective as of close of business on the Effective Date. Project Viking hereby appoints the following five (5) governors to the Board pursuant to Section 5.3(a)(iv) of the Member Control Agreement, effective as of the close of business on the Effective Date: Paul Enstad, Rodney Wilkison, Dean Buesing, Marten Goulet, and Shannon Johnson. Project Viking hereby appoints Leslie Bergquist and David Thompson to serve as alternates to the five (5) Project Viking appointed governors.

e.Alternates will receive notice of all Board meetings and all information provided the Board. Alternates shall be entitled to attend all meeting of the Board. Alternates shall not be entitled to vote at Board meetings, provided that alternates may participate in Board meetings, and provided further that alternates shall serve as replacement governors and shall be entitled to vote at any Board meeting at which the appointed governor or elected governor for which the alternate is serving as alternate is absent.

f.Project Viking shall cause each governor it has a right to appoint under Section 5.3(a)(iv) to vote in favor of the Specified Amendments and in favor of such matters as are necessary to call a meeting of the members as soon as practicable following the Effective Date to consider the Specified Amendments and provide a Board recommendation to vote in favor of the Specified Amendments. The term “Specified Amendments” shall mean (i) an amendment to Section 5.1(c) of the Member Control Agreement to add those actions identified in Section 5.1(d)(i)-(iv) of the Member Control Agreement to the actions, agreements, instruments or items specified in Section 5.1(c) that require the affirmative vote of at least two-thirds of the voting power of the

2

EXHIBIT 10.3

governors in office, (ii) an amendment to Section 5.1(k) of the Member Control Agreement to add provisions consistent with this Agreement relating to alternates acting in the place and stead of absentee governors, and (iii) and amendment to Section 6.2(a) to delete the last sentence thereof.

g.At any meeting, and at every adjournment or postponement thereof, with respect to outstanding Units owned beneficially or of record by Project Viking, Project Viking shall: (i) appear at such meeting or otherwise cause such Units to be counted as present thereat for purposes of establishing a quorum; (ii) vote or cause to be voted such Units in favor of the Specified Amendments and any action required in furtherance thereof; and (iii) vote or cause to be voted, or execute consents in respect of, such Units against any proposal, action or transaction presented to the members of the Company (regardless of any recommendation of the Board) or in respect of which vote or consent of Project Viking is requested or sought (A) that could reasonably be expected to prevent or materially impede or delay the effectiveness of the Specified Amendments (including any proposal to amend Section 5.1(c) of the Member Control Agreement in a manner other than the Specified Amendments), (B) to change in any manner the voting rights of the Units or the appointment rights of Members or their Affiliates, or (C) to alter or amend in any manner Section 5.6 or Section 5.8 with respect to contracts or transactions between the Company and Governors or their Affiliates.

h.Until the approval of the Specified Amendments by members, Project Viking shall cause each governor it has a right to appoint under Section 5.3(a)(iv) to vote in favor of any action identified in Section 5.1(d)(i)-(iv) of the Member Control Agreement only if at least one elected governor then serving on the Board also votes in favor of such action.

i.Project Viking hereby covenants and agrees that, except for actions taken in furtherance of this Agreement, Project Viking (i) has not entered, and shall not enter at any time while this Agreement remains in effect, into any voting agreement or voting trust with respect to the Units owned beneficially or of record by Project Viking or its Affiliates; and (ii) has not granted, and shall not grant at any time while this Agreement remains in effect, a proxy, consent or power of attorney with respect to the Units owned beneficially or of record by Project Viking or its Affiliates that is inconsistent with Project Viking or its appoint governors obligations under this Agreement. During the term of this Agreement, Project Viking shall not take any action that would in any way restrict, limit or interfere with the performance of Project Viking’s obligations hereunder or the effectiveness of the Specified Amendments as contemplated hereby on a timely basis.

j.GFE shall cause Project Viking to act in compliance with its covenants and obligations under this Agreement and the Viking Subscription Agreement.

2.Company Representations and Warranties.The Company represents and warrants to Project Viking that:

3

EXHIBIT 10.3

a.The Company is authorized to issue 80,000,000 capital units, of which 65,000,000 capital units are designated as Class A Units and 15,000,000 capital units are designated Class B Units. Immediately prior to the Effective Date, 38,622,107 Class A Units are issued and outstanding and no Class B Units are issued and outstanding. Following completion of the Offering and the issuance of the Purchased Units to Project Viking pursuant to the Viking Subscription Agreement, and assuming Project Viking elects to convert its Interim Subordinated Note in the amount of $102,000.00 to capital units, Project Viking shall own, on a fully diluted basis, a majority of the issued and outstanding capital units of the Company.

b.The Company has placed no increased minimum ownership requirements or other membership restrictions on the holders of Class B Units.

c.Other than the Viking Subscription Agreement, there are no outstanding subscriptions, options, warrants, calls, contracts, demands, commitments, convertible securities or other agreements or arrangements of any character or nature whatever under which the Company is obligated to issue any securities of any kind representing an ownership interest in the Company, except for subscriptions for approximately $6,650,000 in principal amount of Notes (“Member and Non-Member Subscriptions”) currently held in escrow, $1,407,000 in principal amount of Interim Subordinated Notes (as defined in the Disclosure Statement) to be exchanged for an equal principal amount of Notes, and the Units issuable upon conversion of the Notes. With respect to Member and Non-Member Subscriptions currently held in escrow or subscriptions for Notes subsequently received by the Company, the Company shall accept no more than $3,670,500 of such subscriptions. For the sake of clarity, such maximum amount does not include the principal amount of the Interim Subordinated Notes or any exchange for Notes therefor.

d.Within ten (10) days following the Effective Date, the Company will initiate a confirmation/re-subscription process with all Member and Non-Member Subscriptions and holders of the Interim Subordinated Notes by: (i) providing such persons and the other members of the Company a supplement to the Disclosure Statement that describes (1) the change of ownership of Project Viking and its material terms, (2) the Viking Subscription Agreement, (3) the material terms of this Agreement including exhibits, (4) updated AgStar information, and (5) such other material information determined by the Company; and (ii) allowing such persons to (1) confirm / re-subscribe their subscription or Interim Subordinated Notes for Notes pursuant to the terms of the Offering under the Disclosure Statement, as supplemented or amended, or (2) elect to convert the principal amount of their subscription or Interim Subordinated Notes into a subscription for capital units, at the rate of $0.30 per unit. The subscription payments of such persons (other than the holders of the Interim Subordinated Notes, who shall not have the right to rescind their obligation to exchange the Interim Subordinated Notes for Notes under the Offering or capital units) who do not affirmatively confirm / re-subscribe their subscription by the end of the confirmation / re-subscription period (which shall be

4

EXHIBIT 10.3

no later than August 31) shall be returned promptly to the subscriber from escrow without interest or deduction.

e.At the end of the confirmation / re-subscription period, the Company will accept all confirmed / re-subscribed subscriptions in the Offering for Notes or capital units in the original order in which the subscription was received, on a first-come, first-served basis, to purchase $3,670,500 in principal amount of Notes or capital units, such that the Company shall issue a maximum of $5,077,500 in principal amount of Notes or capital units (at $0.30 per unit) in the Offering, including the Notes exchanged for the $1,407,00 in Interim Subordinated Notes, but excluding the Purchased Units issued to Project Viking pursuant to the Viking Subscription Agreement. If the principal amount of confirmed / re-subscribed subscriptions of Member and Non-Member Subscriptions is less than $3,670,500, the Company shall continue to offer Notes pursuant to the terms of the Offering in the Disclosure Statement (as supplemented or amended). The Company shall not issue more than $5,077,500 in principal amount of Notes or capital units (at $0.30 per unit) in the Offering, including the Notes exchanged for the $1,407,000 in Interim Subordinated Notes.

f.Neither the offer nor the issuance or sale of the Purchased Units or the Notes constitutes an event, under any anti-dilution provisions of any securities issued or issuable by the Company or any agreements with respect to the issuance of securities by the Company, which will either increase the number of Units issuable pursuant to such provisions or decrease the consideration per Units to be received by the Company pursuant to such provisions. No holder of any security of the Company is entitled to any preemptive or similar rights to purchase any securities of the Company, except as provided in the Notes.

g.The Company has no outstanding or contingent obligations to repurchase or redeem any of its securities from holders thereof except for the exchange of Interim Subordinated Notes for Notes. The Company is not a party or subject to any agreement or understanding, and to the knowledge of the Company, there is no agreement or understanding, that effects or relates to transfers, voting or the giving of written consents with respect to any security of the Company, or by any member of the Board, except for the Member Control Agreement and this Agreement.

h.All corporate action necessary to the issuance and delivery of the Purchased Units to Project Viking has been taken by the Company or will be taken by the Company on or prior to the Effective Date. When (i) the terms of the Notes have been established in accordance with the Indenture in the form attached as Appendix E to the Disclosure Statement, (ii) the Indenture has been validly executed and delivered by the Company and the trustee thereunder and (iii) the Notes have been executed, issued, delivered and authenticated in accordance with the terms of the Indenture and the applicable subscription agreement against the receipt of requisite consideration therefor provided for therein, the Notes will constitute legal, valid and binding obligations of the Company, except as enforcement thereof may be limited by applicable bankruptcy,

5

EXHIBIT 10.3

insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles. With respect to the Units issuable upon conversion of the Notes, when the Units have been issued and delivered in accordance with the terms of the Note, such Units will be validly issued, fully paid and non-assessable.

i.The execution, delivery and performance of this Agreement has been duly authorized and approved by proper corporate action of the Company, and does not contravene the Articles of Organization or Member Control Agreement of the Company or any law or contractual restriction binding on or affecting the Company.

j.As of the date hereof, the Company does not have any liabilities, obligations or commitments, except for liabilities, obligations or commitments which (i) are described in, set forth or referenced in the periodic reports and schedules filed by the Company with the SEC (including all exhibits and financial statements and financial statement schedules attached thereto or included therewith) or the unaudited financial statements that are referred to or referenced in Section 2.a. of the Viking Subscription Agreement, (ii) fully-covered by insurance, except for reasonable deductibles or self-insured retention levels, (iii) incurred in the ordinary course of business consistent with past practices, (iv) are described in, set forth or referenced in the Disclosure Statement, as supplemented or amended, including all appendices, (v) arise under this Agreement or the Viking Subscription Agreement, (vi) individually or in the aggregate would not have a material adverse effect on the business, property, operations or financial condition of the Company, or (vii) which have otherwise been disclosed to GFE or its representatives.

k.As of the date hereof, the Company is in compliance in all material respects with all applicable laws the violation of which would have a material adverse effect on the Company and its business as currently conducted. As of the date hereof, the Company has all material licenses and permits required by law or otherwise necessary for the proper operation of its business as currently conducted, and all of such licenses and permits are in full force and effect.

l.Since the date of the Disclosure Statement, the Company’s ethanol plant has operated in the ordinary course of business consistent with past practice and its nameplate capacity, ordinary wear and tear excepted.

m.Notwithstanding anything herein or in the Viking Subscription Agreement to the contrary, except for the due authorization and approval representation and warranty made by the Company under Section 2.h. hereof, no warranty or representation is made regarding any shareholder or member claim asserting breach of fiduciary duty by the Board or its governors or violation of the Member Control Agreement or applicable law in connection with the Offering or the Viking Subscription Agreement or this Agreement or the absence thereof.

3.Representations of GFE and Project Viking.

6

EXHIBIT 10.3

a.GFE and Project Viking each represent and warrant to the Company that as of the Effective Date, GFE has acquired and fully-paid for 100% of the membership interests of Project Viking, GFE has sole voting and dispositive power over all of the Units and Interim Subordinated Notes held by Project Viking, with no limitations, qualification or restrictions on such rights imposed by Roland J. Fagen, Diane K. Fagen or any other person as a result of the sale and transfer to GFE from Roland J. Fagen and Diane K. Fagen of 100% of the membership interests in Project Viking.

b.In consideration of the Company’s offer to sell and sale and issuance of the Purchased Units to Project Viking, GFE hereby represents and warrants and covenants to the Company each of the representations, warranties and covenants set forth in Sections 2, 3, 5, 6, 7, 8 and 10 of the Viking Subscription Agreement, including without limitation that GFE has received and carefully read the Disclosure Statement and appendices thereto.

c.GFE represents and warrants to the Company thatthe execution, delivery and performance of this Agreement has been duly authorized and approved by proper corporate action of GFE, and does not contravene GFE’s organizational documents or any law or contractual restriction binding on or affecting GFE.

d.Project Viking represents and warrants to the Company thatthe execution, delivery and performance of the Viking Subscription Agreement and this Agreement has been duly authorized and approved by proper corporate action of Project Viking, and does not contravene Project Viking’s organizational documents or any law or contractual obligation or restriction binding on or affecting Project Viking.

4.Management Agreement. GFE and the Company agree to execute and enter into the Management Services Agreement attached hereto as Exhibit A, effective as of the Effective Date.

5.Agrinatural Gas, LLC. GFE, the Company, and Project Viking each agree to execute and deliver the Voting Agreement to Waive Purchase Option in the form attached hereto as Exhibit B.

6.Specific Performance. Each Party acknowledges and agrees that irreparable injury to the other Parties hereto would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that such injury may not be adequately compensable by the remedies available at law (including the payment of money damages).  It is accordingly agreed that each Party (the “Moving Party”) shall each be entitled to specific enforcement of, and injunctive relief to prevent any violation of, the terms hereof, without the requirement to post bond or other security, and no other Party hereto will take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in equity.  Each of the Parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement for specific performance or for recognition and enforcement of any judgment in respect of this Agreement shall be brought and determined exclusively in the state or federal court of Minnesota

7

EXHIBIT 10.3

and any state or federal appellate court therefrom within the State of Minnesota or the Eighth Judicial Circuit.  Each of the Parties hereto hereby irrevocably submits, with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any such action in any court other than the aforesaid courts.  Each of the Parties hereto hereby irrevocably waives, and agrees not to assert in any such action or proceeding, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any such legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by applicable legal requirements, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) such action may not be enforced in or by such courts. This Section 6 is not the exclusive remedy for any violation of this Agreement.

7.Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.  It is hereby stipulated and declared to be the intention of the Parties that the Parties would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may be hereafter declared invalid, void or unenforceable.  In addition, the Parties agree to use their best efforts to agree upon and substitute a valid and enforceable term, provision, covenant or restriction for any of such that is held invalid, void or enforceable by a court of competent jurisdiction.

8.Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Minnesota without reference to the conflict of laws principles thereof. Notwithstanding any provision of the Member Control Agreement to the contrary, and except for actions brought under Section 6 of this Agreement, the Parties agree to resolve disputes arising out of or relating to this Agreement or the Viking Subscription Agreement pursuant to this Section 8. If any dispute arises out of or relates to this Agreement or the Viking Subscription Agreement, the parties agree first to try in good faith to settle the dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association, before resorting to arbitration. Thereafter, any remaining unresolved controversy or claim arising out of or relating to this Agreement or the Viking Subscription Agreement, or the performance or breach thereof, shall be settled by binding arbitration pursuant to the Commercial Arbitration Rules of the American Arbitration Association; PROVIDED, that this Section 8 shall not require use of the American Arbitration Association (only that such Rules as modified by this Section 8 shall be followed). The arbitration shall be conducted in the State of Minnesota. Any award rendered shall be final and conclusive upon the parties and a judgment thereon may be entered in any court having competent jurisdiction. The cost and expense of the arbitrator and location costs shall be borne equally by the parties to the dispute. All other costs and expenses, including reasonable attorney's fees and expert's fees, of all parties incurred in any dispute which is

8

EXHIBIT 10.3

determined and/or settled by arbitration pursuant to this Section 8 shall be borne by the party incurring such cost and expense.

9.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Parties (including by means of electronic delivery or facsimile).

10.Entire Agreement; Amendment and Waiver; Successors and Assigns; Third Party Beneficiaries.This Agreement contains the entire understanding of the Parties hereto with respect to its subject matter.  There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings between the Parties other than those expressly set forth herein.  No modifications of this Agreement can be made except in writing signed by an authorized representative of each the Company, GFE and Project Viking.  No failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.  The terms and conditions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties hereto and their respective successors, heirs, executors, legal representatives, and permitted assigns.  No Party shall assign this Agreement or any rights or obligations hereunder without, with respect to Project Viking or GFE, the prior written consent of the Company, and with respect to the Company, the prior written consent of Project Viking and GFE.  This Agreement is solely for the benefit of the Parties hereto and is not enforceable by any other persons.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the Parties as of the date hereof.

HERON LAKE BIOENERGY, LLC

By: /s/ Robert Ferguson             

Its: CEO                    

Name: Robert J. Ferguson            

GRANITE FALLS ENERGY, LLC

By: /s/ Paul Enstad                

Its: Chairman                    

Name: Paul Enstad                

9

EXHIBIT 10.3

PROJECT VIKING, L.L.C.

By: /s/ Paul Enstad                

Its: President                    

Name: Paul Enstad                

10

EX-10.4

EXHIBIT 10.4

MANAGEMENT SERVICES AGREEMENT

(INDEPENDENT CONTRACTOR AGREEMENT)

This MANAGEMENT SERVICES AGREEMENT (“Agreement”) is made and entered into to be effective as of the 31^st day of July, 2013, by and between Granite Falls Energy, LLC, a Minnesota Limited Liability Company (“GFE”) and Heron Lake BioEnergy, LLC, a Minnesota Limited Liability Company (“Heron”) and is as follows:

RECITALS

1.    WHEREAS, GFE currently owns and operates an ethanol facility; and Heron currently owns and operates an ethanol facility; and

2.    WHEREAS, Heron desires to obtain management services; and

3.    WHEREAS, each requires terms and conditions as necessary to protect each company’s confidential/proprietary/trade secret information; and such terms and conditions as will cause all management employees to respect the separate interests and objectives of each company; and

4.    WHEREAS, the parties have had discussions regarding such management services, have reached agreement as to the same, and wish to put their understandings and agreements in writing.

NOW, THEREFORE, for good and valuable consideration, the parties agree as follows:

1.    MANAGEMENT SERVICES. GFE shall provide management services to Heron with respect to the following job descriptions and titles:

a. Positions Provided by GFE to Heron. GFE shall provide to

Heron the following management services, to-wit:

i. Chief Executive Officer (CEO);

ii.    Chief Financial Officer (CFO); and

iii.    Commodity Risk Manager.

b.    Time Commitment.

i.    Each person providing services shall devote such time as is

1

reasonably necessary to perform the services for Heron.

ii. Each person shall use their best efforts when performing work for

Heron.

iii.    Approximate hours worked per week by each position shall be disclosed at semi-annual meetings and reported to Heron no less than semi-annually.

c.    Reporting and Organization. Each person filling one of the above described positions shall report as follows:

i.    The CEO shall report directly to the Heron Board of Directors.

ii.    The Heron Board of Directors reserves the right to require, from time to time, any of the above named persons to do such work or make such reports directly to or for the Heron Board.

iii.    The CEO shall be solely responsible for hiring and firing of persons providing the management services as described herein.

iv.    Nothing herein is intended to create an employment contract, or guaranty of employment, or a guaranty of employment for any length of time to any person. Each person providing management services hereunder shall, at all times, remain the employee of GFE designated to provide services as stated herein.

2.    TERM AND TERMINATION. The initial term of this Agreement, subject to the remaining terms and conditions hereof, shall be for three years from the effective date as stated in the preamble hereof. With respect to the term and termination hereof:

a.    Evergreen. At the expiration of the initial term, this Agreement shall continue from year to year under its then existing conditions unless and until a party hereto gives the other no less than ninety (90) days written notice of termination prior to expiration of the initial term or of the one year extension then in effect.

b.    Termination for Cause. Notwithstanding the foregoing, this Agreement may be terminated for cause, as follows:

i. If a party seeks to terminate this Agreement for cause, it shall deliver to the other party written notice of termination; which notice shall describe the basis for determining cause exists; and which notice shall provide 30 days notice and opportunity to cure.

2

In the event that basis for determining cause has not been cured to the reasonable satisfaction of the party giving notice within 30 days, then the party may deliver notice that this Agreement has been terminated.

ii.    Cause means:

A.    A material breach of this Agreement. Material breach shall be: a failure of a party (to include failure of the person being provided by a party) to comply with applicable laws or regulations; a willful breach by a party (to include a person being provided by a party) of a term of this Agreement; or acts or conduct by a party (to include a person being provided by a party) which demonstrates intentional misconduct, reckless misconduct or grossly negligent misconduct.

B.    A deadlock in the management of Heron. Deadlock shall be the occurrence of disagreements between the Board of Heron which, in the opinion of the GFE Board, has impaired the ability of the management team to carry out the policies and/or procedures as directed by one or both Boards of Directors.

c.    Return of Confidential Information. Upon termination each party shall return to the other all of the other’s Confidential Information that may be in possession of the returning party.

d.    Surviving Obligations. Payment of any reimbursement obligations which have accrued and are unpaid as of the date of termination, together with the obligations of the parties as set forth at Sections 4 – 7 hereof, shall survive termination hereof. In all other respects the obligations of the parties to each other shall cease upon termination hereof.

3.    REIMBURSEMENT. The parties intend and agree that compensation by Heron to GFE shall occur as follows:

a.    Compensation. GFE shall be responsible for and shall directly pay salary, wages, and/or benefits to the persons providing the management services hereunder.

b.    Payment for Management Services. Heron shall pay GFE Thirty-five Thousand and no/100 Dollars ($35,000.00) per month for the first year for the management services provided hereunder. For years two and three, Heron shall pay GFE one-half (1/2) of the total salary, bonuses, and other +expenses and costs (including all benefits and tax contributions) incurred by GFE for the three management positions described at paragraph 1(a). Such will be

3

paid on an estimated monthly basis with a “true up” occurring as soon as possible at the end of each fiscal year of GFE.

c.    Reimbursement of Costs. Any costs incurred in providing the management services, outside the scope of normal duties and activities, shall be reimbursed by Heron to GFE at reasonable and customary rates of reimbursement. (Such to include, but not be limited to, mileage, hotel rooms, etc.)

d.    Payment. Payment by Heron to GFE for all amounts due GFE, shall occur on the 10^th day of each month. Payments for any partial month(s) of services shall be prorated.

4.    SEPARATE RIGHTS AND RESPONSIBILITIES OF GFE AND HERON. The parties agree that to the following reservation of their separate rights and statement of their separate responsibilities, to-wit:

a.    Separate Authority. Nothing herein shall be construed as a grant of authority by GFE as to Heron, or by Heron as to GFE, to make any management or other business decision for the other; or to exercise or seek to exercise a controlling influence over any management policies of the other.

b.    Preserve Competition. GFE and Heron acknowledge that they are competing business entities with different ownership. The CEO and CFO shall be advised by GFE to observe all laws related to price and/or competition in carrying out this Agreement; and to implement such processes to ensure ongoing compliance with such laws by all employees providing management services hereunder.

c.    Insurance. During the term hereof each party shall maintain Workers’ Compensation Insurance at statutory limits; as well as comprehensive liability insurance for all injuries or property damage which may occur on account of services performed hereunder – with such insurance having mutually acceptable terms and limits; with each party being named as an additional insured of the other (except regarding the Worker’s Compensation policy whereby each party shall add the Alternate Employer endorsement to the respective Worker’s Compensation policy naming the other party as the Alternate Employer); with such policies having an endorsement of no cancellation without notice to both parties hereto; and said policies having a Waiver of Subrogation on all policies, including the property, where allowed by law.

5    CONFIDENTIALITY AND COMPETITION COVENANTS. With respect to confidentiality and competition covenants, the parties agree:

a. Confidentiality. With respect to confidentiality:

4

i.    Each person providing management services hereunder shall protect from unauthorized disclosure – either to third parties (with respect to management services), or to GFE or Heron as the case may be (with respect to information that is beyond the scope of management service) – information which GFE and/or Heron consider non-public, confidential, or proprietary in nature. Such non-public, confidential, and/or proprietary information (collectively “Confidential Information”) may include, without limitation, customer lists, contracts, planning and financial information, business plans and strategies, marketing plans, development plans, technical and business information, customer information, pricing information, sales information, any formulas/devices/methods/techniques, or other information which has independent economic value because of not being generally known, and which GFE or Heron, as the case may be, has protected through reasonable efforts regarding maintenance of secrecy.

ii.    The parties agree that Confidential Information shall not include: information that, at the time of disclosure hereunder, is in the public domain; information that, after disclosure hereunder, enters the public domain other than by breach of this Agreement or the obligation of confidentiality stated herein; information that, prior to disclosure hereunder, was already in a party’s possession, either without limitation on disclosure to others or subsequently becoming free of such limitation; information obtained by either party from a third party having an independent right to disclose the information; information that is available through discovery by independent research without use of or access to the confidential information acquired from the other party; information disclosed upon the order of a court or other authorized governmental entity, or pursuant to other legal requirements – provided that prior to such disclosure, the disclosing party shall first timely inform the other party of such disclosure request so that the other party may seek a protective or equivalent order for non-disclosure – and provided that the disclosing party shall limit any such disclosure to the greatest extent permitted by law.

iii.    The persons performing services pursuant to this Agreement shall sign Confidentiality Agreements binding each such person to the confidentiality obligations set forth above.

b.    No Solicitation. GFE hereby warrants to Heron and Heron hereby warrants to GFE that each shall not, directly or indirectly, either for itself or for any other person, firm or corporation solicit for employment, retain or employ

5

any present employee of the other party, or request, induce or advise any employee to leave the employ of or cease affiliation with the other party.

c. The provisions as set forth in this Section 5 shall survive termination of this Agreement for a period of three (3) years.

6.    INDEMNIFICATION. From and after the date hereof, and except as otherwise provided for herein:

a.    GFE Indemnification of Heron. GFE shall indemnify, defend and hold harmless Heron against: (i) all losses, claims, damages, costs, expenses, liabilities or judgments or amounts that are paid in settlement of or in connection with any claim, action, suit, proceeding or investigation to the extent the same is caused in whole or in part by GFE, (ii) or, on account of a breach of GFE’s obligations hereunder.

b.    Heron Indemnification of GFE. Heron shall indemnify, defend and hold harmless GFE against: (i) all losses, claims, damages, costs, expenses, liabilities or judgments or amounts that are paid in settlement of or in connection with any claim, action, suit, proceeding or investigation to the extent the same is caused in whole or in part by Heron, (ii) or, on account of a breach of Heron’s obligations hereunder.

c.    Limitations on Indemnification Obligation. Neither Heron nor GFE shall be required to indemnify the other for any direct claim by the other that it has suffered consequential damages or lost profits; nor shall the requirement to indemnify extend to consequential damages or lost profits claimed by a third party and which – but for this Section 6(c) – would be included in the indemnification obligations listed at Sections 6(a) and 6(b) above.

d.    Survival of Obligations. The provisions of this Section 6 shall survive the termination of this Agreement.

7.    DISPUTE RESOLUTION. Any controversy, claim or dispute arising out of or relating to this Agreement or the breach hereof, including a dispute arising out of the negotiation, formation and execution of this Agreement, and the interpretation of this Agreement, shall be resolved as follows:

a. Meet and Confer. The Dispute Resolution Team (“DRT”) of GFE shall meet and confer – in person – with the DRT of Heron to discuss the controversy, claim or dispute in an attempt to resolve differences and reach agreement. Each party may elect to be represented by counsel or other professional advisors at such meeting. The meeting shall occur as soon as reasonably possible, but no later than ten (10) days from a written notice by a party to the other the dispute, and the request for a meeting of the Boards.

6

b. Mediation. If the controversy, claim or dispute is not resolved by a face-to-face meeting of the respective DRTs, then the DRTs shall meet with a neutral mediator in an attempt to reach a mediated settlement. The mediator shall be jointly agreed to by the parties and if they cannot agree, the court for Lyon County, Minnesota, shall be petitioned and shall appoint the mediator. Such mediation shall occur within twenty-one (21) business days of when the mediator is selected.

c. Arbitration. If the controversy is not resolved by mediation, then the controversy shall be resolved by resort to binding arbitration conducted pursuant to Minnesota Statutes and subject to the following additional requirements:

i.    Arbitration and proceeds related thereto shall be venued in Lyon County, Minnesota. The District Court in and for Lyon County, Minnesota shall have jurisdiction to direct the arbitration process; and to preserve the status quo of the parties during the pondery of arbitration.

ii.    The arbitration shall proceed as a private arbitration, without involvement of the American Arbitration Association, but otherwise pursuant to the then existing Rules of the American Arbitration Association applicable to commercial disputes.

iii.    Each DRT shall pick an arbitrator and the two arbitrators shall pick a neutral third arbitrator.

iv. The arbitration shall occur within sixty (60) days of the appointment of the final arbitrator.

v. The determination of the arbitrators shall be final and binding and each party waives the right to appeal any such decision. Judgment upon the award rendered by the arbitrators may be entered in any

court having jurisdiction thereof. The arbitrators shall decide who shall pay the costs and expenses associated with arbitration. Each party shall pay their own attorneys’ fees related to the arbitration.

d.    Role of DRT. The Dispute Resolution Team of each party shall consist of that party’s then existing Committee of Disinterested Persons together with that party’s Executive Committee. Each party’s DRT shall represent it during the dispute resolution proceedings; and the DRT shall make recommendations for final decisions regarding dispute resolution to its Board. The final decision on such recommendation shall, however, be reserved to and made by the respective Boards of the parties.

7

8.    FORCE MAJEURE. The performance of a party may be excused upon the occurrence of a Force Majeure event. A Force Majeure event shall be fire, flood, storm, act of God, governmental action or intervention, or other circumstance which is beyond the reasonable control of the party claiming the event and which renders the performance of this Agreement by a party hereto impossible. A party affected by a Force Majeure event shall not be relieved of performance unless such party has used reasonable efforts to remedy the conditions giving rise to such event; and unless and until such party has given written notice of the occurrence of such event. Either party may terminate this Agreement upon not less than thirty (30) days prior written notice if the Force Majeure event has been continuously in existence for a period of ninety (90) days.

9.    MISCELLANEOUS.

a.    Independent Contractors. At all times during this Agreement, GFE and its employees shall be deemed independent contractors. Nothing herein shall be construed to create a partnership, joint venture, agency, or any other form of business relationship between GFE and Heron. GFE and Heron acknowledge that their Agreement is strictly contractual in nature.

b.    Further Assurance. Each party agrees to execute and deliver all further instruments, legal opinions and documents, and take all further action not inconsistent with the provisions of this Agreement that may be reasonably necessary to complete performance of a party’s obligations hereunder and to effectuate the purposes and intent of this Agreement.

c.    Notice. Any and all notices provided for herein shall be given in writing by registered or certified mail, postage prepaid, which shall be addressed by either party and delivered to the other at its then existing registered office – with the initial address for notice being as follows:

i. If To GFE: ii. If To Heron: Granite Falls Energy, LLC Attn: Chairman of the Board of Directors Address: 15045 Hwy. 23 SE                 P. O. Box 216                 Granite Falls, MN 56241-0216 Heron Lake BioEnergy, LLC Attn: Chairman of the Board of Directors Address: 91246 390th Avenue
Heron Lake, MN 56137

d.    Binding Effect. This Agreement shall be binding upon the successors, legal representatives and assigns of the parties hereto, all of whom, regardless of

8

the number of intervening transfers, shall be bound in the same manner as the parties hereto.

e.    No Assignment. This Agreement shall not be assigned by either party except upon the written consent of the other party. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies under or by reason of this Agreement.

f.    Integration and Amendment. This Agreement supersedes and takes precedence over any previous agreement entered into between the parties hereto, whether written or oral, regarding the matters covered herein. This Agreement sets forth the entire understanding of the parties and may not be amended, altered or modified except by written agreement between the parties.

g. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, or affecting the validity or unenforceability of any of the other terms of this Agreement in any other jurisdiction. In the event a term or provision is invalid or unenforceable, a Court or Arbitrators (as the case may be) are granted the authority to construe, interpret, or modify this Agreement in a manner which is intended to remedy such invalidity or unenforceability while giving effect, to the greatest extent possible, to all remaining terms and provisions hereof.

h.    No Waiver. Any waiver of any of terms and/or conditions of this

Agreement by a party shall not be construed to be a general waiver of such     terms and/or conditions; and no waiver shall be effective absent the written agreement of the parties.

i.    Counter Parts. This Agreement may be executed in one or more counterparts, all of which, taken together, shall be deemed one and the same Agreement. Facsimile or electronic signatures shall be deemed original signatures for all purposes.

j.    Captions. The captions herein are inserted for the convenience of reference only     and shall be ignored in the construction or interpretation hereof.

k.    Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of Minnesota.

9

IN WITNESS WHEREOF, each party hereto has executed this Agreement effective as of the date first above written.

GRANITE FALLS ENERGY, LLC

By: /s/ Paul Enstad

       Its: Chairman

HERON LAKE BIOENERGY, LLC

By: /s/ Robert Ferguson

       Its: CEO

10

EX-10.5

EXHIBIT 10.5

SECURED PROMISSORY NOTE

$4,024,500                                        July 31, 2013

Granite Falls, Minnesota

FOR VALUABLE CONSIDERATION RECEIVED, the undersigned, GRANITE FALLS ENERGY, LLC, a Minnesota limited liability company (“Borrower”), promises to pay to the order of Roland (Ron) J. Fagen and Diane K. Fagen (collectively, “Holder”), the principal sum of Four Million Twenty-Four Thousand Five Hundred Dollars ($4,024,500) with interest on the unpaid principal balance hereof, from the date hereof until this Secured Promissory Note (“Note”) is paid in full in the following manner and upon the following terms and conditions.

1.    Payment. On August 30, 2013 (the “Maturity Date”), Borrower shall pay to the Holder the entire principal balance plus all interest that shall have accrued on the outstanding principal balance at a rate of [4%] per annum. Such payment shall be made to the Holder of this Note in immediately available United States funds by wire to an account designed by Holder or, if Holder does not upon request of Borrower designate an account, such payment shall be delivered to Holder at P.O. Box 159, 501 West Highway 212, Granite Falls, MN 56242 or at such other place as Holder shall have designated to Borrower in writing.

2.    Prepayment. Borrower may prepay all or any portion of this Note at any time or times prior to the Maturity Date and in any amount without premium or penalty.

3.    Events of Default. This Note shall become due and payable immediately, without notice, upon the occurrence of one or more of the following events (each an “Event of Default”):

(a)    Borrower fails to pay when due any amount due under this Note; or

(b)    Borrower shall breach any provision of that certain Membership Interest Purchase Agreement, including, without limitations, the restrictions and obligations contained Section 4.4 thereof.

4.    Remedies; Security. Upon an Event of Default, Holder may declare that all unpaid principal and interest due under this Note are due and payable immediately (without presentment, notice or demand), and Holder shall have the right to exercise and enforce any or all rights or remedies available to Holder in law or equity. Borrower shall also pay all reasonable costs of collection, including reasonable attorneys’ fees, if any payment due hereunder is not made when due, or any other Event of Default occurs, whether or not litigation is commenced. This Note was entered into in connection with that certain Membership Interest Purchase Agreement, dated as of even date herewith between Holder and Borrower, pursuant to which, among other things, in Section 4.4 thereof Borrower has granted to Holder a first priority security interest in the membership interests of Project Viking, L.L.C. (the “Security Agreement”). This Note shall be secured by the Security Agreement, as the same may be amended from time to time.

EXHIBIT 10.5

5.    Waiver; Delay; Partial Exercise. Borrower waives demand, presentment, notice of non-payment, dishonor, protest, and notice of protest, and will continue to remain liable to pay the unpaid principal balance of the indebtedness evidenced by this Note, if the Note is extended, renewed, or modified. No delay or omission on the part of Holder in exercising any power or right hereunder will impair such right or power or be construed to be a waiver thereof or acquiescence in default, nor shall any single or partial exercise of such power or right hereunder preclude any full exercise of such power or right or of any other power or right. To be effective, any waiver must be in writing and signed by Holder.

6.    Successors and Assigns. This Note shall inure to the benefit of the heirs, successors and assigns of Holder and be binding upon Borrower and its successors and assigns, provided that Borrower may not assign or transfer this Note without the prior written consent of Holder.

7.    Governing Law. This Note shall be governed by the laws of the State of Minnesota without regard to the conflict of laws principles thereof.

8.    Unenforceability. If any provision of this Note shall be declared void or unenforceable by any judicial or administrative authority, the validity of any other provisions and of the entire Note shall not be affected thereby.

9.    Entire Agreement. This Note, and the Security Agreement contained within the Membership Interest Purchase Agreement, represent the complete agreement of the parties with respect to the transactions contemplated hereby and supersedes all prior oral or written agreements and understandings regarding the subject matter hereof. No amendment to this Note shall be valid unless made in a written amendment executed on behalf of Borrower and Holder.

IN WITNESS WHEREOF, this Note has been executed as of the date first above written.

BORROWER:

GRANITE FALLS ENERGY, LLC

By:    /s/ Paul Enstad            
Its:    Chairman            

EX-10.6

EXHIBIT 10.6

PROMISSORY NOTE

Principal $5,000,000.00	Loan Date 07-23-2013	Maturity 09-23-2013	Loan No 28407	Call/Coll 55	Account	Officer JOHN	Initials
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item containing “***” has been omitted due to text length limitations.

Borrower: PROJECT VIKING, LLC	Lender: GRANITE FALLS BANK
ROLAND J. FAGEN	702 PRENTICE ST.
108 MILLER CIRCLE	PO BOX 8
GRANITE FALLS, MN 56241	GRANITE FALLS, MN 56241
	(320) 564-2111

_____________________________________________________________________________________________________________________

Principal Amount: $5,000,000.00         Date of Note: July 23, 2013

PROMISE TO PAY. PROJECT VIKING, LLC; and ROLAND J. FAGEN ("Borrower") jointly and severally promise to pay to GRANITE FALLS BANK ("Lender"), or order, in lawful money of the United States of America, the principal amount of Five Million & 00/100 Dollars ($5,000,000. 00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an interest rate of 3.990% per annum based on a year of 360 days. Interest shall be calculated from the date of each advance until repayment of each advance. The interest rate may change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.

PAYMENT. Borrower will pay this loan in full immediately upon Lender's demand. If no demand is made, Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on September 23, 2013. Unless otherwise agreed or required by applicable law, payments will be applied ·first to any accrued unpaid interest; then to principal; and then to any unpaid collection costs. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.

INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ration of the interest rate of a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: GRANITE FALLS BANK, 702 PRENTICE ST. PO Box 8,GRANITE FALLS, MN 56241.

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by 3.000 percentage points. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note:

Payment Default. Borrower fails to make any payment when due under this Note.

EXHIBIT 10.6

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any· of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect,either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Death or Insolvency. The dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from Borrower, or any other termination of Borrower's existence as a going business or the death of any member, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor to or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by· Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity. Lender in good faith believes itself insecure.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including reasonable attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of YELLOW MEDICINE County, State of Minnesota.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all

EXHIBIT 10.6

such accounts, and, at Lender 's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.

COLLATERAL. Borrower acknowledges this Note is secured by PROPERTY DESCRIBED IN OTHER DOCUMENT(S).

LINE OF CREDIT. This Note evidences a straight line of credit. Once the total amount of principal has been advanced, Borrower is not entitled to further loan advances. Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by Borrower or as provided in this paragraph. Lender may, but need not, require that all oral requests be confirmed in writing. Thefollowing person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority: ROLAND J. FAGEN, Member of PROJECT VIKING, LLC; and ROLAND J. FAGEN, Individually. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor's guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith believes itself insecure.

LOAN PURPOSE. COMMERCIAL - EQUITY INJECTION FOR STOCK PURCHASE.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Borrower may notify Lender if Lender reports any inaccurate information about Borrower's account(s) to a consumer reporting agency. Borrower's written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address: GRANITE FALLS BANK, 702 PRENTICE ST. PO BOX 8, GRANITE FALLS, MN 56241.

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific default provisions or rights of Lender shall not preclude Lender's right to declare payment of this Note on its demand. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. In addition, Lender shall have all the rights and remedies provided in the related documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower shall not affect Lender's right to declare a default and to exercise its rights and remedies. Each Borrower understands and agrees that, with or without notice to Borrower, Lender may with respect to any other Borrower (a) make one or more additional secured or unsecured loans or otherwise extend additional credit; (b) alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (c) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (d) apply such security and direct the order or manner of sale thereof, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreements, as Lender in its discretion may determine; (e) release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; and (f) determine how, when and what application) of payments and credits shall be made on any other indebtedness owing by such other Borrower. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor: Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the medication is made. The obligations under this Note are joint and several.

EXHIBIT 10.6

SECTION DISCLOSURE. To the extent not preempted by federal law, this loan is made under Minnesota Statutes, Section 334.01.

PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. EACH BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

PROJECT VIKING, LLC

By: /s/ Roland J. Fagen        

ROLAND J. FAGEN, Member of PROJECT VIKING, LLC

x /s/ Roland J. Fagen        

ROLAND J. FAGEN, Individually

LENDER:

GRANITE FALLS BANK

x /s/ John Virnig            

John Virnig, President

EX-10.7

EXHIBIT 10.7

Assumption Agreement

This Assumption Agreement (the “Agreement”) is entered into among Granite Falls Energy, LLC, a Minnesota limited liability company (hereinafter “GFE”), Project Viking, LLC, a Minnesota limited liability company (hereinafter “Viking”), Roland J. Fagen (hereinafter “Mr. Fagen”) and Granite Falls Bank (hereinafter “Lender”).

WHEREAS, as a condition to its purchase of Viking, GFE has agreed to assume all obligations as Borrower under that certain Promissory Note in the principal amount of $5,000,000 having Loan Number 28407 (the “Note”) between Viking and Mr. Fagen, who are jointly and severally the current Borrower on the Note, and Lender, and

WHEREAS, Lender is willing to consent to the assumption by GFE of the Note pursuant to the terms and conditions set forth herein.

NOW THEREFORE, in consideration of Lender’s agreement to allow GFE to assume primary responsibility for payment of the Note, the parties agree as follows:

1.    Assumption of Borrower Status by GFE. Upon the date hereof, GFE shall become the Borrower on the Note. GFE hereby agrees to the assumption of all obligations of Borrower under the Note.

2.    Ongoing Obligations. The assumption by GFE of the obligations of Borrower under the Note shall not serve to release Viking and Mr. Fagen from their payment obligations in the event GFE fails to make payments due on the Note. On the date hereof, the parties have entered into that certain Creditor and Debtors Agreement, which addresses, among other things, the manner in which Lender shall pursue collection on the Note as between GFE, Viking and Mr. Fagen.

3.    Supplement to Note. Except as expressly amended or supplement hereby, the Note is and shall remain in full force and effect.

4.    Law Governing. This Agreement shall be interpreted in accordance with and governed by the laws of the State of Minnesota.

5.    Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators and successors of the parties hereto, but no right or liability or obligation arising hereunder may be assigned by any party hereto without the prior written consent of all other parties.

6.    Counterparts, Separate Signature Pages. This Agreement may be executed in any number of counterparts, or using separate signature pages. Each such executed counterpart and each counterpart to which such signature pages are attached shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same instrument. A signed copy of this Agreement

EXHIBIT 10.7

delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

EXHIBIT 10.7

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

GRANITE FALLS ENERGY, LLC

By /s/ Paul Enstad            

Its Chairman                

PROJECT VIKING, L.L.C.

By /s/ Roland J. Fagen            

Its President & Managing Member    

/s/ Roland J. Fagen            

Roland “Ron” J. Fagen

GRANITE FALLS BANK

By /s/ John C. Virnig            

Its President                

EX-10.8

EXHIBIT 10.8

CREDITOR AND DEBTORS AGREEMENT

This Creditor and Debtors Agreement (the “Agreement”) is made as of July 31, 2013 (the “Effective Date”) by and among Granite Falls Energy, LLC, a Minnesota limited liability company(“GFE”); Project Viking, L.L.C., a Minnesota limited liability company (“Viking”), Roland “Ron” J. Fagen (“Mr. Fagen”) and Granite Falls Bank (“Lender”).

RECITALS

WHEREAS, GFE has assumed all of Viking’s and Mr. Fagen’s obligations under that certain promissory note numbered 28407 in the original principal amount of $5,000,000 dated July 23, 2013 in favor of Lender (the “Note”) as of the Effective Date and Lender has consented thereto as of the Effective Date;

WHEREAS, notwithstanding the foregoing, Lender has required that each of Viking and Mr. Fagen remain secondarily liable to Lender for GFE’s obligations under the Note if there is an Event of Default (as such term is defined in the Note) by GFE under the Note,

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.    Lender’s Agreement Regarding Collection. Lender shall only be entitled to seek payment of any amounts from Viking or Mr. Fagen due to Lender from GFE under the Note until and unless there is an Event of Default. Lender shall immediately notify GFE and Mr. Fagen in writing of any Event of Default. If such Event of Default shall remain uncured for more than five business days, then Lender shall be entitled to seek payment of any amounts due to Lender from GFE under the Note from Viking. If Lender is unable to collect such amounts from Viking within 30 days, then Lender shall be entitled to seek payment of any amounts due to Lender from Mr. Fagen. Each of Viking and Mr. Fagen agree to liable to Lender in such amounts in such event.

2.    GFE Grant of Security Interest. GFE hereby grants to Lender a security interest in all of GFE’s assets that would be collateral under Article 9 of the Uniform Commercial Code (“Collateral”); provided, however, that GFE’s membership interest in Viking (a wholly-owned subsidiary of GFE) shall not be Collateral. GFE also agrees to execute documents in the future as requested by Lender to perfect its security interest in the Collateral.

3.    Entire Agreement. This Agreement supplements the Note and that certain Commercial Security Agreement dated July 23, 2013 among Viking, Mr. Fagen and Lender (the “Security Agreement”); provided, however, that if any provision of the Note or the Security Agreement conflicts with this Agreement, the terms of this Agreement shall prevail and govern in all respects.

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4.    Law Governing. This Agreement shall be interpreted in accordance with and governed by the laws of the State of Minnesota.

5.    Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators and successors of the parties hereto, but no right or liability or obligation arising hereunder may be assigned by any party hereto without the prior written consent of all other parties.

6.    Counterparts, Separate Signature Pages. This Agreement may be executed in any number of counterparts, or using separate signature pages, Each such executed counterpart and each counterpart to which such signature pages are attached shall be deemed to be an original instrument, but all-such counterparts together shall constitute one and the same instrument A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

7.    Severability. In the event any of the provisions of this Agreement shall be declared by a court or arbitrator to be void or unenforceable, then such provision shall be severed from this Agreement without affecting the validity and enforceability of any of the other provisions hereof, and the parties shall negotiate in good faith to replace such unenforceable or void provisions with a similar clause to achieve, to the extent permitted under law, the purpose and intent of the provisions declared void and unenforceable.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

GRANITE FALLS ENERGY, LLC

By /s/ Paul Enstad    

Its Chairman    

PROJECT VIKING, L.L.C.

By /s/ Roland J. Fagen    

Its President & Managing Member    

/s/ Roland J. Fagen    

Roland “Ron” J. Fagen

GRANITE FALLS BANK

By/s/ John C. Virnig    

Its President    

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EX-10.9

Exhibit 10.9

Loan No. RI1080S01A

REVOLVING CREDIT SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated August 22, 2012 (the “MLA”), is entered into as of July 26, 2013 between UNITED FCS, PCA (“Lead Lender”) and GRANITE FALLS ENERGY, LLC, Granite Falls, Minnesota (the “Company”), and amends and restates the Supplement dated August 22, 2012 and numbered RI1080S01.

SECTION 1. The Revolving Credit Facility. On the terms and conditions set forth in the MLA and this Supplement, Lead Lender agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed $6,000,000.00 at any one time outstanding (the “Commitment”). Within the limits of the Commitment, the Company may borrow, repay, and reborrow.

SECTION 2. Purpose. The purpose of the Commitment is to provide working capital to the Company.

SECTION 3. Term. The term of the Commitment shall be from the date hereof, up to and including August 1, 2014, or such later date as Agent (as that term is defined in the MLA) may, in its sole discretion, authorize in writing.

SECTION 4. Interest. The Company agrees to pay interest on the unpaid balance of the loan(s) in accordance with one or more of the following interest rate options, as selected by the Company:

(A)    One-Month LIBOR Index Rate. At a rate (rounded upward to the nearest 1/100th and adjusted for reserves required on “Eurocurrency Liabilities” [as hereinafter defined] for banks subject to “FRB Regulation D” [as hereinafter defined] or required by any other federal law or regulation) per annum equal at all times to 2.65% above the rate quoted by the British Bankers Association (the “BBA”) at 11:00 a.m. London time for the offering of one (1)-month U.S. dollars deposits, as published by Bloomberg or another major information vendor listed on BBA’s official website on the first “U.S. Banking Day” (as hereinafter defined) in each week, with such rate to change weekly on such day. The rate shall be reset automatically, without the necessity of notice being provided to the Company or any other party, on the first “U.S. Banking Day” of each succeeding week, and each change in the rate shall be applicable to all balances subject to this option. Information about the then-current rate shall be made available upon telephonic request. For purposes hereof: (1) “U.S. Banking Day” shall mean a day on which Agent is open for business and banks are open for business in New York, New York; (2) “Eurocurrency Liabilities” shall have the meaning as set forth in “FRB Regulation D”; and (3) “FRB Regulation D” shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

(B)    Quoted Rate. At a fixed rate per annum to be quoted by Agent in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to Agent in its sole discretion in each instance, provided that: (1) the minimum fixed period shall be 30 days; (2) amounts may be fixed in increments of $100,000.00 or multiples thereof; and (3) the maximum number of fixes in place at any one time shall be five.

#2370748

(C)    LIBOR. At a fixed rate per annum equal to “LIBOR” (as hereinafter defined) plus 2.65%. Under this option: (1) rates may be fixed for “Interest Periods” (as hereinafter defined) of 1, 2, 3, 6, 9, or 12 months, as selected by the Company; (2) amounts may be fixed in increments of $100,000.00 or multiples thereof; (3) the maximum number of fixes in place at any one time shall be five; and (4) rates may only be fixed on a “Banking Day” (as hereinafter defined) on three Banking Days’ prior written notice. For purposes hereof: (a) “LIBOR” shall mean the rate (rounded upward to the nearest sixteenth and adjusted for reserves required on “Eurocurrency Liabilities” [as hereinafter defined] for banks subject to “FRB Regulation D” [as herein defined] or required by any other federal law or regulation) quoted by the British Bankers Association (the “BBA”) at 11:00 a.m. London time two Banking Days before the commencement of the Interest Period for the offering of U.S. dollar deposits in the London interbank market for the Interest Period designated by the Company, as published by Bloomberg or another major information vendor listed on BBA’s official website; (b) “Banking Day” shall mean a day on which Agent is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are open for business in New York City and London, England; (c) “Interest Period” shall mean a period commencing on the date this option is to take effect and ending on the numerically corresponding day in the next calendar month or the month that is 2, 3, 6, 9, or 12 months thereafter, as the case may be; provided, however, that: (i) in the event such ending day is not a Banking Day, such period shall be extended to the next Banking Day unless such next Banking Day falls in the next calendar month, in which case it shall end on the preceding Banking Day; and (ii) if there is no numerically corresponding day in the month, then such period shall end on the last Banking Day in the relevant month; (d) “Eurocurrency Liabilities” shall have meaning as set forth in “FRB Regulation D”; and (e) “FRB Regulation D” shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

The Company shall select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, rates may not be fixed for periods expiring after the maturity date of the loans and rates may not be fixed in such a manner as to cause the Company to have to break any fixed rate balance in order to pay any installment of principal. All elections provided for herein shall be made electronically (if applicable), telephonically or in writing and must be received by Agent not later than 12:00 Noon Company’s local time in order to be considered to have been received on that day; provided, however, that in the case of LIBOR rate loans, all such elections must be confirmed in writing upon Agent’s request. Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following month or on such other day in such month as Agent shall require in a written notice to the Company; provided, however, in the event the Company elects to fix all or a portion of the indebtedness outstanding under the LIBOR interest rate option above, at Agent’s option upon written notice to the Company, interest shall be payable at the maturity of the Interest Period and if the LIBOR interest rate fix is for a period longer than three months, interest on that portion of the indebtedness outstanding shall be payable quarterly in arrears on each three-month anniversary of the commencement date of such Interest Period, and at maturity.

SECTION 5. Promissory Note. The Company promises to repay the unpaid principal balance of the loans on the last day of the term of the Commitment. In addition to the above, the

Company promises to pay interest on the unpaid principal balance of the loans at the times and in accordance with the provisions set forth in Section 4 hereof. This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

SECTION 6. Letters of Credit. If agreeable to Agent in its sole discretion in each instance, in addition to loans, the Company may utilize the Commitment to open irrevocable letters of credit for its account. Each letter of credit will be issued within a reasonable period of time after Agent’s receipt of a duly completed and executed copy of Agent’s then current form of Application and Reimbursement Agreement or, if applicable, in accordance with the terms of any CoTrade Agreement between the parties, and shall reduce the amount available under the Commitment by the maximum amount capable of being drawn thereunder. Any draw under any letter of credit issued hereunder shall be deemed a loan under the Commitment and shall be repaid in accordance with this Supplement. Each letter of credit must be in form and content acceptable to Agent and must expire no later than the maturity date of the Commitment,

SECTION 7. Security. The Company’s obligations hereunder and, to the extent related hereto, the MLA, including without limitation any future advances under any existing mortgage or deed of trust, shall be secured as provided in the Security Section of the MLA.

SECTION 8. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to Agent a commitment fee on the average daily unused portion of the Commitment at the rate of 0.30% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

UNITED FCS, PCA

By:    /s/ Jeffrey A. Schmidt    

Title:    CCO    

GRANITE FALLS ENERGY, LLC

By:    /s/ Steven A. Christensen    

Title:    CEO    

EX-31.1

CERTIFICATION PURSUANT TO 17 CFR 240.15d-14(a)

(SECTION 302 CERTIFICATION)

I, Steve Christensen, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Granite Falls Energy, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	September 16, 2013	/s/ Steve Christensen
		Steve Christensen, Chief Executive Officer (Principal Executive Officer)

EX-31.2

CERTIFICATION PURSUANT TO 17 CFR 240.15d-14(a)

(SECTION 302 CERTIFICATION)

I, Stacie Schuler, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Granite Falls Energy, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	September 16, 2013	/s/ Stacie Schuler
		Stacie Schuler, Chief Financial Officer (Principal Financial Officer)

EX-32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Granite Falls Energy, LLC (the “Company”) for the quarter ended July 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steve Christensen, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steve Christensen
Steve Christensen, Chief Executive Officer
Dated:	September 16, 2013

EX-32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Granite Falls Energy, LLC (the “Company”) for the quarter ended July 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stacie Schuler, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stacie Schuler
Stacie Schuler, Chief Financial Officer
Dated:	September 16, 2013

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Summary of Significant Accounting Policies Level 2 (Policies)

9 Months Ended

Jul. 31, 2013

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

Basis of Presentation and Principles of Consolidation

The accompanying financial statements consolidate the operating results and financial position of Granite Falls Energy, LLC (“GFE” or the “Company”), and its wholly owned subsidiary, Project Viking, L.L.C. ("Project Viking") which owns 63.3% of Heron Lake BioEnergy, LLC (“HLBE”). The remaining 36.7% ownership of HLBE is included in the consolidated financial statements as a non-controlling interest. All intercompany balances and transactions are eliminated in consolidation. See Note 3 for details of acquisition.

The accompanying condensed consolidated balance sheet as of October 31, 2012 is derived from audited financial statements. The unaudited interim condensed consolidated financial statements of the Company reflect all adjustments consisting only of normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations and cash flows. The results for the three and nine month periods ended July 31, 2013 are not necessarily indicative of the results that may be expected for a full fiscal year. Certain information and note disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) are condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), although the Company believes that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in its annual report for the year ended October 31, 2012 filed on Form 10-K with the SEC.

Nature of Operations [Text Block]

Nature of Business

GFE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers grains, and crude corn oil near Granite Falls, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. GFE's plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 70 million gallons of undenatured ethanol on a twelve month rolling sum basis.

HLBE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers grains, and crude corn oil near Heron Lake, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. HLBE's plant has an approximate annual production capacity of 50 million gallons, but is currently permitted to produce up to 59.2 million gallons.

Use of Estimates, Policy [Policy Text Block]

Accounting Estimates

Management uses estimates and assumptions in preparing these condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others: economic lives of property, plant, and equipment, valuation of commodity derivatives and inventory, the assumptions used in the impairment analysis of long-lived assets, and the assumptions used to estimate the fair market value of acquired assets and liabilities. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company generally sells ethanol and related products pursuant to marketing agreements. Revenues from the production of ethanol and the related products are recorded when the customer has taken title and assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Ethanol and related products are generally shipped free on board (FOB) shipping point. The Company believes there are no ethanol sales, during any given month, which should be considered contingent and recorded as deferred revenue.

In accordance with the Company's agreements for the marketing and sale of ethanol and related products, marketing fees and commissions due to the marketers are deducted from the gross sales price as earned. These fees and commissions are recorded net of revenues, as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. Shipping costs paid by the Company to the marketer in the sale of ethanol are not specifically identifiable and, as a result, are recorded based on the net selling price reported to the Company from the marketer. Shipping costs incurred by the Company in the sale of distillers grains and corn oil are included in cost of goods sold.

Derivatives, Policy [Policy Text Block]

Derivative Instruments

From time to time the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives in the balance sheets at fair value.

In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings.

Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our condensed consolidated financial statements.

In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes.

The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 5.

Business Combinations Policy [Policy Text Block]

Business Combinations

The Company allocates the total purchase price of a business combination to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date, with the excess purchase price recorded as goodwill. The Company used current market data to assist them in determining the fair value of the assets acquired and liabilities assumed, including goodwill, based on recognized business valuation methodology. Subsequent to the acquisition but not to exceed one year from the acquisition date, the Company will record any material adjustments retrospectively to the initial estimate based on new information obtained about facts and circumstances that existed as of the acquisition date. The Company expenses any acquisition-related costs as incurred in connection with business combinations. An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired or liabilities assumed in a business combination. The income valuation method represents the present value of future cash flows over the life of the asset using (i) discrete financial forecasts, which rely on management's estimates of revenue and operating expenses, (ii) long-term growth rates, and (iii) an appropriate discount rate. The market valuation method uses prices paid for a reasonably similar asset by other purchasers in the market, with adjustments relating to any differences between the assets. The cost valuation method is based on the replacement cost of a comparable asset at prices at the time of the acquisition reduced for depreciation of the asset.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill represents the cost in excess of the fair value of net assets acquired. The Company will conduct impairment assessments annually or when events indicate a triggering event has occurred.

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Condensed Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Jul. 31, 2013	Jul. 31, 2012	Jul. 31, 2013	Jul. 31, 2012
Revenues	$ 48,884,076	$ 42,435,763	$ 144,021,800	$ 125,206,661
Cost of Goods Sold	46,173,897	42,381,070	136,849,505	120,806,601
Gross Profit	2,710,179	54,693	7,172,295	4,400,060
Operating Expenses	513,021	651,880	1,658,681	1,906,097
Other Income (Expense)	2,197,158	(597,187)	5,513,614	2,493,963
Other Nonoperating Income (Expense) [Abstract]
Other income, net	393	34,357	24,617	99,905
Interest income	395	2,452	491	17,733
Interest expense	(24,245)	(5,259)	(111,651)	(18,484)
Total other income (expense), net	(23,457)	31,550	(86,543)	99,154
Net Income (Loss)	2,173,701	(565,637)	5,427,071	2,593,117
Weighted Average Units Outstanding - Basic and Diluted	30,606	30,606	30,606	30,617
Net Income (Loss) Per Unit - Basic and Diluted	$ 71.02	$ (18.48)	$ 177.32	$ 84.70
Distributions Per Unit - Basic and Diluted	$ 0	$ 0	$ 0	$ 300.00

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Revolving Line of Credit

9 Months Ended

Jul. 31, 2013

Revolving Line of Credit [Abstract]

Debt Disclosure [Text Block]

REVOLVING LINE OF CREDIT AND LONG-TERM DEBT

Granite Falls Energy:

GFE has two credit facilities with a lender. The first is a seasonal revolving operating loan facility in the amount of $6,000,000. The second is a revolving term loan facility in the amount of $8,000,000. However, the amount available for borrowing under this facility reduces by $1,000,000 every six months, beginning September 1, 2013, with final payment due March 1, 2017.

The interest rates for both facilities are based on the bank's "One Month LIBOR Index Rate," plus 2.65% and 2.9% on the seasonal and revolving term commitments, respectively. Both facilities are available through March 2017. The outstanding balance on the revolving term loan on July 31, 2013 and October 31, 2012 was $4,375,970 and $4,891,952, respectively. GFE currently has no outstanding balance on the seasonal revolving operating loan facility.

The credit facilities require GFE to comply with certain financial covenants. As of July 31, 2013 and October 31, 2012, GFE was in compliance with these financial covenants and expects to be in compliance throughout fiscal 2013.

The credit facilities are secured by substantially all assets of the Company. There are no savings account balance collateral requirements as part of this new credit facility.

At July 31, 2013, GFE also had letters of credit totaling $337,928 with the bank as part of a credit requirement of Northern Natural Gas. These letters of credit reduce the amount available under the seasonal revolving operating loan to approximately $5,662,000.

As part of the acquisition of Project Viking discussed in Note 3, GFE assumed a note payable with Granite Falls Bank with a principal amount of $5,000,000. The note was due upon the demand of Granite Falls Bank, or if no demand is made, on September 23, 2013. Interest accrued on the note at a rate of 3.99% per annum and was secured by all of Project Viking's assets. This note was paid in full on August 19, 2013.

Also, as part of the acquisition of Project Viking discussed in Note 3, GFE issued a note payable to the previous owners of Project Viking with a principal amount of $4,024,500. The note matured on August 30, 2013 and interest accrued on the note at a rate of 4% per annum. This note was paid in full on August 26, 2013.

Heron Lake BioEnergy:

Line of Credit

On May 17, 2013, HLBE renegotiated its revolving line of credit to extend the maturity date of the revolving line of credit to September 2016. Amounts borrowed by HLBE under the term revolving loan and repaid or prepaid may be re-borrowed at any time prior to maturity date of the term revolving loan, provided that outstanding advances may not exceed the amount of the term revolving loan commitment. Amounts outstanding on the term revolving loan bear interest at a variable rate equal to the greater of a LIBOR rate plus 3.50% or 5.0%, payable monthly.  At July 31, 2013, the revolving line of credit carried an interest rate of LIBOR plus 3.50% but not less than 5.00%. HLBE also pays an unused commitment fee on the unused portion of the term revolving loan commitment at the rate of 0.35% per annum, payable in arrears in quarterly installments during the term of the term revolving loan. At July 31, 2013, the outstanding balance on this line of credit was $10,650,377, plus a fair value adjustment premium of approximately $722,000 as part of the GFE acquisition. At July 31, 2013, HLBE had an additional $9,800,000 available under this revolving line of credit. The amount available under the revolving line of credit is reduced by $2,000,000 at October 31st each year until September 2016 when the unpaid balance is due.

Term Note

On May 17, 2013, HLBE renegotiated its term loan with AgStar in the amount of $17,400,000. HLBE must make equal monthly payments of principal and interest on the term loan based on a 10-year amortization, provided the entire principal balance and accrued and unpaid interest on the term loan is due and payable in full on the maturity date of September 1, 2016.  In addition, HLBE is required to make additional payments annually on debt for up to 25% of the excess cash flow, as defined by the agreement, up to $2,000,000 per year. Through September 1, 2014, the loan bears interest at 5.75% as long as HLBE is in compliance with their debt covenants. On September 1, 2014, the interest term loan will be adjusted to LIBOR plus 3.50% but not less than 5%. The loan agreements are secured by substantially all business assets and are subject to various financial and non-financial covenants that limit distributions and debt and require minimum debt service coverage, net worth, and working capital requirements.  As described above, HLBE was in compliance with the covenants of its master loan agreement with AgStar as of July 31, 2013.

Subordinated Debt

On May 17, 2013, HLBE's Board of Governors loaned HLBE $1,407,000 in convertible secured subordinated debt. The notes bear interest at 7.25% and are due in the aggregate principal amount during May 2018. On October 1, 2014, or immediately prior to the effective time of any sale of all or substantially all of HLBE assets, each holder has the right at the holder's option to irrevocably convert all of such holder's interim subordinated notes into class A units of HLBE, at the rate of $0.30 per class A unit. HLBE reserves the right to issue class B units upon conversion if the principal balance of the 7.25% subordinated secured notes exceeds the authorized class A units at the conversion rate.

Long-term debt consists of the following:

	July 31, 2013			October 31, 2012
Granite Falls Energy:
Capital One Equipment Leasing/Finance (GFE):
Shuttlewagon Railcar Mover (5 year term at 3.875%)	$	412,013		$	497,636
Revolving Term Loan (GFE)	4,375,970			4,891,952
Heron Lake BioEnergy:
Term note payable to lending institution (HLBE) (including premium of approximately $1.4m)	18,505,863			—
Assessments Payable (HLBE) (including premium of approximately $223k)	2,981,353			—
Notes payable to electrical company (HLBE)	312,500			—
Corn oil recovery system note payable (HLBE)	750,835			—
Notes payable on pipeline assets (HLBE)	1,123,064			—
Subordinated Debt (HLBE)	1,407,000			—
Total debt	29,868,598			5,389,588
Less: Current Maturities	(3,329,924		)	(114,718		)
Total Long-Term Debt	$	26,538,674		$	5,274,870

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Fair Value fair value (Tables)

9 Months Ended

12 Months Ended

Jul. 31, 2013

Oct. 31, 2012

Fair Value [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

The following table provides information on those derivative assets measured at fair value on a recurring basis at July 31, 2013:

	Carrying Amount in Balance Sheet July 31, 2013		Fair Value July 31, 2013		Fair Value Measurement Using
					Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial Assets:
Commodity derivative instruments	$	688	$	688	$	688	$	—	$	—

The following table provides information on those derivative liabilities measured at fair value on a recurring basis at October 31, 2012:

	Carrying Amount in Balance Sheet October 31, 2012			Fair Value October 31, 2012			Fair Value Measurement Using
							Quoted Prices in Active Markets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial Liabilities:
Commodity derivative instruments	$	(45,563	)	$	(45,563	)	$	(45,563	)	$	—	$	—

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Risks and Uncertainties (Tables)

9 Months Ended

Jul. 31, 2013

Acquisition Consideration [Abstract]

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

The acquisition date fair value of the consideration transferred consisted of the following:

Cash	$	8,000,000
Note payable	4,024,500
Assumption of note payable to Granite Falls Bank	5,000,000
Total Consideration	$	17,024,500

BUSINESS COMBINATION

On July 31, 2013, the Company acquired 63.3% of the outstanding membership units of Heron Lake BioEnergy, LLC (“HLBE”) through its purchase of 100% of the membership units of Project Viking, L.L.C. (“Project Viking”), for a total purchase price of $17,024,500. HLBE is a 50 million gallon per year ethanol plant located in Heron Lake, Minnesota. Project Viking was formed by the previous investor to only hold equity interests in HLBE and the debt incurred to obtain those interests and did not have any other assets or liabilities. The previous owner of Project Viking also owned approximately 12.82% of the outstanding membership units of the Company at July 31, 2013.

Immediately following the closing, the Company, through its 100% ownership of Project Viking, owned 24,080,949 Class A units and 15,000,000 Class B units of HLBE, for a total of 39,080,949 units, or 63.3% of the 61,697,104 units. As a result, under HLBE's member control agreement, Project Viking is entitled to appoint five (5) of the nine (9) governors to HLBE's board of governors.

On July 31, 2013, the Company entered into a Management Services Agreement with HLBE. Under the Management Services Agreement, the Company agreed to supply its own personnel to act as part-time officers and managers of HLBE for the positions of Chief Executive Officer, Chief Financial Officer, and Commodity Risk Manager. The initial term of the Management Services Agreement is three years. The Company will be paid $35,000 per month by HLBE for the first year of the Management Services Agreement. During years two and three of the agreement, HLBE agreed to pay the Company 50% of the total salary, bonuses, and other expenses and costs incurred by the Company for the three management positions. At the expiration of the initial term, the Management Services Agreement will automatically renew for successive one-year terms unless and until the Company or HLBE gives the other party 90-days written notice of termination prior to expiration of the initial term or the start of a renewal term.

The acquisition date fair value of the consideration transferred consisted of the following:

Cash	$	8,000,000
Note payable	4,024,500
Assumption of note payable to Granite Falls Bank	5,000,000
Total Consideration	$	17,024,500

The assets and liabilities of Project Viking were recorded at their respective estimated fair values as of the date of the acquisition using generally accepted accounting principles for business combinations. The Company used a combination of the market and cost approaches and unobservable level 3 inputs, to estimate the fair values of the assets acquired and liabilities assumed. The fair value of the long-term debt acquired was determined based on the present value of future contractual cash flows discounted at an interest rate that reflects the current borrowing rates available to the Company for loans with similar terms. The value of the 36.66% noncontrolling interest was determined by using the fair value method by using the most recent arms-length transaction of HLBE's units that did not include a control premium. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

Cash	$	1,022,764
Restricted cash	510,955
Accounts receivable	3,005,121
Inventory	2,303,157
Prepaid expenses	1,107,025
Property, plant, and equipment	51,625,774
Other assets	924,252
Goodwill	1,099,579
Total assets acquired	$	61,598,627
Accounts payable	$	(936,893	)
Accrued expenses	(399,623		)
Notes payable	(36,452,764		)
Non-controlling interest	(6,784,847		)
Net purchase price	$	17,024,500

Since the acquisition occurred on the last day of the Company's fiscal third quarter, there were no revenues or expenses consolidated in the Company's statement of operations. As such, there was also no portion of the Company's net income attributable to non-controlling interests during the three or nine month periods ended July 31, 2013. The following represents the pro forma consolidated statement of operations as if the transaction occurred at the beginning of the following periods:

	For the three month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	94,461,603	$	83,407,497
Net income (loss), including portion attributable to noncontrolling interest of $834,036 and $171,232, respectively	$	4,446,282	$	(99,065	)
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	118.02	$	(8.83	)

	For the nine month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	269,219,558	$	246,226,425
Net income, including portion attributable to noncontrolling interest of $191,471 and $1,150,813, respectively	$	5,948,791	$	5,728,847
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	188.11	$	149.58

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each of the periods presented.

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Risks and Uncertainties (Details)	Jul. 31, 2013
Minimum [Member]
Concentration Risk [Line Items]
Sales Revenue, Goods, Net	8000.00%
Percent of Cost of Goods Sold	7000.00%
Maximum [Member]
Concentration Risk [Line Items]
Sales Revenue, Goods, Net	8500.00%
Percent of Cost of Goods Sold	8000.00%

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Summary of Significant Accounting Policies narrative (Details)	3 Months Ended
	Jul. 31, 2013 gal
Plant production capacity	60,000,000
Production (Actual)	70,000,000
Measurement, Rolling Twelve Months	twelve
Heron Lake Bioenergy [Member]
Plant production capacity	50,000,000
Production (Actual)	59,000,000

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Fair Value (Details) (USD $)	Jul. 31, 2013 Carrying (Reported) Amount, Fair Value Disclosure [Member]	Oct. 31, 2012 Carrying (Reported) Amount, Fair Value Disclosure [Member]	Jul. 31, 2013 Estimate of Fair Value, Fair Value Disclosure [Member]	Oct. 31, 2012 Estimate of Fair Value, Fair Value Disclosure [Member]	Jul. 31, 2013 Fair Value, Inputs, Level 1 [Member]	Oct. 31, 2012 Fair Value, Inputs, Level 1 [Member]	Jul. 31, 2013 Fair Value, Inputs, Level 2 [Member]	Jul. 31, 2012 Fair Value, Inputs, Level 2 [Member]	Jul. 31, 2013 Fair Value, Inputs, Level 3 [Member]	Oct. 31, 2012 Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset, Notional Amount	$ 688	$ (45,563)
Derivative Liabilities			688	(45,563)
Derivative, Fair Value, Net					$ 688	$ (45,563)	$ 0	$ 0	$ 0	$ 0

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Revolving Line of Credit letters of credit (Details) (USD $)	Jul. 31, 2013
Line of Credit Facility [Line Items]
Letters of Credit Outstanding, Amount	$ 337,928

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Acquisition (Tables)

9 Months Ended

Jul. 31, 2013

Fair Value of Cash Used [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

Cash	$	1,022,764
Restricted cash	510,955
Accounts receivable	3,005,121
Inventory	2,303,157
Prepaid expenses	1,107,025
Property, plant, and equipment	51,625,774
Other assets	924,252
Goodwill	1,099,579
Total assets acquired	$	61,598,627
Accounts payable	$	(936,893	)
Accrued expenses	(399,623		)
Notes payable	(36,452,764		)
Non-controlling interest	(6,784,847		)
Net purchase price	$	17,024,500

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

The acquisition date fair value of the consideration transferred consisted of the following:

Cash	$	8,000,000
Note payable	4,024,500
Assumption of note payable to Granite Falls Bank	5,000,000
Total Consideration	$	17,024,500

BUSINESS COMBINATION

On July 31, 2013, the Company acquired 63.3% of the outstanding membership units of Heron Lake BioEnergy, LLC (“HLBE”) through its purchase of 100% of the membership units of Project Viking, L.L.C. (“Project Viking”), for a total purchase price of $17,024,500. HLBE is a 50 million gallon per year ethanol plant located in Heron Lake, Minnesota. Project Viking was formed by the previous investor to only hold equity interests in HLBE and the debt incurred to obtain those interests and did not have any other assets or liabilities. The previous owner of Project Viking also owned approximately 12.82% of the outstanding membership units of the Company at July 31, 2013.

Immediately following the closing, the Company, through its 100% ownership of Project Viking, owned 24,080,949 Class A units and 15,000,000 Class B units of HLBE, for a total of 39,080,949 units, or 63.3% of the 61,697,104 units. As a result, under HLBE's member control agreement, Project Viking is entitled to appoint five (5) of the nine (9) governors to HLBE's board of governors.

On July 31, 2013, the Company entered into a Management Services Agreement with HLBE. Under the Management Services Agreement, the Company agreed to supply its own personnel to act as part-time officers and managers of HLBE for the positions of Chief Executive Officer, Chief Financial Officer, and Commodity Risk Manager. The initial term of the Management Services Agreement is three years. The Company will be paid $35,000 per month by HLBE for the first year of the Management Services Agreement. During years two and three of the agreement, HLBE agreed to pay the Company 50% of the total salary, bonuses, and other expenses and costs incurred by the Company for the three management positions. At the expiration of the initial term, the Management Services Agreement will automatically renew for successive one-year terms unless and until the Company or HLBE gives the other party 90-days written notice of termination prior to expiration of the initial term or the start of a renewal term.

The acquisition date fair value of the consideration transferred consisted of the following:

Cash	$	8,000,000
Note payable	4,024,500
Assumption of note payable to Granite Falls Bank	5,000,000
Total Consideration	$	17,024,500

The assets and liabilities of Project Viking were recorded at their respective estimated fair values as of the date of the acquisition using generally accepted accounting principles for business combinations. The Company used a combination of the market and cost approaches and unobservable level 3 inputs, to estimate the fair values of the assets acquired and liabilities assumed. The fair value of the long-term debt acquired was determined based on the present value of future contractual cash flows discounted at an interest rate that reflects the current borrowing rates available to the Company for loans with similar terms. The value of the 36.66% noncontrolling interest was determined by using the fair value method by using the most recent arms-length transaction of HLBE's units that did not include a control premium. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

Cash	$	1,022,764
Restricted cash	510,955
Accounts receivable	3,005,121
Inventory	2,303,157
Prepaid expenses	1,107,025
Property, plant, and equipment	51,625,774
Other assets	924,252
Goodwill	1,099,579
Total assets acquired	$	61,598,627
Accounts payable	$	(936,893	)
Accrued expenses	(399,623		)
Notes payable	(36,452,764		)
Non-controlling interest	(6,784,847		)
Net purchase price	$	17,024,500

Since the acquisition occurred on the last day of the Company's fiscal third quarter, there were no revenues or expenses consolidated in the Company's statement of operations. As such, there was also no portion of the Company's net income attributable to non-controlling interests during the three or nine month periods ended July 31, 2013. The following represents the pro forma consolidated statement of operations as if the transaction occurred at the beginning of the following periods:

	For the three month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	94,461,603	$	83,407,497
Net income (loss), including portion attributable to noncontrolling interest of $834,036 and $171,232, respectively	$	4,446,282	$	(99,065	)
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	118.02	$	(8.83	)

	For the nine month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	269,219,558	$	246,226,425
Net income, including portion attributable to noncontrolling interest of $191,471 and $1,150,813, respectively	$	5,948,791	$	5,728,847
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	188.11	$	149.58

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each of the periods presented.

Business Acquisition, Pro Forma Information [Table Text Block]

	For the three month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	94,461,603	$	83,407,497
Net income (loss), including portion attributable to noncontrolling interest of $834,036 and $171,232, respectively	$	4,446,282	$	(99,065	)
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	118.02	$	(8.83	)

	For the nine month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	269,219,558	$	246,226,425
Net income, including portion attributable to noncontrolling interest of $191,471 and $1,150,813, respectively	$	5,948,791	$	5,728,847
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	188.11	$	149.58

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Summary of Significant Accounting Policies

9 Months Ended

Jul. 31, 2013

Accounting Policies [Abstract]

Summary of Significant Account Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying financial statements consolidate the operating results and financial position of Granite Falls Energy, LLC (“GFE” or the “Company”), and its wholly owned subsidiary, Project Viking, L.L.C. ("Project Viking") which owns 63.3% of Heron Lake BioEnergy, LLC (“HLBE”). The remaining 36.7% ownership of HLBE is included in the consolidated financial statements as a non-controlling interest. All intercompany balances and transactions are eliminated in consolidation. See Note 3 for details of acquisition.

The accompanying condensed consolidated balance sheet as of October 31, 2012 is derived from audited financial statements. The unaudited interim condensed consolidated financial statements of the Company reflect all adjustments consisting only of normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations and cash flows. The results for the three and nine month periods ended July 31, 2013 are not necessarily indicative of the results that may be expected for a full fiscal year. Certain information and note disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) are condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), although the Company believes that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in its annual report for the year ended October 31, 2012 filed on Form 10-K with the SEC.

Nature of Business

GFE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers grains, and crude corn oil near Granite Falls, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. GFE's plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 70 million gallons of undenatured ethanol on a twelve month rolling sum basis.

HLBE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers grains, and crude corn oil near Heron Lake, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. HLBE's plant has an approximate annual production capacity of 50 million gallons, but is currently permitted to produce up to 59.2 million gallons.

Accounting Estimates

Management uses estimates and assumptions in preparing these condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others: economic lives of property, plant, and equipment, valuation of commodity derivatives and inventory, the assumptions used in the impairment analysis of long-lived assets, and the assumptions used to estimate the fair market value of acquired assets and liabilities. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made.

Revenue Recognition

The Company generally sells ethanol and related products pursuant to marketing agreements. Revenues from the production of ethanol and the related products are recorded when the customer has taken title and assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Ethanol and related products are generally shipped free on board (FOB) shipping point. The Company believes there are no ethanol sales, during any given month, which should be considered contingent and recorded as deferred revenue.

In accordance with the Company's agreements for the marketing and sale of ethanol and related products, marketing fees and commissions due to the marketers are deducted from the gross sales price as earned. These fees and commissions are recorded net of revenues, as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. Shipping costs paid by the Company to the marketer in the sale of ethanol are not specifically identifiable and, as a result, are recorded based on the net selling price reported to the Company from the marketer. Shipping costs incurred by the Company in the sale of distillers grains and corn oil are included in cost of goods sold.

Derivative Instruments

From time to time the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives in the balance sheets at fair value.

In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings.

Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our condensed consolidated financial statements.

In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes.

The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 5.

Business Combinations

The Company allocates the total purchase price of a business combination to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date, with the excess purchase price recorded as goodwill. The Company used current market data to assist them in determining the fair value of the assets acquired and liabilities assumed, including goodwill, based on recognized business valuation methodology. Subsequent to the acquisition but not to exceed one year from the acquisition date, the Company will record any material adjustments retrospectively to the initial estimate based on new information obtained about facts and circumstances that existed as of the acquisition date. The Company expenses any acquisition-related costs as incurred in connection with business combinations. An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired or liabilities assumed in a business combination. The income valuation method represents the present value of future cash flows over the life of the asset using (i) discrete financial forecasts, which rely on management's estimates of revenue and operating expenses, (ii) long-term growth rates, and (iii) an appropriate discount rate. The market valuation method uses prices paid for a reasonably similar asset by other purchasers in the market, with adjustments relating to any differences between the assets. The cost valuation method is based on the replacement cost of a comparable asset at prices at the time of the acquisition reduced for depreciation of the asset.

Goodwill

Goodwill represents the cost in excess of the fair value of net assets acquired. The Company will conduct impairment assessments annually or when events indicate a triggering event has occurred.

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Inventory

9 Months Ended

Jul. 31, 2013

Inventory [Abstract]

Inventory

INVENTORY

Inventories consist of the following:

	July 31, 2013		October 31, 2012
	(Unaudited)
Raw materials	$	5,370,347	$	8,977,820
Spare parts	1,544,897		682,896
Work in process	2,044,754		1,183,188
Finished goods	1,187,917		1,169,265
Totals	$	10,147,915	$	12,013,169

The Company performs a lower of cost or market analysis on inventory to determine if the market values of certain inventories are less than their carrying value, which is attributable primarily to decreases in market prices of corn and ethanol. Based on the lower of cost or market analysis, the Company did not record a lower of cost or market adjustment on certain inventories for the three or nine month periods ended July 31, 2013 and 2012.

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Leases

3 Months Ended

Jul. 31, 2012

Leases [Abstract]

Leases

LEASES

GFE has a lease agreement with Trinity Industries Leasing Company (“Trinity”) for 75 hopper cars to assist with the transport of distiller's grains by rail through April 2018. GFE will pay Trinity $620 per month plus $0.03 per mile traveled in excess of 36,000 miles per year. Rent expense for these leases was approximately $139,500 for the three month periods ended July 31, 2013 and 2012. Rent expense for these leases was approximately $418,500 for the nine month periods ended July 31, 2013 and 2012.

GFE has lease agreements with three leasing companies for 176 rail car leases for the transportation of GFE's ethanol with various maturity dates through October 2017. The rail car lease payments are due monthly in the aggregate amount of approximately $121,000. Rent expense for these leases was approximately $361,000 and $318,000 for the three month periods ended July 31, 2013 and 2012, respectively. Rent expense for these leases was approximately $1,067,000 and $955,000 for the nine month periods ended July 31, 2013 and 2012, respectively.

HLBE leases equipment, primarily rail cars, under operating leases through 2017. Rent expense for the three months ended July 31, 2013 and 2012 was approximately $406,000 and $650,000, respectively.  Rent expense for the nine months ended July 31, 2013 and 2012 was approximately $1,313,000 and $1,400,000, respectively.

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Derivative Instruments

9 Months Ended

Jul. 31, 2013

Derivative Instruments [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

As of July 31, 2013, the total notional amount of the Company's outstanding corn derivative instruments was approximately 890,000 bushels that were entered into to hedge forecasted corn purchases through August 2013. There may be offsetting positions that are shown on a net basis that could lower the notional amount of positions outstanding as disclosed above.

The following tables provide details regarding the Company's derivative instruments at July 31, 2013, none of which are designated as hedging instruments:

	Balance Sheet location	Assets		Liabilities
Corn contracts	Commodity Derivative instruments	$	688	$	—
Totals		$	688	$	—

In addition, as of July 31, 2013 the Company maintained $412,000 of restricted cash related to margin requirements for the Company's commodity derivative instrument positions.

As of October 31, 2012, the total notional amount of the Company's outstanding corn derivative instruments was approximately 1,235,000 bushels that were entered into to hedge forecasted corn purchases through March 2013. There may be offsetting positions that are shown on a net basis that could lower the notional amount of positions outstanding as disclosed above.

The following tables provide details regarding the Company's derivative instruments at October 31, 2012, none of which are designated as hedging instruments:

	Balance Sheet location	Assets		Liabilities
Corn contracts	Commodity Derivative instruments	$	—	$	(45,563	)
Totals		$	—	$	(45,563	)

In addition, as of October 31, 2012 the Company maintained $494,000 of restricted cash related to margin requirements for the Company's commodity derivative instrument positions.

The following tables provide details regarding the gains and (losses) from Company's derivative instruments in statements of operations, none of which are designated as hedging instruments:

	Statement of Operations location	Three Months Ended July 31
		2013		2012
Corn contracts	Cost of Goods Sold	$	343,320	$	49,813
Total Gain		$	343,320	$	49,813

	Statement of Operations location	Nine Months Ended July 31
		2013		2012
Corn contracts	Cost of Goods Sold	$	369,902	$	(1,251,437	)
Total Gain (Loss)		$	369,902	$	(1,251,437	)

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Inventory Details (Details) (USD $)	Jul. 31, 2013	Oct. 31, 2011
Inventory [Abstract]
Raw materials	$ 5,370,347	$ 8,977,820
Spare parts	1,544,897	682,896
Work in process	2,044,754	1,183,188
Finished goods	1,187,917	1,169,265
Inventory, Net	$ 10,147,915	$ 12,013,169

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Leases (Details) (USD $)	3 Months Ended		9 Months Ended
	Jul. 31, 2013	Jul. 31, 2012	Jul. 31, 2013	Jul. 31, 2012
Rail Cars [Member]
Operating Leases, Rent Expense, Net	$ 176
Hopper Cars [Member]
Operating Leases, Rent Expense, Net	75
Hopper Cars [Member]
Operating Leases, Rent Expense, Net	620
Hopper Cars [Member]
Operating Leases, Rent Expense, Net	0
Hopper Cars [Member]
Operating Leases, Rent Expense, Net	36,000
Rail Cars [Member]
Operating Leases, Rent Expense, Net	121,000
Rail Cars [Member]
Operating Leases, Rent Expense	361,000	318,000	1,067,000	955,000
Hopper Cars [Member]
Operating Leases, Rent Expense	139,500	139,500	418,500	418,500
Heron Lake Bioenergy [Member] | Rail Cars [Member]
Operating Leases, Rent Expense	$ 406,000	$ 650,000	$ 1,313,000	$ 1,400,000

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Condensed Balance Sheets (Parenthetical)	Jul. 31, 2013	Oct. 31, 2012
Members' Equity, units authorized, issued and outstanding	30,606	30,656

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Commitments and Contingencies

9 Months Ended

Jul. 31, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Corn Storage and Grain Handling Agreement and Purchase Commitments

GFE has a corn storage and grain handling agreement with Farmers Cooperative Elevator Company (FCE), a member. Under the current agreement, GFE agrees to purchase all of the corn needed for the operation of the plant from FCE. The price of the corn purchased will be the bid price the member establishes for the plant plus a set fee per bushel. At July 31, 2013, GFE had basis contracts for forward corn purchase commitments with FCE for 1,455,000 bushels for deliveries in August and September 2013. At July 31, 2013, GFE also had 375,000 bushels of stored corn totaling approximately $2,775,000 with FCE that is included in inventory.

Ethanol Contracts

At July 31, 2013, GFE had forward contracts to sell approximately $15,980,000 of ethanol for deliveries in August 2013 through December 2013 which approximates 29% of its anticipated ethanol sales during that period.

Distillers Grain Contracts

At July 31, 2013, GFE had forward contracts to sell approximately $1,580,000 of distillers grain for deliveries in August 2013 through December 2013 which approximates 17% of its anticipated distillers grain sales during that period.

Natural Gas

HLBE has natural gas agreements with a minimum purchase commitment of approximately 1.6 million MMBTU per year until October 31, 2014.

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Condensed Statements of Cash Flows (USD $)	9 Months Ended
	Jul. 31, 2013	Jul. 31, 2012
Cash paid during the period for: [Abstract]
Net income	$ 5,427,071	$ 2,593,117
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	3,470,137	3,191,960
Change in fair value of derivative instruments	(369,902)	1,251,437
Increase (Decrease) in Operating Assets and Liabilities [Abstract]
Restricted cash	82,000	801,000
Derivative Instruments	323,651	(902,475)
Accounts receivable	587,158	(1,795,150)
Inventory	4,168,411	1,635,449
Prepaid expenses and other current assets	(4,975)	(23,209)
Accounts payable	(3,906,302)	(1,080,012)
Accrued liabilities	40,725	(92,296)
Net Cash Provided by Operating Activities	9,817,974	5,579,821
Net Cash Provided by (Used in) Investing Activities [Abstract]
Proceeds from sale of land	540,000	0
Payments for capital expenditures	(1,804,883)	(2,270,322)
Payments to Acquire Businesses, Net of Cash Acquired	(6,977,236)	0
Payments for land acquisition	0	(3,467,199)
Net Cash Used in Investing Activities	(8,242,119)	(5,737,521)
Net Cash Provided by (Used in) Financing Activities [Abstract]
Payments on long-term debt	(601,605)	(73,345)
Member distributions paid	0	(9,196,800)
Net Cash Used in Financing Activities	(601,605)	(9,270,145)
Net Increase (Decrease) in Cash	974,250	(9,427,845)
Cash - Beginning of Period	685,828	13,064,560
Cash - End of Period	1,660,078	3,636,715
Supplemental Cash Flow Information [Abstract]
Interest expense	$ 24,245	$ 18,484

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Condensed Balance Sheets (USD $)	Jul. 31, 2013	Oct. 31, 2012
Current Assets
Cash	$ 1,660,078	$ 685,828
Restricted cash	922,955	494,000
Accounts receivable	9,774,497	7,356,534
Inventory	10,147,915	12,013,169
Derivative Instruments and Hedges, Assets	688	0
Prepaid expense and other current assets	1,277,519	165,519
Total current assets	23,783,652	20,715,050
Property, Plant and Equipment [Abstract]
Land and improvements	12,307,063	7,095,172
Railroad improvements	7,961,096	4,121,148
Process equipment and tanks	109,777,711	64,678,860
Administration building	666,100	279,734
Office equipment	265,792	154,072
Rolling stock	1,691,856	1,305,395
Construction in progress	1,686,683	3,831,263
Gross property, plant and equipment	134,356,301	81,465,644
Less accumulated depreciation	44,517,699	41,047,562
Net property, plant and equipment	89,838,602	40,418,082
Goodwill	1,099,579	0
Other Assets	924,252	0
Total Assets	115,646,085	61,133,132
Current Liabilities
Current portion of long-term debt	3,329,924	114,718
Notes Payable, Current	5,000,000	0
Debt Instrument, Face Amount	4,024,500
Accounts payable	2,538,717	3,527,840
Corn payable to FCE	15,711	1,995,997
Commodity derivative instruments	0	45,563
Accrued liabilities current	759,167	318,819
Total current liabilities	15,668,019	6,002,937
Long-term Line of Credit, Noncurrent	11,372,149
Long-Term Debt, less current portion	26,538,674	5,274,870
Commitments and Contingencies
Members' Equity, 30,606 units authorized, issued and outstanding	55,282,396	49,855,325
Stockholders' Equity Attributable to Noncontrolling Interest	6,784,847	0
Members' Equity	62,067,243	49,855,325
Total Liabilities and Members' Equity	$ 115,646,085	$ 61,133,132

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Derivative Instruments (Details) (USD $)	3 Months Ended		9 Months Ended
	Jul. 31, 2013 bu	Jul. 31, 2012	Jul. 31, 2013 bu	Jul. 31, 2012	Oct. 31, 2012 bu	Oct. 31, 2011
Derivative [Line Items]
Outstanding corn derivative instrument	890,000		890,000		1,235,000
Derivative Assets, Current	$ 688		$ 688		$ 0
Commodity derivative instruments	0		0		(45,563)
Restricted Cash and Cash Equivalents, Current	412,000		412,000			494,000
Derivative Instruments, Gain (Loss) Recognized in Income, Net	343,320	49,813	369,902	(1,251,437)
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Derivative [Line Items]
Derivative Asset, Notional Amount	688		688		(45,563)
Fair Value, Inputs, Level 1 [Member]
Derivative [Line Items]
Derivative, Fair Value, Net	688		688		(45,563)
Fair Value, Inputs, Level 2 [Member]
Derivative [Line Items]
Derivative, Fair Value, Net	0	0	0	0
Fair Value, Inputs, Level 3 [Member]
Derivative [Line Items]
Derivative, Fair Value, Net	0		0		0
Corn Contracts [Member]
Derivative [Line Items]
Derivative Assets, Current	688		688		0
Commodity derivative instruments	0		0		(45,563)
Derivative Instruments, Gain (Loss) Recognized in Income, Net	$ 343,320	$ 49,813	$ 369,902	$ (1,251,437)

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Long-Term Debt Long Term Debt (Tables)

9 Months Ended

Jul. 31, 2013

Statement of Financial Position [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

ong-term debt consists of the following:

	July 31, 2013			October 31, 2012
Granite Falls Energy:
Capital One Equipment Leasing/Finance (GFE):
Shuttlewagon Railcar Mover (5 year term at 3.875%)	$	412,013		$	497,636
Revolving Term Loan (GFE)	4,375,970			4,891,952
Heron Lake BioEnergy:
Term note payable to lending institution (HLBE) (including premium of approximately $1.4m)	18,505,863			—
Assessments Payable (HLBE) (including premium of approximately $223k)	2,981,353			—
Notes payable to electrical company (HLBE)	312,500			—
Corn oil recovery system note payable (HLBE)	750,835			—
Notes payable on pipeline assets (HLBE)	1,123,064			—
Subordinated Debt (HLBE)	1,407,000			—
Total debt	29,868,598			5,389,588
Less: Current Maturities	(3,329,924		)	(114,718		)
Total Long-Term Debt	$	26,538,674		$	5,274,870

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Commitments and Contingencies (Details) (USD $)	3 Months Ended
	Jul. 31, 2013 bu
Corn Contracts [Member]
Future Commitment	1,455,000
Inventory, Outside storage	375,000
Inventory Dollars, Outside Storage	$ 2,775,000
Ethanol Contracts [Member]
Future Commitment, Dollar	15,980,000
Revenue Concentration, Future Commitment	29.00%
Distillers Grains [Member]
Future Commitment, Dollar	$ 1,580,000
Revenue Concentration, Future Commitment	17.00%
Heron Lake Bioenergy [Member]
Purchase Commitment, Remaining Minimum Amount Committed	1,600,000

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Acquisition (Details) (USD $)	3 Months Ended		9 Months Ended
	Jul. 31, 2013 gal	Jul. 31, 2012	Jul. 31, 2013	Jul. 31, 2012	Oct. 31, 2012	Oct. 31, 2011
Business Acquisition [Line Items]
Business Acquisition, Pro Forma Revenue	$ 94,461,603	$ 83,407,497	$ 269,219,558	$ 246,226,425
Cash Acquired from Acquisition	1,660,078	3,636,715	1,660,078	3,636,715	685,828	13,064,560
Business Acquisition, Cost of Acquired Entity, Cash Paid	8,000,000		8,000,000
Business Acquisition, Cost of Acquired Entity, Purchase Price	17,024,500		17,024,500
Plant production capacity	60,000,000
Business Acquisition, Purchase Price Allocation, Notes Payable and Long-term Debt	4,024,500		4,024,500
Business Acquisition, Cost of Acquired Entity, Liabilities Incurred	5,000,000		5,000,000
Restricted Cash and Cash Equivalents	922,955		922,955		494,000
Inventory, Net	10,147,915		10,147,915			12,013,169
Property, Plant and Equipment, Net	89,838,602		89,838,602		40,418,082
Goodwill	1,099,579		1,099,579		0
Total Assets	115,646,085		115,646,085		61,133,132
Accounts Payable, Current	2,538,717		2,538,717		3,527,840
Accrued Liabilities, Current	759,167		759,167		318,819
Stockholders' Equity Attributable to Noncontrolling Interest	6,784,847		6,784,847		0
Business Acquisition, Pro Forma Net Income (Loss)	4,446,282	(99,065)	5,948,791	5,728,847
Earnings Per Share, Basic and Diluted	$ 71.02	$ (18.48)	$ 177.32	$ 84.70
Project Viking, LLC [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage	100.00%		100.00%
Heron Lake Bioenergy [Member]
Business Acquisition [Line Items]
Net Income (Loss) Attributable to Noncontrolling Interest	834,036	171,232	191,471	1,150,813
Cash Acquired from Acquisition	1,022,764		1,022,764
Equity Method Investment, Ownership Percentage	63.30%		63.30%
Business Acquisition, Cost of Acquired Entity, Purchase Price	17,024,500		17,024,500
Plant production capacity	50,000,000
Membership Units, Acquired	39,080,949
Membership Units, Issued	61,697,104		61,697,104
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	36.66%		36.66%
Restricted Cash and Cash Equivalents	510,955		510,955
Accounts Receivable, Net, Current	3,005,121		3,005,121
Inventory, Net	2,303,157		2,303,157
Prepaid Expense, Current	1,107,025		1,107,025
Property, Plant and Equipment, Net	51,625,774		51,625,774
Other Assets, Noncurrent	924,252		924,252
Goodwill	1,099,579		1,099,579
Total Assets	61,598,627		61,598,627
Accounts Payable, Current	(936,893)		(936,893)
Accrued Liabilities, Current	(399,623)		(399,623)
Notes Payable	(36,452,764)		(36,452,764)
Stockholders' Equity Attributable to Noncontrolling Interest	(6,784,847)		(6,784,847)
Earnings Per Share, Basic and Diluted	$ 118.02	$ (8.83)	$ 188.11	$ 149.58
Management Services Agreement, Initial Term	three years
Management Services Agreement, Monthly Fee, Year 1	$ 35,000
Management Serices Agreement, Monthly Fee Percent of Salaries, Year 2	50.00%
Management Serices Agreement, Monthly Fee Percent of Salaries, Year 2	50.00%
Management Serives Agreement, Renewal Terms	one-year
Management Services Agreement, Termination Notice	90-days
Capital Unit, Class A [Member]
Business Acquisition [Line Items]
Membership Units, Acquired	24,080,949
Capital Unit, Class B [Member]
Business Acquisition [Line Items]
Membership Units, Acquired	15,000,000

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Fair Value

9 Months Ended

Jul. 31, 2013

Fair Value [Abstract]

Fair Value

FAIR VALUE

The following table provides information on those derivative assets measured at fair value on a recurring basis at July 31, 2013:

	Carrying Amount in Balance Sheet July 31, 2013		Fair Value July 31, 2013		Fair Value Measurement Using
					Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial Assets:
Commodity derivative instruments	$	688	$	688	$	688	$	—	$	—

The following table provides information on those derivative liabilities measured at fair value on a recurring basis at October 31, 2012:

	Carrying Amount in Balance Sheet October 31, 2012			Fair Value October 31, 2012			Fair Value Measurement Using
							Quoted Prices in Active Markets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial Liabilities:
Commodity derivative instruments	$	(45,563	)	$	(45,563	)	$	(45,563	)	$	—	$	—

GFE determines the fair value of commodity derivative instruments by obtaining fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the Chicago Board of Trade market and New York Mercantile Exchange.

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Revolving Line of Credit Line of Credit (Details) (USD $)	3 Months Ended
	Jul. 31, 2013	Oct. 31, 2012
Debt Instrument [Line Items]
Shuttlewagon Railcar Mover Loan	$ 412,013	$ 497,636
Long-term Debt	29,868,598	5,389,588
Long-term Debt, Current Maturities	(3,329,924)	(114,718)
Long-Term Debt, less current portion	26,538,674	5,274,870
Line of Credit Future Reduction, Amount	1,000,000
Line of Credit Facility, Interest Rate Description	"One Month LIBOR Index Rate," plus 2.65% and 2.9%
Letters of Credit Outstanding, Amount	337,928
Notes Assumed	5,000,000
Business Acquisition, Purchase Price Allocation, Notes Payable and Long-term Debt	4,024,500
Note Assumed [Member]
Debt Instrument [Line Items]
Debt Instrument, Maturity Date	Sep. 23, 2013
Debt Instrument, Interest Rate, Stated Percentage	399.00%
Subsequent Event, Date	Aug. 19, 2013
Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	400.00%
Subsequent Event, Date	Aug. 26, 2013
Shuttlewagon Railcar Mover [Member]
Debt Instrument [Line Items]
LOC Term	5
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum	3.875%
Revolving Operating Loan [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	2.65%
Long-term Debt	6,000,000
Revolving Term Loan [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	2.90%
Line of Credit Facility, Amount Outstanding	4,375,970	4,891,952
Long-term Debt	8,000,000
Revolving Operating Loan, Net [Member]
Debt Instrument [Line Items]
Long-term Debt	5,662,000
Heron Lake Bioenergy [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.50%
Line of Credit Facility, Amount Outstanding	10,650,377
Notes Payable to Bank	18,505,863	0
Notes Payable	(36,452,764)
Convertible Subordinated Debt	1,407,000	0
Line of Credit Future Reduction, Amount	2,000,000
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum	5.00%
Debt Instrument, Interest Rate Terms	LIBOR plus 3.50% but not less than 5.00%
Line of Credit Facility, Interest Rate Description	LIBOR
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.35%
Liabilities, Fair Value Adjustment	722,000
Line of Credit Facility, Remaining Borrowing Capacity	9,800,000
Line of Credit Facility, Expiration Date	Sep. 01, 2016
Debt Instrument, Convertible, Effective Interest Rate	7.25%
Debt Instrument, Convertible, Conversion Price	$ 0.30
Agrinatural, LLC [Member]
Debt Instrument [Line Items]
Notes Payable	1,123,064
AgStar [Member] | Heron Lake Bioenergy [Member] | Fixed Term Note [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Interest Rate Description	LIBOR plus 3.50% but not less than 5%
Debt Instrument, Interest Rate, Stated Percentage	5.75%
Line of Credit Facility, Remaining Borrowing Capacity	17,400,000
Line of Credit Facility, Expiration Date	Sep. 01, 2016
Line of Credit Facility, Excess Cash Flow Payment, Percentage	25.00%
Line of Credit Facility, Excess Cash Flow Payment	2,000,000
City/County Juristiction [Member] | Heron Lake Bioenergy [Member]
Debt Instrument [Line Items]
Notes Payable	2,981,353	0
Federated Electric [Member] | Heron Lake Bioenergy [Member]
Debt Instrument [Line Items]
Notes Payable	312,500	0
SRS [Member] | Heron Lake Bioenergy [Member]
Debt Instrument [Line Items]
Notes Payable	$ 750,835	$ 0

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Acquisition (Notes)

9 Months Ended

Jul. 31, 2013

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

The acquisition date fair value of the consideration transferred consisted of the following:

Cash	$	8,000,000
Note payable	4,024,500
Assumption of note payable to Granite Falls Bank	5,000,000
Total Consideration	$	17,024,500

BUSINESS COMBINATION

On July 31, 2013, the Company acquired 63.3% of the outstanding membership units of Heron Lake BioEnergy, LLC (“HLBE”) through its purchase of 100% of the membership units of Project Viking, L.L.C. (“Project Viking”), for a total purchase price of $17,024,500. HLBE is a 50 million gallon per year ethanol plant located in Heron Lake, Minnesota. Project Viking was formed by the previous investor to only hold equity interests in HLBE and the debt incurred to obtain those interests and did not have any other assets or liabilities. The previous owner of Project Viking also owned approximately 12.82% of the outstanding membership units of the Company at July 31, 2013.

Immediately following the closing, the Company, through its 100% ownership of Project Viking, owned 24,080,949 Class A units and 15,000,000 Class B units of HLBE, for a total of 39,080,949 units, or 63.3% of the 61,697,104 units. As a result, under HLBE's member control agreement, Project Viking is entitled to appoint five (5) of the nine (9) governors to HLBE's board of governors.

On July 31, 2013, the Company entered into a Management Services Agreement with HLBE. Under the Management Services Agreement, the Company agreed to supply its own personnel to act as part-time officers and managers of HLBE for the positions of Chief Executive Officer, Chief Financial Officer, and Commodity Risk Manager. The initial term of the Management Services Agreement is three years. The Company will be paid $35,000 per month by HLBE for the first year of the Management Services Agreement. During years two and three of the agreement, HLBE agreed to pay the Company 50% of the total salary, bonuses, and other expenses and costs incurred by the Company for the three management positions. At the expiration of the initial term, the Management Services Agreement will automatically renew for successive one-year terms unless and until the Company or HLBE gives the other party 90-days written notice of termination prior to expiration of the initial term or the start of a renewal term.

The acquisition date fair value of the consideration transferred consisted of the following:

Cash	$	8,000,000
Note payable	4,024,500
Assumption of note payable to Granite Falls Bank	5,000,000
Total Consideration	$	17,024,500

The assets and liabilities of Project Viking were recorded at their respective estimated fair values as of the date of the acquisition using generally accepted accounting principles for business combinations. The Company used a combination of the market and cost approaches and unobservable level 3 inputs, to estimate the fair values of the assets acquired and liabilities assumed. The fair value of the long-term debt acquired was determined based on the present value of future contractual cash flows discounted at an interest rate that reflects the current borrowing rates available to the Company for loans with similar terms. The value of the 36.66% noncontrolling interest was determined by using the fair value method by using the most recent arms-length transaction of HLBE's units that did not include a control premium. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

Cash	$	1,022,764
Restricted cash	510,955
Accounts receivable	3,005,121
Inventory	2,303,157
Prepaid expenses	1,107,025
Property, plant, and equipment	51,625,774
Other assets	924,252
Goodwill	1,099,579
Total assets acquired	$	61,598,627
Accounts payable	$	(936,893	)
Accrued expenses	(399,623		)
Notes payable	(36,452,764		)
Non-controlling interest	(6,784,847		)
Net purchase price	$	17,024,500

Since the acquisition occurred on the last day of the Company's fiscal third quarter, there were no revenues or expenses consolidated in the Company's statement of operations. As such, there was also no portion of the Company's net income attributable to non-controlling interests during the three or nine month periods ended July 31, 2013. The following represents the pro forma consolidated statement of operations as if the transaction occurred at the beginning of the following periods:

	For the three month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	94,461,603	$	83,407,497
Net income (loss), including portion attributable to noncontrolling interest of $834,036 and $171,232, respectively	$	4,446,282	$	(99,065	)
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	118.02	$	(8.83	)

	For the nine month periods ended
	July 31, 2013		July 31, 2012
Revenues	$	269,219,558	$	246,226,425
Net income, including portion attributable to noncontrolling interest of $191,471 and $1,150,813, respectively	$	5,948,791	$	5,728,847
Earnings per share (30,606 weighted average units outstanding - basic and diluted)	$	188.11	$	149.58

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each of the periods presented.

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Members' Equity

9 Months Ended

Jul. 31, 2013

Members' Equity [Abstract]

Members' Equity

MEMBERS' EQUITY

GFE has one class of membership units.   The units have no par value and have identical rights, obligations and privileges.  Income and losses are allocated to all members based upon their respective percentage of units held. As of July 31, 2013 and October 31, 2012, GFE had 30,606 membership units authorized, issued, and outstanding.

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Risks and Uncertainties

9 Months Ended

Jul. 31, 2013

Risks and Incertainties [Abstract]

Risks and Uncertainties [Text Block]

RISKS AND UNCERTAINTIES

The Company has certain risks and uncertainties that it experiences during volatile market conditions. These volatilities can have a severe impact on operations.  The Company's revenues are derived from the sale and distribution of ethanol, distillers grains, and corn oil to customers primarily located in the United States. Corn for the production process is supplied to our plant primarily from local agricultural producers and from purchases on the open market.  Ethanol sales typically average 80-85% of total revenues and corn costs typically average 70-80% of cost of goods sold.

The Company's operating and financial performance is largely driven by the prices at which they sell ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, the weather, government policies and programs, and unleaded gasoline prices and the petroleum markets as a whole. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. Our largest cost of production is corn.  The cost of corn is generally impacted by factors such as supply and demand, the weather, government policies and programs, and our risk management program used to protect against the price volatility of these commodities.

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Members' Equity (Details) (USD $)	9 Months Ended
	Jul. 31, 2013	Jul. 31, 2012
Class of Stock [Line Items]
Limited Partners' Capital Account, Units Outstanding	30,606
Distribution Made to Member or Limited Partner, Cash Distributions Paid	$ 0	$ 9,196,800

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Inventory Level 3 (Tables)

9 Months Ended

Jul. 31, 2013

Inventory [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories consist of the following:

	July 31, 2013		October 31, 2012
	(Unaudited)
Raw materials	$	5,370,347	$	8,977,820
Spare parts	1,544,897		682,896
Work in process	2,044,754		1,183,188
Finished goods	1,187,917		1,169,265
Totals	$	10,147,915	$	12,013,169

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Legal Proceedings

9 Months Ended

Jul. 31, 2013

Legal Proceedings [Abstract]

Legal Proceedings

LEGAL PROCEEDINGS

From time to time in the ordinary course of business, GFE and HLBE may be named as a defendant in legal proceedings related to various issues, including without limitation, workers' compensation claims, tort claims, or contractual disputes.  We are not currently a party to any material pending legal proceedings and we are not currently aware of any such proceedings contemplated by governmental authorities.

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Long-Term Debt Level 3 (Tables)

9 Months Ended

Jul. 31, 2013

Item 6. Long-Term Debt [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

ong-term debt consists of the following:

	July 31, 2013			October 31, 2012
Granite Falls Energy:
Capital One Equipment Leasing/Finance (GFE):
Shuttlewagon Railcar Mover (5 year term at 3.875%)	$	412,013		$	497,636
Revolving Term Loan (GFE)	4,375,970			4,891,952
Heron Lake BioEnergy:
Term note payable to lending institution (HLBE) (including premium of approximately $1.4m)	18,505,863			—
Assessments Payable (HLBE) (including premium of approximately $223k)	2,981,353			—
Notes payable to electrical company (HLBE)	312,500			—
Corn oil recovery system note payable (HLBE)	750,835			—
Notes payable on pipeline assets (HLBE)	1,123,064			—
Subordinated Debt (HLBE)	1,407,000			—
Total debt	29,868,598			5,389,588
Less: Current Maturities	(3,329,924		)	(114,718		)
Total Long-Term Debt	$	26,538,674		$	5,274,870

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Derivative Instruments (Tables)

9 Months Ended

Jul. 31, 2013

Jul. 31, 2012

Derivatives, Fair Value [Line Items]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The following tables provide details regarding the Company's derivative instruments at July 31, 2013, none of which are designated as hedging instruments:

	Balance Sheet location	Assets		Liabilities
Corn contracts	Commodity Derivative instruments	$	688	$	—
Totals		$	688	$	—

The following tables provide details regarding the Company's derivative instruments at October 31, 2012, none of which are designated as hedging instruments:

	Balance Sheet location	Assets		Liabilities
Corn contracts	Commodity Derivative instruments	$	—	$	(45,563	)
Totals		$	—	$	(45,563	)

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Document and Entity Information Document	9 Months Ended
	Jul. 31, 2013	Sep. 16, 2013
Entity Information [Line Items]
Entity Registrant Name	Granite Falls Energy, LLC
Entity Central Index Key	0001181749
Current Fiscal Year End Date	--10-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jul. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		30,606

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Derivative Instruments Derivative presentation in equity (Tables)

9 Months Ended

Jul. 31, 2013

Derivative Instruments, Gain (Loss) [Line Items]

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance [Table Text Block]

	Statement of Operations location	Three Months Ended July 31
		2013		2012
Corn contracts	Cost of Goods Sold	$	343,320	$	49,813
Total Gain		$	343,320	$	49,813

	Statement of Operations location	Nine Months Ended July 31
		2013		2012
Corn contracts	Cost of Goods Sold	$	369,902	$	(1,251,437	)
Total Gain (Loss)		$	369,902	$	(1,251,437	)