Heron Lake BioEnergy (HLBYL) 10-K 29 Jan 20 2019 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Oct. 31, 2019	Jan. 29, 2020	Apr. 30, 2019
Document Type	10-K
Document Period End Date	Oct. 31, 2019
Entity Registrant Name	Heron Lake BioEnergy, LLC
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001286964
Current Fiscal Year End Date	--10-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus (Q1,Q2,Q3,FY)	FY
Amendment Flag	false
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Public Float			$ 9,659,704
Class A units
Common stock, shares outstanding		62,932,107
Class B units
Common stock, shares outstanding		15,000,000

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Oct. 31, 2019	Oct. 31, 2018
Current Assets
Cash	$ 4,541,295	$ 5,995,982
Restricted cash	52,516
Accounts receivable	4,891,249	3,952,687
Inventory	6,276,258	6,398,686
Commodity derivative instruments	95,823	425,638
Prepaid expenses and other current assets	408,325	392,980
Total current assets	16,265,466	17,165,973
Property and Equipment, net	39,408,195	44,149,925
Other assets	922,254	704,958
Total Assets	56,595,915	62,020,856
Current Liabilities
Current maturities of long-term debt	333,977	391,934
Accounts payable	5,386,618	5,413,915
Commodity derivative instruments		25,180
Accrued expenses	423,266	843,875
Total current liabilities	6,143,861	6,674,904
Long-Term Debt, less current portion	300,203	567,267
Other Long-Term Liabilities	551,000
Commitments and Contingencies
Members' Equity
Members' equity attributable to Heron Lake BioEnergy, LLC consists of 77,932,107 units issued and outstanding at October 31, 2019 and 2018	47,599,276	53,054,846
Non-controlling interest	2,001,575	1,723,839
Total members' equity	49,600,851	54,778,685
Total Liabilities and Members' Equity	$ 56,595,915	$ 62,020,856

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - shares	Oct. 31, 2019	Oct. 31, 2018
Consolidated Balance Sheets
Members' Equity, units issued	77,932,107	77,932,107
Members' Equity, units outstanding	77,932,107	77,932,107

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
Consolidated Statements of Operations
Revenues	$ 106,827,445	$ 108,472,054	$ 109,917,652
Cost of Goods Sold	108,812,379	104,379,759	99,488,370
Gross Profit (Loss)	(1,984,934)	4,092,295	10,429,282
Operating Expenses	(3,397,611)	(3,198,740)	(3,124,687)
Operating Income (Loss)	(5,382,545)	893,555	7,304,595
Other Income (Expense):
Interest income	77,654	75,558	24,668
Interest expense	(98,815)	(132,036)	(212,491)
Other income, net	225,872	329,916	399,221
Total other income, net	204,711	273,438	211,398
Net Income (Loss)	(5,177,834)	1,166,993	7,515,993
Less: Net Income Attributable to Non-controlling Interest	(277,736)	(311,777)	(247,638)
Net Income (Loss) Attributable to Heron Lake BioEnergy, LLC	$ (5,455,570)	$ 855,216	$ 7,268,355
Weighted Average Units Outstanding—Basic and Diluted (Class A and B)	77,932,107	77,932,107	77,932,107
Net Income (Loss) Per Unit Attributable to Heron Lake BioEnergy, LLC—Basic and Diluted (Class A and B)	$ (0.07)	$ 0.01	$ 0.09
Distributions Per Unit (Class A and B)		$ 0.11

Consolidated Statements of Chan

Consolidated Statements of Changes in Members' Equity - USD ($)	Class A units	Class B units	Members' Equity attributable to Heron Lake BioEnergy LLC	Noncontrolling Interest	Total
Balance at Oct. 31, 2016			$ 53,499,596	$ 1,245,424	$ 54,745,020
Balance (in units) at Oct. 31, 2016	62,932,107	15,000,000
Increase (Decrease) in Stockholders' Equity
Net income attributable to non-controlling interest				247,638	247,638
Net income (loss) attributable to Heron Lake BioEnergy, LLC			7,268,355		7,268,355
Balance at Oct. 31, 2017			60,767,951	1,493,062	62,261,013
Balance (in units) at Oct. 31, 2017	62,932,107	15,000,000
Increase (Decrease) in Stockholders' Equity
Member Distributions			(8,568,321)	(81,000)	(8,649,321)
Net income attributable to non-controlling interest				311,777	311,777
Net income (loss) attributable to Heron Lake BioEnergy, LLC			855,216		855,216
Balance at Oct. 31, 2018			53,054,846	1,723,839	$ 54,778,685
Balance (in units) at Oct. 31, 2018	62,932,107	15,000,000			77,932,107
Increase (Decrease) in Stockholders' Equity
Net income attributable to non-controlling interest				277,736	$ 277,736
Net income (loss) attributable to Heron Lake BioEnergy, LLC			(5,455,570)		(5,455,570)
Balance at Oct. 31, 2019			$ 47,599,276	$ 2,001,575	$ 49,600,851
Balance (in units) at Oct. 31, 2019	62,932,107	15,000,000			77,932,107

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
Cash Flow From Operating Activities:
Net income (loss)	$ (5,177,834)	$ 1,166,993	$ 7,515,993
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization	5,253,479	5,037,645	5,021,798
(Gain) loss on sale of asset	4,864	(24,815)	(45,000)
Change in fair value of commodity derivative instruments	(375,216)	(1,240,386)	(728,073)
Changes in operating assets and liabilities:
Accounts receivable	(938,562)	79,290	575,225
Inventory	122,428	665,658	(1,199,799)
Commodity derivative instruments	679,851	953,942	1,276,397
Prepaid expenses and other current assets	(15,345)	(133,874)	(77,253)
Accounts payable	(103,915)	594,150	(107,013)
Accrued expenses	(420,609)	428,769	17,699
Accrued railcar rehabilitation costs	551,000
Net cash provided by (used in) operating activities	(419,859)	7,527,372	12,249,974
Cash Flows from Investing Activities:
Capital expenditures	(432,291)	(2,533,767)	(1,174,527)
Acquisition of non-controlling interest	(225,000)
Proceeds from disposal of asset		24,815	45,000
Net cash used in investing activities	(657,291)	(2,508,952)	(1,129,527)
Cash Flows from Financing Activities:
Checks drawn in excess of bank balance			(1,866,683)
Payments on long-term debt	(325,021)	(438,484)	(486,041)
Distributions to Heron Lake BioEnergy, LLC members		(8,568,321)
Distribution to non-controlling interest		(81,000)
Net cash used in financing activities	(325,021)	(9,087,805)	(2,352,724)
Net increase (Decrease) in Cash and Restricted Cash	(1,402,171)	(4,069,385)	8,767,723
Cash and Restricted Cash—Beginning of Period	5,995,982	10,065,367	1,297,644
Cash and Restricted Cash—End of Period	4,593,811	5,995,982	10,065,367
Supplemental Disclosure of Cash Flow Information
Interest expense	98,815	132,036	$ 212,491
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Capital expenditures included in accounts payable	$ 125,186	$ 48,568

Consolidated Statements of Ca_2

Consolidated Statements of Cash Flows (Parenthetical) - USD ($)	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017	Oct. 31, 2016
Reconciliation of Cash and Restricted Cash
Cash - Balance Sheet	$ 4,541,295	$ 5,995,982	$ 10,065,367
Restricted Cash - Balance Sheet	52,516
Cash and Restricted Cash	$ 4,593,811	$ 5,995,982	$ 10,065,367	$ 1,297,644

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Oct. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Heron Lake BioEnergy, LLC owns and operates an ethanol plant near Heron Lake, Minnesota with a permitted capacity of approximately 72.3 million gallons per year of undenatured ethanol on a twelve-month rolling sum basis. In addition, Heron Lake BioEnergy, LLC produces and sells distillers’ grains with solubles and corn oil as co-products of ethanol production. Heron Lake BioEnergy, LLC’s wholly owned subsidiary, HLBE Pipeline Company, LLC (“HLBE Pipeline Company”), owns 100% of Agrinatural Gas, LLC (“Agrinatural”), beginning as of December 11, 2019. At October 31, 2019, HLBE held a 73% interest in Agrinatural. Agrinatural operates a natural gas pipeline that provides natural gas to Heron Lake BioEnergy, LLC’s ethanol production facility and other customers. Principles of Consolidation The consolidated financial statements include the accounts of Heron Lake BioEnergy, LLC and its wholly owned subsidiary, HLBE Pipeline Company (collectively, “the Company”). Given the Company’s control over the operations of Agrinatural and its majority voting interest, the Company consolidates the financial statements of Agrinatural with its consolidated financial statements, with the equity and earnings (loss) attributed to the remaining 27% non-controlling interest identified separately in the accompanying consolidated balance sheets and statements of operations. All significant intercompany balances and transactions are eliminated in consolidation. See Note 18 for a subsequent event regarding the acquisition of non-controlling interest. Fiscal Reporting Period The Company’s fiscal year end for reporting financial operations is October 31. Accounting Estimates Management uses estimates and assumptions in preparing these consolidated financial statements in accordance with U.S. generally accepted accounting principles. 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 significant matters including, among others, the economic lives of property and equipment, valuation of commodity derivative instruments and inventory, evaluation of rail car rehabilitation costs, the assumptions used in the impairment analysis of long-lived assets, and inventory purchase and sale commitments. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Actual results could differ from those estimates. Non-controlling Interest Amounts recorded as non-controlling interest relate to the net investment by an unrelated party in Agrinatural. Income and losses are allocated to the members of Agrinatural based on their respective percentage of membership units held. Pursuant to the firm natural gas transportation agreement with Agrinatural, Agrinatural will provide natural gas to Heron Lake BioEnergy’s plant with a specified price per MMBTU with a term ending on October 31, 2021, with one automatic renewal option to extend the term for an additional five years period. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Our contracts primarily consist of agreements with marketing companies and other customers as described below. Our performance obligations consist of the delivery of ethanol, distillers’ grains, and corn oil to our customers. Our customers primarily consist of three distinct marketing companies as discussed below. The consideration we receive for these products is fixed or determinable based on current observable market prices at the Chicago Mercantile Exchange, generally, and adjusted for local market differentials. Our contracts have specific delivery modes, rail or truck, and dates. Revenue is recognized when the Company delivers the products to the mode of transportation specified in the contract, at the transaction price established in the contract, net of commissions, fees, and freight. We sell each of the products via different marketing channels as described below. · Ethanol. The Company sells its ethanol via a marketing agreement with Eco-Energy, Inc. Eco-Energy sells one hundred percent of the Company’s ethanol production based on agreements with end users at prices agreed upon mutually among the end user, Eco-Energy and the Company. Our performance obligations consist of our obligation to deliver ethanol to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. The marketing agreement calls for control and title to pass to Eco-Energy once a rail car is released to the railroad or a truck is released from the Company’s scales. Revenue is recognized then at the price in the agreement with the end user, net of commissions, freight, and fees. · Distillers grains. The Company engages another third-party marketing company, Gavilon, Inc, to sell one hundred percent of the distillers grains it produces at the plant. Gavilon takes title and control once a rail car is released to the railroad or a truck is released from the Company’s scales. Prices are agreed upon between Gavilon and the Company. Our performance obligations consist of our obligation to deliver distillers grains to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. · Distillers corn oil (corn oil). The Company sells one hundred percent of its corn oil production to RPMG, Inc. The process for selling corn oil is the same as our distillers’ grains. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. · Agrinatural generates revenue from the transportation of natural gas to residential and commercial customers. Revenue is recognized at the point when natural gas is delivered at the transaction price established in the contract. Cost of Goods Sold The primary components of cost of goods sold for the production of ethanol and related co-products are corn, energy, raw materials, overhead, depreciation, railcar rehabilitation costs, and direct labor. Operating Expenses The primary components of operating expenses are salaries and expenses for administrative employees, professional fees, board of governor expenses and property taxes. Cash The Company maintains its accounts at multiple financial institutions. At times throughout the year, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. The Company does not believe it is exposed to any significant credit risk on its cash balances. Restricted Cash The Company is periodically required to maintain cash balances at its broker related to derivative instrument positions as discussed in Note 7. Accounts Receivable Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral. Accounts receivable are recorded at their estimated net realizable value. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company’s credit terms. Accounts considered uncollectible are written off. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts will be collectible in all material respects and thus an allowance was not necessary at October 31, 2019 or 2018. It is at least possible this estimate will change in the future. Inventory Inventory is stated at the lower of cost or net realizable value. Cost for all inventories is determined using the first in first out method (FIFO). Net realizable value is the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and supplies. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers’ grains, and corn oil. 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 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 7. Other Intangibles Other intangibles are stated at cost and include road improvements located near the plant in which the Company has a beneficial interest in but does not own the road. The Company amortizes the assets over the economic useful life. The Company recorded amortization expense in the amount of approximately $7,700 for the fiscal year ended October 31, 2019, and approximately $38,000 for each of the fiscal years ended October 31, 2018 and 2017. Property and Equipment Property and equipment are recorded at cost. Depreciation is provided over an estimated useful life by use of the straight-line deprecation method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. Construction in progress expenditures will be depreciated using the straight-line method over their estimated useful lives once the assets are placed into service. Depreciable useful lives are as follows: Land improvements 15 Years Plant building and equipment 7-40 Years Vehicles and other equipment 5-7 Years Office buildings and equipment 3-40 Years Long-Lived Assets Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When determining impairment losses, a long lived asset should be grouped with other assets or liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets or liabilities. If circumstances require a long-lived asset to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment expense was recorded during fiscal 2019, 2018, and 2017. Fair Value of Financial Instruments The Company follows guidance for accounting for fair value measurements of financial assets and liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the consolidated financial statements on a recurring and nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. · Level 2 inputs include: 1. Quoted prices in active markets for similar assets or liabilities. 2. Quoted prices in markets that are observable for the asset or liability either directly or indirectly, for substantially the full term of the asset or liability. 3. Inputs that derived primarily from or corroborated by observable market date by correlation or other means. · Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in our balance sheets, the Company has elected not to record any other assets or liabilities at fair value. No events occurred during the fiscal years ended October 31, 2019, 2018, and 2017 that required adjustment to the recognized balances of assets or liabilities, which are recorded at fair value on a nonrecurring basis. The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short maturity of these instruments. The fair value of debt has been estimated using discounted cash flow analysis based upon the Company’s current incremental borrowing rates for similar types of financing arrangements. The fair value of outstanding debt will fluctuate with changes in applicable interest rates. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The Company believes the carrying amount of its debt facilities approximates the fair value. Income Taxes The Company is treated as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, its earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. Differences between financial statement basis of assets and tax basis of assets is related to capitalization and amortization of organization and start-up costs for tax purposes, whereas these costs are expensed for financial statement purposes. In addition, the Company uses the alternative depreciation system (ADS) for tax depreciation instead of the straight-line method that is used for book depreciation, which also causes temporary differences. The Company’s tax year end is December 31. The Company had no significant uncertain tax positions as of October 31, 2019 or 2018 that would require disclosure, primarily due to the partnership tax status. The Company recognizes and measures tax benefits when realization of the benefits is uncertain under a two-step approach. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. Primarily due to the Company’s tax status as a partnership, the adoption of this guidance had no material impact on the Company’s financial condition or results of operations. The Company files income tax returns in the U.S. federal and Minnesota state jurisdictions. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2016. Net Income per Unit Basic net income per unit is computed by dividing net income by the weighted average number of members’ units outstanding during the period. Diluted net income or loss per unit is computed by dividing net income by the weighted average number of members’ units and members’ unit equivalents outstanding during the period. Environmental Liabilities The Company’s operations are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which it operates. These laws require the Company to investigate and remediate the effects of the release or disposal of materials at its location. Accordingly, the Company has adopted policies, practices, and procedures in the areas of pollution control, occupational health, and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability, which could result from such events. Environmental liabilities are recorded when the liability is probable and the costs can be reasonably estimated. Reportable Operating Segments Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the related business nature and expected financial results criteria set forth in ASC 280, the Company has two reportable operating segments for financial reporting purposes. · Ethanol Production . Based on the nature of the products and production process and the expected financial results, the Company’s operations at its ethanol plant, including the production and sale of ethanol and its co-products, are aggregated into one financial reporting segment. · Natural Gas Pipeline . The Company has majority ownership in Agrinatural, through its wholly owned subsidiary, HLBE Pipeline, LLC, and operations of Agrinatural’s natural gas pipeline are aggregated into another financial reporting segment. Recently Adopted Accounting Pronouncements Effective November 1, 2018, the Company adopted the amended guidance ASC Topic 606, Revenue from Contracts with Customers. Refer to Note 1 – Summary of Significant Accounting Policies and Note 3 – Revenue for further details. In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-18, Restricted Cash, which amended Statement of Cash Flows (Topic 230) of the Accounting Standards Codification. The new guidance requires an entity to reconcile and explain the period-over-period change in total cash, cash equivalents, restricted cash and restricted cash equivalents within its statement of cash flows. Effective November 1, 2018, the Company adopted the new standard and has applied it retrospectively. Accordingly, the consolidated statements of cash flows for the periods ended October 31, 2019, 2018, and 2017 have been adjusted from amounts previously reported. Recently Issued Accounting Pronouncements Leases (Evaluating) In February 2016, the FASB adopted ASU No. 2016-02, Leases (Topic 842), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The guidance will be effective for the Company beginning November 1, 2019. It is to be adopted using a modified retrospective approach. The Company is evaluating the impact that the adoption of this guidance will have on the Company’s consolidated financial statements and anticipates the new guidance will significantly impact its consolidated financial statements given the Company leases a significant number of rail cars for transporting ethanol and dried distillers grains with solubles to its end customers.

RISKS AND UNCERTAINTIES

RISKS AND UNCERTAINTIES	12 Months Ended
	Oct. 31, 2019
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES	2. RISKS AND UNCERTAINTIES The Company has certain risks and uncertainties that it experienced during volatile market conditions. These volatilities can have a severe impact on operations. The Company’s revenues are primarily derived from the sale and distribution of ethanol, distillers’ grains and corn oil to customers primarily located in the U.S. Corn for the production process is supplied to the plant primarily from local agricultural producers. Ethanol sales average 75%-85% of total revenues and corn costs average 70%-90% of cost of goods sold. The Company’s operating and financial performance is largely driven by the prices at which it sells ethanol, distillers’ grains and corn oil, and the related costs of corn. The price of ethanol is influenced by factors such as supply and demand, the weather, government policies and programs, 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. The 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 a risk management program used to protect against the price volatility of these commodities. Market fluctuations in the price of and demand for these products may have a significant adverse effect on the Company’s operations, profitability and the availability and adequacy of cash flow to meet the Company’s working capital requirements. The Company’s risk management program is used to protect against the price volatility of these commodities. The Company, and the ethanol industry as a whole, experienced significant adverse conditions throughout most of 2018 and into 2019 as a result of industry-wide record low ethanol prices due to reduced demand and high industry inventory levels. These factors resulted in prolonged negative operating margins, significantly lower cash flow from operations and substantial net losses. The Company believes its cash on hand and available debt from its lender will provide sufficient liquidity to meets its anticipated working capital, debt service and other liquidity needs through the next twelve months. Additionally, supply and demand for ethanol are impacted by federal and state legislation and regulation, most significantly the Renewable Fuels Standard (“RFS”), and any changes in legislation or regulation could cause the demand for ethanol to decline or its supply to increase, which could have a material adverse effect on our business, results of operations and financial condition, and the ability to operate at a profit. Current ethanol production capacity exceeds the EPA’s 2019 and 2020 RVOs that can be satisfied by corn-based ethanol. According to the RFS, if mandatory renewable fuel volumes are reduced by at least 20% for two consecutive years, the EPA is required to modify, or reset, statutory volumes through 2022. In October 2018, the Office of Management and Budget announced that the 20% thresholds “have been met or are expected to be met in the near future.” In May 2019, the EPA delivered a proposed RFS “reset” rule to the White House Office of Management and Budget. If the statutory RVOs are reduced as a result of such reset, it could have an adverse effect on the market price and demand for ethanol which would negatively impact our financial performance. Additionally, opponents of ethanol such as large oil companies will likely continue their efforts to repeal or reduce the RFS through lawsuits or lobbying of Congress. Successful reduction or repeal of the blending requirements of the RFS could result in a significant decrease in ethanol demand.

REVENUE

REVENUE	12 Months Ended
	Oct. 31, 2019
REVENUE
REVENUE	3. REVENUE Adoption of ASC Topic 606 On November 1, 2018, the Company adopted the amended guidance in ASC Topic 606, Revenue from Contracts with Customers, and all related amendments (“new revenue standard”) and applied it to all contracts using the modified retrospective transition method. The adoption of the new revenue standard did not result in any changes to the timing or amount of revenue recognized prior to November 1, 2018, but did result in expanded disclosures to our consolidated financial statements. Revenue by Source All revenues from contracts with customers under ASC Topic 606 are recognized at a point in time. The following table disaggregates revenue by major source for the fiscal year ended October 31, 2019: Ethanol Production Natural Gas Pipeline Total Ethanol $ $ — $ Distillers’ Grains — Corn Oil — Other — Natural Gas — Total Revenues $ $ $ Payment Terms The Company has contractual payment terms with each respective marketer that sells ethanol, distillers’ grains and corn oil. These terms are 10 calendar days after the transfer of control date. The Company has contractual payment terms with the natural gas customers of 20 days. Shipping and Handling Costs Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of goods sold. Accordingly, amounts billed to customers for such costs are included as a component of revenue.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	12 Months Ended
	Oct. 31, 2019
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	4. FAIR VALUE MEASUREMENTS The Company follows accounting guidance related to fair value disclosures. For the Company, this guidance applies to certain derivative investments. The authoritative guidance also clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair measurements. The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis at October 31, 2019: Fair Value Measurement Using Carrying Amount in Quoted Prices Significant Other Significant Consolidated Balance Sheet Active Markets Observable Inputs Unobservable inputs Financial Assets Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative instruments - Corn $ 20,060 $ 20,060 $ 20,060 $ — $ — Commodity Derivative instruments - Ethanol $ 75,763 $ 75,763 $ 75,763 $ $ The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis at October 31, 2018: Fair Value Measurement Using Carrying Amount in Quoted Prices in Significant Other Significant Consolidated Active Markets Observable Inputs Unobservable Inputs Financial Assets: Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative instruments - Corn $ 425,638 $ 425,638 $ 425,638 $ — $ — Financial Liabilities: Commodity Derivative instruments - Corn $ 25,180 $ 25,180 $ — $ 25,180 $ We determine 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. We determine the fair value of corn Level 2 instruments by model-based techniques in which all significant inputs are observable in the markets noted above.

CONCENTRATIONS

CONCENTRATIONS	12 Months Ended
	Oct. 31, 2019
CONCENTRATIONS
CONCENTRATIONS	5. CONCENTRATIONS The Company sold all of the ethanol, distillers’ grains, and corn oil produced at its plant to three customers under marketing agreements during the fiscal years ended October 31, 2019, 2018, and 2017. The percentage of total revenues attributable to each of the Company’s three major customers for the fiscal years ended October 31, 2019, 2018, and 2017 were as follows: October 31, 2019 October 31, 2018 October 31, 2017 Eco-Energy, Inc. - Ethanol Gavilon Ingredients, LLC - Distillers' Grains RPMG, Inc. - Corn Oil The percentage of total accounts receivable attributable to each of the Company’s three major customers at October 31, 2019 and 2018 were as follows: October 31, 2019 October 31, 2018 Eco-Energy, Inc. - Ethanol Gavilon Ingredients, LLC - Distillers' Grains RPMG, Inc. - Corn Oil

INVENTORY

INVENTORY	12 Months Ended
	Oct. 31, 2019
INVENTORY
INVENTORY	6. INVENTORY Inventory consists of the following at October 31: 2019 2018 Raw materials $ 932,503 $ 1,215,640 Work in process 732,243 571,228 Finished goods 3,157,429 3,436,175 Supplies 1,454,083 1,175,643 Totals $ 6,276,258 $ 6,398,686 The Company performs a lower cost or net realizable value 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 net realizable value analysis, the Company recorded a loss on ethanol and corn inventories, as a component of cost of goods sold, of approximately $537,000 and $47,000 for the fiscal year ended October 31, 2019, respectively. The Company recorded a loss on ethanol and corn inventories, as a component of cost of goods sold, of approximately $669,000 and $101,000 for the fiscal year ended October 31, 2018, respectively.

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS	12 Months Ended
	Oct. 31, 2019
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS	7. DERIVATIVE INSTRUMENTS The Company enters into corn, ethanol, and natural gas derivatives in order to protect cash flows from fluctuations caused by volatility in commodity prices for periods up to 24 months. These derivatives are put in place to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sales and corn purchase commitments where the prices are set at a future date. Although these derivative instruments serve the Company’s purpose as an economic hedge, they are not designated as effective hedges for accounting purposes. For derivative instruments that are not accounted for as hedges, or for the ineffective portions of qualifying hedges, the change in fair value is recorded through earnings in the period of change. As of October 31, 2019, the total notional amount of the Company’s outstanding corn derivative instruments was approximately 5,398,000 bushels, comprised of long corn futures positions on 2,131,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn futures positions on 3,267,000 bushels that were entered into to hedge forecasted corn purchases through December 2021. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, the Company had approximately $52,000 in cash collateral (restricted cash) related to derivates held by a broker. The following table provides detail regarding the Company’s derivative financial instruments at October 31, 2019, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 20,060 $ — Ethanol contracts Commodity derivative instruments 75,763 — Totals $ 95,823 $ — As of October 31, 2018, the Company had no cash collateral (restricted cash) related to derivatives held by a broker. The following table provides detail regarding the Company’s derivative financial instruments at October 31, 2018, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 425,638 $ 25,180 Totals $ 425,638 $ 25,180 As of October 31, 2018, the total notional amount of the Company’s outstanding corn derivative instruments was approximately 2,685,000 bushels, comprised of long corn positions on 510,000 bushels that were entered into to hedge forecasted ethanol sales through July 2019, and short corn positions on 2,175,000 bushels that were entered into to hedge forecasted corn purchases through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. The following table provides details regarding the gains (losses) from the Company’s derivative instruments in its consolidated statements of operations, none of which are designated as hedging instruments: Consolidated Statement of Fiscal Year Ended October 31, Operations Location 2019 2018 2017 Corn contracts Cost of goods sold $ 350,624 $ 1,188,237 $ 962,256 Ethanol contracts Revenues 24,592 53,747 (218,802) Natural gas contracts Cost of goods sold — (1,598) (15,381) Total gain $ 375,216 $ 1,240,386 $ 728,073

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	12 Months Ended
	Oct. 31, 2019
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT	8. PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: October 31, 2019 October 31, 2018 Land and improvements $ 9,111,838 $ 9,111,838 Plant buildings and equipment 88,708,522 87,940,264 Vehicles 700,959 700,959 Office buildings 735,864 738,073 Construction in progress 58,319 375,245 99,315,502 98,866,379 Less: accumulated depreciation (59,907,307) (54,716,454) Net property and equipment $ 39,408,195 $ 44,149,925 Depreciation expense totaled approximately $5,246,000, $4,999,000 and $4,984,000 during the fiscal years ended October 31, 2019, 2018, and 2017, respectively.

DEBT FACILITIES

DEBT FACILITIES	12 Months Ended
	Oct. 31, 2019
DEBT FACILITIES
DEBT FACILITIES	9. DEBT FACILITIES Long-term debt consists of the following: October 31, 2019 October 31, 2018 Amended revolving term note payable to lending institution, see terms below. $ — $ — Seasonal line of credit payable to lending institution, see terms below. — — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in 2021. The Company made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 634,180 947,300 Assessment payable as part of water supply agreement, due in monthly installments of $3,942 with interest at 8.73%, enforceable by statutory lien, with the final payment made in 2019. — 11,901 Totals 634,180 959,201 Less amounts due within one year 333,977 391,934 Net long-term debt $ 300,203 $ 567,267 Revolving Term Note The Company had a revolving term note payable under which the Company could borrow, repay, and re-borrow in an amount up to the original aggregate principal commitment at any time prior to maturity at March 1, 2022. The original aggregate principal commitment was $28,000,000, which reduced by $3,500,000 annually, starting March 1, 2015 and continuing each anniversary thereafter until maturity. In December 2017, the Company and its lender orally agreed to reduce the aggregate principal commitment of the revolving term loan to $8,000,000. On April 6, 2018, the Company finalized loan agreements with an effective date of March 29, 2018 for an amended credit facility with its lender (the “2018 Credit Facility”). On January 7, 2020, the Company finalized loan agreements for an amended credit facility with its lender (the “2020 Credit Facility”). 2020 Credit Facility The 2020 Credit Facility includes an amended and restated revolving term loan with an $8,000,000 principal commitment. This loan replaces the amended revolving term note and seasonal revolving loan made under the 2018 Credit Facility. The loan is secured by substantially all of the Company’s assets, including a subsidiary guarantee. The 2020 Credit Facility contains customary covenants, including restrictions on the payment of dividends and loans and advances to Agrinatural, and maintenance of certain financial ratios including minimum working capital, minimum net worth and a debt service coverage ratio as defined by the credit facility. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the revolving term loan and/or the imposition of fees, charges, or penalties. As part of the 2020 Credit Facility closing, the Company entered into an amended administrative agency agreement with CoBank, ACP (“CoBank”). As a result, CoBank will continue act as the agent for the lender with respect to the 2020 Credit Facility. The Company agreed to pay CoBank an annual fee of $2,500 for its services as administrative agent. Amended Revolving Term Note Under the terms of the amended revolving term loan, the Company may borrow, repay, and reborrow up to the aggregate principal commitment amount of $8,000,000. Final payment of amounts borrowed under the amended revolving term loan is due December 1, 2022. Interest on the amended revolving term loan accrues at a variable weekly rate equal to 3.10% above the One-Month London Interbank Offered Rate (“LIBOR”) Index rate. The Company also agreed to pay an unused commitment fee on the unused available portion of the amended revolving term loan commitment at the rate of 0.500% per annum, payable monthly in arrears. 2018 Credit Facility The 2018 Credit Facility includes an amended and restated revolving term loan with a $4,000,000 principal commitment and a revolving seasonal line of credit with a $4,000,000 principal commitment. The loans are secured by substantially all of the Company’s assets, including a subsidiary guarantee. The 2018 Credit Facility contains customary covenants, including restrictions on the payment of dividends and loans and advances to Agrinatural, and maintenance of certain financial ratios including minimum working capital, minimum net worth and a debt service coverage ratio as defined by the credit facility. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the revolving term loan and/or the imposition of fees, charges, or penalties. In October 2018, the Company had an event of non-compliance related to the debt service coverage ratio as defined in the 2018 Credit Facility. In December 2018, the Company received a waiver from its lender waiving this event of noncompliance. In October 2019, the Company had an event of non-compliance related to the debt service coverage ratio as defined in the 2018 Credit Facility. In December 2019, the Company received a waiver from its lender waiving this event of noncompliance. As part of the 2018 Credit Facility closing, the Company entered into an amended administrative agency agreement with CoBank, ACP (“CoBank”). As a result, CoBank will continue act as the agent for the lender with respect to the 2018 Credit Facility. The Company agreed to pay CoBank an annual fee of $2,500 for its services as administrative agent. Amended Revolving Term Note Under the terms of the amended revolving term loan, the Company may borrow, repay, and reborrow up to the aggregate principal commitment amount of $4,000,000. Final payment of amounts borrowed under amended revolving term loan is due December 1, 2021. Interest on the amended revolving term loan accrues at a variable weekly rate equal to 3.10% above the One-Month London Interbank Offered Rate (“LIBOR”) Index rate, which was 4.87% at October 31, 2019. The Company also agreed to pay an unused commitment fee on the unused available portion of the amended revolving term loan commitment at the rate of 0.500% per annum, payable monthly in arrears. The aggregate principal amount available to the Company for borrowing under the amended revolving term loan at October 31, 2019 and 2018 was $4,000,000. Seasonal Revolving Loan Under the terms of the seasonal revolving loan, the Company may borrow, repay, and reborrow up to the aggregate principal commitment amount of $4,000,000 until its maturing on May 1, 2020. Amounts borrowed under the seasonal revolving loan bear interest at a variable weekly rate equal to 2.85% above the rate quoted by LIBOR Index rate, which was 4.62% at October 31, 2019. The aggregate principal amount available under the seasonal revolving loan was $4,000,000 at October 31, 2019 and 2018. The Company also agreed to pay an unused commitment fee on the unused portion of the seasonal revolving loan commitment at the rate of 0.250% per annum. Estimated annual maturities of long-term debt at October 31, 2019 are as follows based on the most recent debt agreements: 2020 $ 333,977 2021 300,203 Total debt $ 634,180

MEMBERS' EQUITY

MEMBERS' EQUITY	12 Months Ended
	Oct. 31, 2019
MEMBERS' EQUITY.
MEMBERS' EQUITY	10. MEMBERS’ EQUITY The Company is authorized to issue 80,000,000 capital units, of which 65,000,000 have been designated Class A units and 15,000,000 have been designated as Class B units. Members of the Company are holders of units who have been admitted as members and who hold at least 2,500 units. Any holder of units who is not a member will not have voting rights. Transferees of units must be approved by our board of governors to become members. Members are entitled to one vote for each unit held. Subject to the Member Control Agreement, all units share equally in the profits and losses and distributions of assets on a per unit basis. On December 21, 2017, the Company’s board of governors declared a distribution of $0.11 per membership unit for a total of approximately $8,573,000 to be paid to members of record as of December 21, 2017. The distribution was paid in January 2018. Based on the covenants contained in the Company’s lender credit facilities, the foregoing distribution was approved by its lender prior to distribution.

LEASES

LEASES	12 Months Ended
	Oct. 31, 2019
LEASES
LEASES	11. LEASES The Company has lease agreements with leasing companies for 138 rail cars for the transportation of the Company’s ethanol with various maturity dates through January 2027. The rail car lease payments are due monthly in the aggregate amount of approximately $122,000. The Company has lease agreements with leasing companies for 110 hopper cars to assist in with the transport of the distillers’ grains by rail with various maturity dates through May 2027. The rail car lease payments are due monthly in the amount of approximately $64,000. Rent expense for the Company’s leases was approximately $2,374,000, $2,339,000 and $2,170,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively. At October 31, 2019, the Company had the following minimum future lease payments, which at inception had non‑cancelable terms of more than one year: November 1, 2019 to October 31, 2020 $ 1,767,000 November 1, 2020 to October 31, 2021 1,767,000 November 1, 2021 to October 31, 2022 1,767,000 November 1, 2022 to October 31, 2023 1,767,000 November 1, 2023 to October 31, 2024 1,670,000 Thereafter 3,812,000 Total minimum lease commitments $ 12,550,000

INCOME TAXES

INCOME TAXES	12 Months Ended
	Oct. 31, 2019
INCOME TAXES
INCOME TAXES	12. INCOME TAXES The differences between consolidated financial statement basis and tax basis of assets and liabilities are estimated as follows at October 31: 2019 2018 Consolidated financial statement basis of assets $ 56,595,915 $ 62,020,856 Plus: Organization and start-up costs capitalized for tax purposes, net 502,566 617,833 Less: Unrealized gains on commodity derivative instruments (95,823) (425,638) Less: Accumulated tax depreciation and amortization greater than financial statement basis (56,386,730) (56,330,302) Plus: Impairment charge 27,844,579 27,844,579 Income tax basis of assets $ 28,460,507 $ 33,727,328 Financial Statement basis of liabilities $ 6,995,064 Accrued Rail Car Maintenance (551,000) Other Accruals (183,891) Income tax basis of liabilities $ 6,260,174 There were no significant differences between the consolidated financial statement basis of liabilities and the income tax basis of liabilities at 2018.

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS	12 Months Ended
	Oct. 31, 2019
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS	13. EMPLOYEE BENEFIT PLANS The Company has a defined contribution plan available to all of its qualified employees. The Company contributes a match of 50% of the participant’s salary deferral up to a maximum of 4% of the employee’s salary. The Company contributions totaled approximately $92,000, $98,000, and $90,000 for the fiscal years ended October 31, 2019, 2018, and 2017, respectively.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	12 Months Ended
	Oct. 31, 2019
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	14. RELATED PARTY TRANSACTIONS Granite Falls Energy, LLC The Company has a management services agreement with Granite Falls Energy, LLC (“GFE”), a related party. Under the terms of the agreement, GFE supplies its own personnel to act as part-time officers and managers of the Company for the positions of Chief Executive Officer, Chief Financial Officer, and Commodity Risk Manager and the Company pays GFE 50% of the total salary, bonuses and other expenses and costs for the three management positions. The management services agreement automatically renews for successive one-year terms unless the Company or GFE gives the other party 90-day written notice of termination prior to expiration of the then-current term. The management services agreement may also be terminated by either party for cause under certain circumstances. Total expenses under this agreement were $438,000, $449,000 and $406,000 for fiscal years ended October 31, 2019, 2018, and 2017, respectively. Corn Purchase - Members The Company purchased corn from members of its Board of Governors of approximately $11,478,000 in fiscal year 2019, o f which approximately $470,000 is included in accounts payable at October 31, 2019, $14,483,000 in fiscal year 2018, o f which approximately $348,000 is included in accounts payable at October 31, 2018, and $9,811,000 in fiscal year 2017 o f which approximately $602,000 is included in accounts payable at October 31, 2017. Swan Engineering Agrinatural had a management and operating agreement with Swan Engineering, Inc. (“SEI”). SEI, together with an unrelated third party owns Rural Energy Solutions, LLC (“RES”), the 27% minority owner of Agrinatural. Under the management and operating agreement, SEI provided Agrinatural with day-to-day management and operation of Agrinatural’s pipeline distribution business. In exchange for these services, Agrinatural paid SEI an aggregate management fee equal to the fixed monthly base fee plus the variable customer management fee based on the number of customers served on the pipeline less the agreed monthly fee reduction of $4,500. For the year ended October 31, 2019, the Company paid approximately $28,000 and $111,000 for the monthly base fee and variable customer management fee, respectively. For the year ended October 31, 2018, the Company paid approximately $38,000 and $161,000 for the monthly base fee and variable customer management fee, respectively. For the year ended October 31, 2017, the Company paid approximately $36,000 and $157,000 for the monthly base fee and variable customer management fee, respectively. The management and operating agreement with SEI expired July 1, 2019. Agrinatural entered into a new five-year management and operating agreement with a third party effective July 1, 2019. Agrinatural also had a project management agreement with SEI. Pursuant to the project management agreement, SEI supervised all of Agrinatural’s pipeline construction projects. These projects are constructed by unrelated third-party pipeline construction companies. Under the project management agreement, Agrinatural paid SEI a total of 10% of the actual capital expenditures for construction projects approved by Agrinatural’s Board of Directors, excluding capitalized marketing costs. For the year ended October 31, 2019, the Company incurred approximately $45,000 for project management and capital work fees. For the year ended October 31, 2018, the Company incurred approximately $77,000 for project management and capital work fees. For the year ended October 31, 2017, the Company incurred approximately $44,000 for project management and capital work fees. The project management with SEI expired June 30, 2019. Agrinatural entered into a new five-year management and operating agreement with a third party effective July 1, 2019.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Oct. 31, 2019
COMMITMENTS AND CONTINGENCIES.
COMMITMENTS AND CONTINGENCIES	15. COMMITMENTS AND CONTINGENCIES Water Agreements In September 2019, the Company entered into an industrial water supply development and distribution agreement, effective as of February 1, 2019, with the City of Heron Lake for 10 years. The Company has the exclusive rights to the first 600 gallons per minute of capacity that is available from the well. In consideration, the Company will pay flow charges at a rate of $0.60 cents per thousand gallons of water, in addition to a fixed monthly charge of $1,500 per month. The flow charges are placed into a dedicated fund for operation and maintenance of the well, and are capped at $300,000 at the end of each year. The Company is also responsible for paying 55% of operation and maintenance costs in excess of the $300,000 cap, in the first two years of the agreement. Thereafter, the percentage payable by the Company is determined based on a two-year average of the Company’s usage compared to the total amount of industrial water supplied to the Company and a third-party customer of the City of Heron Lake. Under the previous industrial water supply development and distribution agreement with the City of Heron Lake, the Company paid one half of the City of Heron Lake’s water well bond payments of $735,000, plus a 5% administrative fee, totaling approximately $594,000, and operating costs, relative to the Company’s water usage, plus a 10% profit. The Company recorded an assessment of approximately $367,000 with long-term debt as described in Note 9. The Company paid operating and administrative expenses of approximately $12,000 per year. In May 2006, the Company entered into a water treatment agreement with the City of Heron Lake and Jackson County for 30 years. The Company will pay for operating and maintenance costs of the plant in exchange for receiving treated water. In addition, the Company agreed to an assessment for a portion of the capital costs of the water treatment plant. The Company recorded assessments with long-term debt of $500,000 and $3,550,000 in fiscal 2007 and 2006, respectively, as described in Note 9. The Company paid operating and maintenance expenses of approximately $52,000, $92,000, and $24,000 in fiscal 2019, 2018, and 2017, respectively. Ethanol Marketing Agreement The Company has a marketing agreement (“Eco Agreement”) with Eco-Energy, Inc., an unrelated party (“Eco-Energy”) for the sale of ethanol. Under this ethanol agreement, Eco-Energy purchases, markets and resells 100% of the ethanol produced at the Company’s ethanol production facility and arranges for the transportation of ethanol. The Company pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to the Company. The marketing fee was negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. The initial term of Eco Agreement continued through December 31, 2016, with automatic renewals for additional three terms of three year periods unless terminated by either party by providing written notice to the other party at least 3 months prior to the end of the then current term. During the third fiscal quarter of 2016, the Company amended the Eco Agreement. In October 2019, the Company amended the Eco Agreement, which provides an extension of the term of the agreement through December 31, 2020, with automatic renewals for additional consecutive terms of one year unless either party provides written notice to the other at least 90 days prior to the end of the then-current term. Additionally, the amended Eco Agreement provides for certain negotiated changes to the marketing fees payable to Eco-Energy and payment terms based on prevailing market-rate conditions for comparable ethanol marketed services. Ethanol marketing fees and commissions totaled approximately $635,000, $604,000, and $587,000 for the fiscal years ended October 31, 2019, 2018, and 2017. Ethanol Forward Contracts At October 31, 2019, the Company had fixed and basis contracts to sell approximately $13,490,000 of ethanol for various delivery periods through December 2019, which approximates 92% of its anticipated ethanol sales for that period. Distillers’ Grains Marketing Agreement Gavilon Ingredients, LLC, an unrelated party (“Gavilon”), serves as the distillers’ grains marketer for our plant pursuant to a distillers’ grains off-take agreement. Pursuant to our agreement with Gavilon, Gavilon purchases all of the distillers’ grains produced at our ethanol plant. We pay Gavilon a service fee for its services under this agreement. The contract commenced on November 1, 2013 with an initial term of six months, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 60 days to the other party. Distillers’ grains commissions totaled approximately $287,000, $252,000, and $268,000 for the fiscal years ended October 31, 2019, 2018 and 2017. Distillers’ Grains Forward Contracts At October 31, 2019, the Company had forward contracts to sell approximately $1,275,000 of distillers’ grains for delivery through January 2020, which approximates 21% of its anticipated distillers’ grains sales during that period. Corn Oil Marketing Agreement RPMG, Inc., an unrelated party, markets the corn oil produced at our ethanol plant pursuant to a corn oil marketing agreement. We pay RPMG a commission based on each pound of corn oil sold by RPMG under the agreement. The contract commenced on November 1, 2013 with an initial term of one year and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Corn oil commissions totaled approximately $71,000, $83,000, and $89,000 for the fiscal years ended October 31, 2019, 2018, and 2017. Corn Oil Forward Contracts At October 31, 2019, the Company had forward contracts to sell approximately $468,000 of corn oil for delivery through December 2019, which approximates 75% of its anticipated corn oil sales for that period. Contract for Natural Gas Pipeline to Plant The Company has a facilities agreement with Northern Border Pipeline Company which allows us access to an existing interstate natural gas pipeline located approximately 16 miles north from the plant. Agrinatural was formed to own and operate the pipeline and transports gas to the Company pursuant to a transportation agreement. The Company also has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy-Gas Division, LLC (“Constellation”), pursuant to which it buys all of its natural gas from Constellation. This agreement runs until March 31, 2022. Corn Forward Contracts At October 31, 2019, the Company had cash and basis contracts for forward corn purchase commitments for approximately 740,000 bushels for deliveries through December 2021. Given the uncertainty of future ethanol and corn prices, the Company could incur a loss on the outstanding corn purchase contracts in future periods. Management has evaluated these forward contracts and its inventories using the lower of cost or net realizable value evaluation, similar to the method used on its inventory, and has determined that no impairment loss existed at October 31, 2019 and 2017, and an impairment loss existed of approximately $323,000 at October 31, 2018. The impairment expense is recorded as a component of cost of goods sold. Rail Car Rehabilitation Costs The Company leases 50 hopper rail cars under a multi-year agreement which ends in May 2027. Under the agreement, the Company is required to pay to rehabilitate each car for “damage” that is considered to be other than normal wear and tear upon turn in of the car(s) at the termination of the lease. Prior to the year ending October 31, 2019, the Company believed ongoing repairs resulted in an insignificant future rehabilitation expense. During the year ending October 31, 2019, based on new information, we re-evaluated our assumptions and believe that it is probable that we may be assessed for damages incurred. Company management has estimated total costs to rehabilitate the cars at October 31, 2019 to be approximately $551,000. During the year ended October 31, 2019, the Company has recorded an expense in cost of goods and a corresponding estimated long-term liability totaling $551,000. The Company accrues the estimated cost of railcar damages over the term of the lease as the damages are incurred.

BUSINESS SEGMENTS

BUSINESS SEGMENTS	12 Months Ended
	Oct. 31, 2019
BUSINESS SEGMENTS
BUSINESS SEGMENTS	16. BUSINESS SEGMENTS The Company groups its operations into the following two business segments: Ethanol Production: Ethanol and co-product production and sales Natural gas pipeline: Ownership and operations of natural gas pipeline Segment reporting is intended to give financial statement users a better view of how the Company manages and evaluates its businesses. The accounting policies for each segment are the same as those described in the summary of significant accounting policies in Note 1. Segment income or loss does not include any allocation of shared-service costs. Segment assets are those that are directly used in or identified with segment operations. Inter-segment balances and transactions have been eliminated. The following tables summarize financial information by segment and provide a reconciliation of segment revenue, contribution to operating income and total assets for the fiscal years ended October 31: Fiscal Year Ended October 31, Revenue: 2019 2018 2017 Ethanol production $ 105,395,553 $ 106,811,761 $ 108,709,255 Natural gas pipeline 3,182,958 3,436,880 2,946,438 Eliminations (1,751,066) (1,776,587) (1,738,041) Total Revenue $ 106,827,445 $ 108,472,054 $ 109,917,652 Fiscal Year Ended October 31, Operating Income (Loss): 2019 2018 2017 Ethanol production $ (6,594,653) $ (501,475) $ 6,821,779 Natural gas pipeline 1,878,935 2,116,147 1,177,251 Eliminations (666,827) (721,117) (694,435) Operating Income (Loss): $ (5,382,545) $ 893,555 $ 7,304,595 Fiscal Year Ended October 31, Assets: 2019 2018 Ethanol production $ 44,097,379 $ 49,540,279 Natural gas pipeline 12,498,536 12,480,577 Total Assets $ 56,595,915 $ 62,020,856

QUARTERLY FINANCIAL DATA (UNAUD

QUARTERLY FINANCIAL DATA (UNAUDITED)	12 Months Ended
	Oct. 31, 2019
QUARTERLY FINANCIAL DATA (UNAUDITED)
QUARTERLY FINANCIAL DATA (UNAUDITED)	17. QUARTERLY FINANCIAL DATA (UNAUDITED) Summary quarterly results are as follows: First Second Third Fourth Fiscal year ended October 31, 2019 Quarter Quarter Quarter Quarter Revenues $ 25,697,520 $ 25,494,797 $ 27,367,787 $ 28,267,341 Gross profit (loss) (1,033,800) (419,654) 1,248,103 (1,779,583) Operating income (loss) (1,953,327) (1,275,409) 381,693 (2,535,502) Net income (loss) attributable to Heron Lake BioEnergy, LLC (2,023,640) (1,115,152) 326,579 (2,643,357) Basic and diluted earnings (loss) per unit attributable to Heron Lake BioEnergy, LLC (Class A and B) $ (0.03) $ (0.01) $ — $ (0.03) First Second Third Fourth Fiscal year ended October 31, 2018 Quarter Quarter Quarter Quarter Revenues $ 27,972,451 $ 29,880,856 $ 26,252,916 $ 24,365,831 Gross profit (loss) 1,581,182 2,127,807 1,092,414 (709,108) Operating income (loss) 716,139 1,285,823 373,043 (1,481,450) Net income (loss) attributable to Heron Lake BioEnergy, LLC 861,997 1,271,018 302,686 (1,580,485) Basic and diluted earnings (loss) per unit attributable to Heron Lake BioEnergy, LLC (Class A and B) $ 0.01 $ 0.02 $ — $ (0.02) First Second Third Fourth Fiscal year ended October 31, 2017 Quarter Quarter Quarter Quarter Revenues $ 27,390,074 $ 25,990,784 $ 28,541,889 $ 27,994,905 Gross profit 3,414,231 1,850,266 2,251,294 2,913,491 Operating income 2,567,534 1,080,594 1,518,888 2,137,579 Net income attributable to Heron Lake BioEnergy, LLC 2,832,416 1,019,120 1,414,752 2,002,070 Basic and diluted earnings per unit attributable to Heron Lake BioEnergy, LLC (Class A and B) $ 0.04 $ 0.01 $ 0.02 $ 0.02 The above quarterly financial data is unaudited, but in the opinion of management, all adjustments necessary for a fair presentation of the selected data for these periods presented have been included.

SUBSEQUENT EVENT

SUBSEQUENT EVENT	12 Months Ended
	Oct. 31, 2019
SUBSEQUENT EVENT
SUBSEQUENT EVENT	18. SUBSEQUENT EVENT On December 11, 2019, HLBE Pipeline Company, LLC, which is a wholly owned subsidiary of Heron Lake BioEnergy, acquired the remaining non-controlling interest of Agrinatural for a total price of $2.225 million. A deposit of $225,000 was paid in October 2019 and recorded within other assets at October 31, 2019. The change of interest will be recorded as an equity transaction in accordance with ASC 805 during fiscal year 2020.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Oct. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business	Nature of Business Heron Lake BioEnergy, LLC owns and operates an ethanol plant near Heron Lake, Minnesota with a permitted capacity of approximately 72.3 million gallons per year of undenatured ethanol on a twelve-month rolling sum basis. In addition, Heron Lake BioEnergy, LLC produces and sells distillers’ grains with solubles and corn oil as co-products of ethanol production. Heron Lake BioEnergy, LLC’s wholly owned subsidiary, HLBE Pipeline Company, LLC (“HLBE Pipeline Company”), owns 100% of Agrinatural Gas, LLC (“Agrinatural”), beginning as of December 11, 2019. At October 31, 2019, HLBE held a 73% interest in Agrinatural. Agrinatural operates a natural gas pipeline that provides natural gas to Heron Lake BioEnergy, LLC’s ethanol production facility and other customers.
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of Heron Lake BioEnergy, LLC and its wholly owned subsidiary, HLBE Pipeline Company (collectively, “the Company”). Given the Company’s control over the operations of Agrinatural and its majority voting interest, the Company consolidates the financial statements of Agrinatural with its consolidated financial statements, with the equity and earnings (loss) attributed to the remaining 27% non-controlling interest identified separately in the accompanying consolidated balance sheets and statements of operations. All significant intercompany balances and transactions are eliminated in consolidation. See Note 18 for a subsequent event regarding the acquisition of non-controlling interest.
Fiscal Reporting Period	Fiscal Reporting Period The Company’s fiscal year end for reporting financial operations is October 31.
Accounting Estimates	Accounting Estimates Management uses estimates and assumptions in preparing these consolidated financial statements in accordance with U.S. generally accepted accounting principles. 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 significant matters including, among others, the economic lives of property and equipment, valuation of commodity derivative instruments and inventory, evaluation of rail car rehabilitation costs, the assumptions used in the impairment analysis of long-lived assets, and inventory purchase and sale commitments. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Actual results could differ from those estimates.
Non-controlling Interest	Non-controlling Interest Amounts recorded as non-controlling interest relate to the net investment by an unrelated party in Agrinatural. Income and losses are allocated to the members of Agrinatural based on their respective percentage of membership units held. Pursuant to the firm natural gas transportation agreement with Agrinatural, Agrinatural will provide natural gas to Heron Lake BioEnergy’s plant with a specified price per MMBTU with a term ending on October 31, 2021, with one automatic renewal option to extend the term for an additional five years period.
Revenue Recognition	Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Our contracts primarily consist of agreements with marketing companies and other customers as described below. Our performance obligations consist of the delivery of ethanol, distillers’ grains, and corn oil to our customers. Our customers primarily consist of three distinct marketing companies as discussed below. The consideration we receive for these products is fixed or determinable based on current observable market prices at the Chicago Mercantile Exchange, generally, and adjusted for local market differentials. Our contracts have specific delivery modes, rail or truck, and dates. Revenue is recognized when the Company delivers the products to the mode of transportation specified in the contract, at the transaction price established in the contract, net of commissions, fees, and freight. We sell each of the products via different marketing channels as described below. · Ethanol. The Company sells its ethanol via a marketing agreement with Eco-Energy, Inc. Eco-Energy sells one hundred percent of the Company’s ethanol production based on agreements with end users at prices agreed upon mutually among the end user, Eco-Energy and the Company. Our performance obligations consist of our obligation to deliver ethanol to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. The marketing agreement calls for control and title to pass to Eco-Energy once a rail car is released to the railroad or a truck is released from the Company’s scales. Revenue is recognized then at the price in the agreement with the end user, net of commissions, freight, and fees. · Distillers grains. The Company engages another third-party marketing company, Gavilon, Inc, to sell one hundred percent of the distillers grains it produces at the plant. Gavilon takes title and control once a rail car is released to the railroad or a truck is released from the Company’s scales. Prices are agreed upon between Gavilon and the Company. Our performance obligations consist of our obligation to deliver distillers grains to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. · Distillers corn oil (corn oil). The Company sells one hundred percent of its corn oil production to RPMG, Inc. The process for selling corn oil is the same as our distillers’ grains. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. · Agrinatural generates revenue from the transportation of natural gas to residential and commercial customers. Revenue is recognized at the point when natural gas is delivered at the transaction price established in the contract.
Cost of Goods Sold	Cost of Goods Sold The primary components of cost of goods sold for the production of ethanol and related co-products are corn, energy, raw materials, overhead, depreciation, railcar rehabilitation costs, and direct labor.
Operating Expenses	Operating Expenses The primary components of operating expenses are salaries and expenses for administrative employees, professional fees, board of governor expenses and property taxes.
Cash	Cash The Company maintains its accounts at multiple financial institutions. At times throughout the year, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. The Company does not believe it is exposed to any significant credit risk on its cash balances.
Restricted Cash	Restricted Cash The Company is periodically required to maintain cash balances at its broker related to derivative instrument positions as discussed in Note 7.
Accounts Receivable	Accounts Receivable Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral. Accounts receivable are recorded at their estimated net realizable value. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company’s credit terms. Accounts considered uncollectible are written off. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts will be collectible in all material respects and thus an allowance was not necessary at October 31, 2019 or 2018. It is at least possible this estimate will change in the future.
Inventory	Inventory Inventory is stated at the lower of cost or net realizable value. Cost for all inventories is determined using the first in first out method (FIFO). Net realizable value is the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and supplies. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers’ grains, and corn oil.
Derivative Instruments	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 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 7.
Other Intangibles	Other Intangibles Other intangibles are stated at cost and include road improvements located near the plant in which the Company has a beneficial interest in but does not own the road. The Company amortizes the assets over the economic useful life. The Company recorded amortization expense in the amount of approximately $7,700 for the fiscal year ended October 31, 2019, and approximately $38,000 for each of the fiscal years ended October 31, 2018 and 2017.
Property and Equipment	Property and Equipment Property and equipment are recorded at cost. Depreciation is provided over an estimated useful life by use of the straight-line deprecation method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. Construction in progress expenditures will be depreciated using the straight-line method over their estimated useful lives once the assets are placed into service. Depreciable useful lives are as follows: Land improvements 15 Years Plant building and equipment 7-40 Years Vehicles and other equipment 5-7 Years Office buildings and equipment 3-40 Years
Long-Lived Assets	Long-Lived Assets Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When determining impairment losses, a long lived asset should be grouped with other assets or liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets or liabilities. If circumstances require a long-lived asset to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment expense was recorded during fiscal 2019, 2018, and 2017.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The Company follows guidance for accounting for fair value measurements of financial assets and liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the consolidated financial statements on a recurring and nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. · Level 2 inputs include: 1. Quoted prices in active markets for similar assets or liabilities. 2. Quoted prices in markets that are observable for the asset or liability either directly or indirectly, for substantially the full term of the asset or liability. 3. Inputs that derived primarily from or corroborated by observable market date by correlation or other means. · Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in our balance sheets, the Company has elected not to record any other assets or liabilities at fair value. No events occurred during the fiscal years ended October 31, 2019, 2018, and 2017 that required adjustment to the recognized balances of assets or liabilities, which are recorded at fair value on a nonrecurring basis. The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short maturity of these instruments. The fair value of debt has been estimated using discounted cash flow analysis based upon the Company’s current incremental borrowing rates for similar types of financing arrangements. The fair value of outstanding debt will fluctuate with changes in applicable interest rates. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The Company believes the carrying amount of its debt facilities approximates the fair value.
Income Taxes	Income Taxes The Company is treated as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, its earnings and losses are included in the income tax returns of the members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. Differences between financial statement basis of assets and tax basis of assets is related to capitalization and amortization of organization and start-up costs for tax purposes, whereas these costs are expensed for financial statement purposes. In addition, the Company uses the alternative depreciation system (ADS) for tax depreciation instead of the straight-line method that is used for book depreciation, which also causes temporary differences. The Company’s tax year end is December 31. The Company had no significant uncertain tax positions as of October 31, 2019 or 2018 that would require disclosure, primarily due to the partnership tax status. The Company recognizes and measures tax benefits when realization of the benefits is uncertain under a two-step approach. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. Primarily due to the Company’s tax status as a partnership, the adoption of this guidance had no material impact on the Company’s financial condition or results of operations. The Company files income tax returns in the U.S. federal and Minnesota state jurisdictions. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2016.
Net Income per Unit	Net Income per Unit Basic net income per unit is computed by dividing net income by the weighted average number of members’ units outstanding during the period. Diluted net income or loss per unit is computed by dividing net income by the weighted average number of members’ units and members’ unit equivalents outstanding during the period.
Environmental Liabilities	Environmental Liabilities The Company’s operations are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which it operates. These laws require the Company to investigate and remediate the effects of the release or disposal of materials at its location. Accordingly, the Company has adopted policies, practices, and procedures in the areas of pollution control, occupational health, and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability, which could result from such events. Environmental liabilities are recorded when the liability is probable and the costs can be reasonably estimated.
Reportable Operating Segments	Reportable Operating Segments Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the related business nature and expected financial results criteria set forth in ASC 280, the Company has two reportable operating segments for financial reporting purposes. · Ethanol Production . Based on the nature of the products and production process and the expected financial results, the Company’s operations at its ethanol plant, including the production and sale of ethanol and its co-products, are aggregated into one financial reporting segment. · Natural Gas Pipeline . The Company has majority ownership in Agrinatural, through its wholly owned subsidiary, HLBE Pipeline, LLC, and operations of Agrinatural’s natural gas pipeline are aggregated into another financial reporting segment.
Recently Issued or Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements Effective November 1, 2018, the Company adopted the amended guidance ASC Topic 606, Revenue from Contracts with Customers. Refer to Note 1 – Summary of Significant Accounting Policies and Note 3 – Revenue for further details. In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-18, Restricted Cash, which amended Statement of Cash Flows (Topic 230) of the Accounting Standards Codification. The new guidance requires an entity to reconcile and explain the period-over-period change in total cash, cash equivalents, restricted cash and restricted cash equivalents within its statement of cash flows. Effective November 1, 2018, the Company adopted the new standard and has applied it retrospectively. Accordingly, the consolidated statements of cash flows for the periods ended October 31, 2019, 2018, and 2017 have been adjusted from amounts previously reported. Recently Issued Accounting Pronouncements Leases (Evaluating) In February 2016, the FASB adopted ASU No. 2016-02, Leases (Topic 842), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The guidance will be effective for the Company beginning November 1, 2019. It is to be adopted using a modified retrospective approach. The Company is evaluating the impact that the adoption of this guidance will have on the Company’s consolidated financial statements and anticipates the new guidance will significantly impact its consolidated financial statements given the Company leases a significant number of rail cars for transporting ethanol and dried distillers grains with solubles to its end customers.

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Oct. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schedule of depreciable useful lives of property and equipment	Land improvements 15 Years Plant building and equipment 7-40 Years Vehicles and other equipment 5-7 Years Office buildings and equipment 3-40 Years

REVENUE (Tables)

REVENUE (Tables)	12 Months Ended
	Oct. 31, 2019
REVENUE
Schedule of disaggregated revenue by source	Ethanol Production Natural Gas Pipeline Total Ethanol $ $ — $ Distillers’ Grains — Corn Oil — Other — Natural Gas — Total Revenues $ $ $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	12 Months Ended
	Oct. 31, 2019
FAIR VALUE MEASUREMENTS
Schedule of assets and liabilities accounted for on a recurring basis	The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis at October 31, 2019: Fair Value Measurement Using Carrying Amount in Quoted Prices Significant Other Significant Consolidated Balance Sheet Active Markets Observable Inputs Unobservable inputs Financial Assets Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative instruments - Corn $ 20,060 $ 20,060 $ 20,060 $ — $ — Commodity Derivative instruments - Ethanol $ 75,763 $ 75,763 $ 75,763 $ $ The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis at October 31, 2018: Fair Value Measurement Using Carrying Amount in Quoted Prices in Significant Other Significant Consolidated Active Markets Observable Inputs Unobservable Inputs Financial Assets: Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative instruments - Corn $ 425,638 $ 425,638 $ 425,638 $ — $ — Financial Liabilities: Commodity Derivative instruments - Corn $ 25,180 $ 25,180 $ — $ 25,180 $

CONCENTRATIONS (Tables)

CONCENTRATIONS (Tables)	12 Months Ended
	Oct. 31, 2019
Customer | Total revenues
CONCENTRATIONS
Schedule of concentration risk	October 31, 2019 October 31, 2018 October 31, 2017 Eco-Energy, Inc. - Ethanol Gavilon Ingredients, LLC - Distillers' Grains RPMG, Inc. - Corn Oil
Credit | Accounts receivable
CONCENTRATIONS
Schedule of concentration risk	October 31, 2019 October 31, 2018 Eco-Energy, Inc. - Ethanol Gavilon Ingredients, LLC - Distillers' Grains RPMG, Inc. - Corn Oil

INVENTORY (Tables)

INVENTORY (Tables)	12 Months Ended
	Oct. 31, 2019
INVENTORY
Schedule of inventory	2019 2018 Raw materials $ 932,503 $ 1,215,640 Work in process 732,243 571,228 Finished goods 3,157,429 3,436,175 Supplies 1,454,083 1,175,643 Totals $ 6,276,258 $ 6,398,686

DERIVATIVE INSTRUMENTS (Tables)

DERIVATIVE INSTRUMENTS (Tables)	12 Months Ended
	Oct. 31, 2019
DERIVATIVE INSTRUMENTS
Schedule of derivative instruments	The following table provides detail regarding the Company’s derivative financial instruments at October 31, 2019, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 20,060 $ — Ethanol contracts Commodity derivative instruments 75,763 — Totals $ 95,823 $ — As of October 31, 2018, the Company had no cash collateral (restricted cash) related to derivatives held by a broker. The following table provides detail regarding the Company’s derivative financial instruments at October 31, 2018, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 425,638 $ 25,180 Totals $ 425,638 $ 25,180
Schedule of gains (losses) from derivative instruments	Consolidated Statement of Fiscal Year Ended October 31, Operations Location 2019 2018 2017 Corn contracts Cost of goods sold $ 350,624 $ 1,188,237 $ 962,256 Ethanol contracts Revenues 24,592 53,747 (218,802) Natural gas contracts Cost of goods sold — (1,598) (15,381) Total gain $ 375,216 $ 1,240,386 $ 728,073

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Oct. 31, 2019
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	October 31, 2019 October 31, 2018 Land and improvements $ 9,111,838 $ 9,111,838 Plant buildings and equipment 88,708,522 87,940,264 Vehicles 700,959 700,959 Office buildings 735,864 738,073 Construction in progress 58,319 375,245 99,315,502 98,866,379 Less: accumulated depreciation (59,907,307) (54,716,454) Net property and equipment $ 39,408,195 $ 44,149,925

DEBT FACILITIES (Tables)

DEBT FACILITIES (Tables)	12 Months Ended
	Oct. 31, 2019
DEBT FACILITIES
Schedule of long-term debt	October 31, 2019 October 31, 2018 Amended revolving term note payable to lending institution, see terms below. $ — $ — Seasonal line of credit payable to lending institution, see terms below. — — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in 2021. The Company made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 634,180 947,300 Assessment payable as part of water supply agreement, due in monthly installments of $3,942 with interest at 8.73%, enforceable by statutory lien, with the final payment made in 2019. — 11,901 Totals 634,180 959,201 Less amounts due within one year 333,977 391,934 Net long-term debt $ 300,203 $ 567,267
Schedule of estimated maturities of long-term debt	2020 $ 333,977 2021 300,203 Total debt $ 634,180

LEASES (Tables)

LEASES (Tables)	12 Months Ended
	Oct. 31, 2019
LEASES
Schedule of minimum future lease payments	November 1, 2019 to October 31, 2020 $ 1,767,000 November 1, 2020 to October 31, 2021 1,767,000 November 1, 2021 to October 31, 2022 1,767,000 November 1, 2022 to October 31, 2023 1,767,000 November 1, 2023 to October 31, 2024 1,670,000 Thereafter 3,812,000 Total minimum lease commitments $ 12,550,000

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Oct. 31, 2019
INCOME TAXES
Schedule of differences between financial statement basis and tax basis of assets	2019 2018 Consolidated financial statement basis of assets $ 56,595,915 $ 62,020,856 Plus: Organization and start-up costs capitalized for tax purposes, net 502,566 617,833 Less: Unrealized gains on commodity derivative instruments (95,823) (425,638) Less: Accumulated tax depreciation and amortization greater than financial statement basis (56,386,730) (56,330,302) Plus: Impairment charge 27,844,579 27,844,579 Income tax basis of assets $ 28,460,507 $ 33,727,328 Financial Statement basis of liabilities $ 6,995,064 Accrued Rail Car Maintenance (551,000) Other Accruals (183,891) Income tax basis of liabilities $ 6,260,174

BUSINESS SEGMENTS (Tables)

BUSINESS SEGMENTS (Tables)	12 Months Ended
	Oct. 31, 2019
BUSINESS SEGMENTS
Schedule of business segments	Ethanol Production: Ethanol and co-product production and sales Natural gas pipeline: Ownership and operations of natural gas pipeline
Reconciliation of segment revenue	Fiscal Year Ended October 31, Revenue: 2019 2018 2017 Ethanol production $ 105,395,553 $ 106,811,761 $ 108,709,255 Natural gas pipeline 3,182,958 3,436,880 2,946,438 Eliminations (1,751,066) (1,776,587) (1,738,041) Total Revenue $ 106,827,445 $ 108,472,054 $ 109,917,652
Schedule of operating income (loss) and total assets	Fiscal Year Ended October 31, Operating Income (Loss): 2019 2018 2017 Ethanol production $ (6,594,653) $ (501,475) $ 6,821,779 Natural gas pipeline 1,878,935 2,116,147 1,177,251 Eliminations (666,827) (721,117) (694,435) Operating Income (Loss): $ (5,382,545) $ 893,555 $ 7,304,595 Fiscal Year Ended October 31, Assets: 2019 2018 Ethanol production $ 44,097,379 $ 49,540,279 Natural gas pipeline 12,498,536 12,480,577 Total Assets $ 56,595,915 $ 62,020,856

QUARTERLY FINANCIAL DATA (UNA_2

QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)	12 Months Ended
	Oct. 31, 2019
QUARTERLY FINANCIAL DATA (UNAUDITED)
Summary of quarterly results	First Second Third Fourth Fiscal year ended October 31, 2019 Quarter Quarter Quarter Quarter Revenues $ 25,697,520 $ 25,494,797 $ 27,367,787 $ 28,267,341 Gross profit (loss) (1,033,800) (419,654) 1,248,103 (1,779,583) Operating income (loss) (1,953,327) (1,275,409) 381,693 (2,535,502) Net income (loss) attributable to Heron Lake BioEnergy, LLC (2,023,640) (1,115,152) 326,579 (2,643,357) Basic and diluted earnings (loss) per unit attributable to Heron Lake BioEnergy, LLC (Class A and B) $ (0.03) $ (0.01) $ — $ (0.03) First Second Third Fourth Fiscal year ended October 31, 2018 Quarter Quarter Quarter Quarter Revenues $ 27,972,451 $ 29,880,856 $ 26,252,916 $ 24,365,831 Gross profit (loss) 1,581,182 2,127,807 1,092,414 (709,108) Operating income (loss) 716,139 1,285,823 373,043 (1,481,450) Net income (loss) attributable to Heron Lake BioEnergy, LLC 861,997 1,271,018 302,686 (1,580,485) Basic and diluted earnings (loss) per unit attributable to Heron Lake BioEnergy, LLC (Class A and B) $ 0.01 $ 0.02 $ — $ (0.02) First Second Third Fourth Fiscal year ended October 31, 2017 Quarter Quarter Quarter Quarter Revenues $ 27,390,074 $ 25,990,784 $ 28,541,889 $ 27,994,905 Gross profit 3,414,231 1,850,266 2,251,294 2,913,491 Operating income 2,567,534 1,080,594 1,518,888 2,137,579 Net income attributable to Heron Lake BioEnergy, LLC 2,832,416 1,019,120 1,414,752 2,002,070 Basic and diluted earnings per unit attributable to Heron Lake BioEnergy, LLC (Class A and B) $ 0.04 $ 0.01 $ 0.02 $ 0.02

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Nature of Business (Details) gal in Millions	12 Months Ended
	Oct. 31, 2019Optiongal	Dec. 11, 2019
Ethanol production
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating capacity of Ethanol plant owned and operated | gal	72.3
Agrinatural, LLC
Noncontrolling interest
Number of renewal options | Option	1
Term of renewed contract	5 years
Agrinatural, LLC
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Noncontrolling interest, ownership percentage by noncontrolling owners	27.00%
HLBE Pipeline Company, LLC | Agrinatural, LLC
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ownership percentage	73.00%
HLBE Pipeline Company, LLC | Agrinatural, LLC | Subsequent Event
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ownership percentage		100.00%

SUMMARY OF SIGNIFICANT ACCOUN_5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other intangibles (Details) - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
Other Intangibles
Amortization of intangible assets	$ 7,700	$ 38,000	$ 38,000

SUMMARY OF SIGNIFICANT ACCOUN_6

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details)	12 Months Ended
	Oct. 31, 2019item
CONCENTRATIONS
Number of distinct marketing companies	3
Ethanol | Eco-Energy, Inc. | Revenue from product line
CONCENTRATIONS
Concentration percentage	100.00%
Distillers' Grains | Gavilon, Inc. | Revenue from product line
CONCENTRATIONS
Concentration percentage	100.00%
Corn Oil | RPMG, Inc. | Revenue from product line
CONCENTRATIONS
Concentration percentage	100.00%

SUMMARY OF SIGNIFICANT ACCOUN_7

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details)	12 Months Ended
	Oct. 31, 2019
Land improvements
Property and Equipment
Depreciable useful life	15 years
Plant building and equipment | Minimum
Property and Equipment
Depreciable useful life	7 years
Plant building and equipment | Maximum
Property and Equipment
Depreciable useful life	40 years
Vehicles and other equipment | Minimum
Property and Equipment
Depreciable useful life	5 years
Vehicles and other equipment | Maximum
Property and Equipment
Depreciable useful life	7 years
Office buildings and equipment | Minimum
Property and Equipment
Depreciable useful life	3 years
Office buildings and equipment | Maximum
Property and Equipment
Depreciable useful life	40 years

SUMMARY OF SIGNIFICANT ACCOUN_8

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Long-Lived Assets (Details) - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
Long-Lived Assets
Impairment charge	$ 0	$ 0	$ 0

SUMMARY OF SIGNIFICANT ACCOUN_9

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reportable Operating Segments (Details)	12 Months Ended
	Oct. 31, 2019segment
Segment Reporting Information
Number of reportable segments	2
Ethanol production
Segment Reporting Information
Number of reportable segments	1

RISKS AND UNCERTAINTIES (Detail

RISKS AND UNCERTAINTIES (Details) gal in Millions	1 Months Ended	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2019Y	Dec. 19, 2019gal
Conventional ethanol
RISKS AND UNCERTAINTIES
Renewable volume requirements			15,000
Advanced biofuels
RISKS AND UNCERTAINTIES
Renewable volume requirements			5,090
Cellulosic ethanol
RISKS AND UNCERTAINTIES
Renewable volume requirements			590
Renewable fuels
RISKS AND UNCERTAINTIES
Renewable volume requirements			20,090
Statutory renewable volume requirement			30,000
Percentage mandatory renewable fuel volumes are reduced		20.00%
Number of consecutive years | Y		2
Threshold percentage	20.00%
Total revenues | Customer | Ethanol | Minimum
RISKS AND UNCERTAINTIES
Concentration percentage		75.00%
Total revenues | Customer | Ethanol | Maximum
RISKS AND UNCERTAINTIES
Concentration percentage		85.00%
Cost of goods sold | Product | Corn | Minimum
RISKS AND UNCERTAINTIES
Concentration percentage		70.00%
Cost of goods sold | Product | Corn | Maximum
RISKS AND UNCERTAINTIES
Concentration percentage		90.00%

REVENUE - Revenue (Details)

REVENUE - Revenue (Details) - USD ($)

3 Months Ended

12 Months Ended

Oct. 31, 2019

Jul. 31, 2019

Apr. 30, 2019

Jan. 31, 2019

Oct. 31, 2018

Jul. 31, 2018

Apr. 30, 2018

Jan. 31, 2018

Oct. 31, 2017

Jul. 31, 2017

Apr. 30, 2017

Jan. 31, 2017

Oct. 31, 2019

Oct. 31, 2018

Oct. 31, 2017

Revenue Recognition

Total Revenues

$ 28,267,341

$ 27,367,787

$ 25,494,797

$ 25,697,520

$ 24,365,831

$ 26,252,916

$ 29,880,856

$ 27,972,451

$ 27,994,905

$ 28,541,889

$ 25,990,784

$ 27,390,074

$ 106,827,445

$ 108,472,054

$ 109,917,652

Payment terms

10 days

Ethanol production

Revenue Recognition

Total Revenues

$ 105,395,553

Natural gas pipeline

Revenue Recognition

Total Revenues

1,431,892

Ethanol

Revenue Recognition

Total Revenues

82,544,145

Ethanol | Ethanol production

Revenue Recognition

Total Revenues

82,544,145

Distillers' Grains

Revenue Recognition

Total Revenues

18,214,512

Distillers' Grains | Ethanol production

Revenue Recognition

Total Revenues

18,214,512

Corn Oil

Revenue Recognition

Total Revenues

3,513,679

Corn Oil | Ethanol production

Revenue Recognition

Total Revenues

3,513,679

Other

Revenue Recognition

Total Revenues

1,123,217

Other | Ethanol production

Revenue Recognition

Total Revenues

1,123,217

Natural Gas

Revenue Recognition

Total Revenues

$ 1,431,892

Payment terms

20 days

Natural Gas | Natural gas pipeline

Revenue Recognition

Total Revenues

$ 1,431,892

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($)	Oct. 31, 2019	Oct. 31, 2018
Fair value measurements
Financial Assets	$ 95,823	$ 425,638
Financial Liabilities		25,180
Corn contracts | Carrying Amount
Fair value measurements
Financial Assets	20,060	425,638
Financial Liabilities		25,180
Corn contracts | Recurring basis | Fair Value.
Fair value measurements
Financial Assets	20,060	425,638
Financial Liabilities		25,180
Corn contracts | Level 1 | Recurring basis | Fair Value.
Fair value measurements
Financial Assets	20,060	425,638
Corn contracts | Level 2 | Recurring basis | Fair Value.
Fair value measurements
Financial Liabilities		$ 25,180
Ethanol contracts | Carrying Amount
Fair value measurements
Financial Liabilities	75,763
Ethanol contracts | Recurring basis | Fair Value.
Fair value measurements
Financial Liabilities	75,763
Ethanol contracts | Level 1 | Recurring basis | Fair Value.
Fair value measurements
Financial Liabilities	$ 75,763

CONCENTRATIONS (Details)

CONCENTRATIONS (Details) - customer	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
CONCENTRATIONS
Number of major customers	3	3	3
Total revenues | Customer
CONCENTRATIONS
Number of major customers	3	3	3
Total revenues | Customer | Eco-Energy, Inc. | Ethanol production
CONCENTRATIONS
Concentration percentage	77.30%	76.30%	81.30%
Total revenues | Customer | Gavilon Ingredients, LLC | Distiller's grains
CONCENTRATIONS
Concentration percentage	16.90%	18.30%	13.70%
Total revenues | Customer | RPMG, Inc. | Corn Oil
CONCENTRATIONS
Concentration percentage	3.30%	3.70%	4.50%
Accounts receivable | Credit
CONCENTRATIONS
Number of major customers	3	3	3
Accounts receivable | Credit | Eco-Energy, Inc. | Ethanol production
CONCENTRATIONS
Concentration percentage	80.00%	77.60%
Accounts receivable | Credit | Gavilon Ingredients, LLC | Distiller's grains
CONCENTRATIONS
Concentration percentage	15.30%	15.40%
Accounts receivable | Credit | RPMG, Inc. | Corn Oil
CONCENTRATIONS
Concentration percentage	2.80%	2.60%

INVENTORY (Details)

INVENTORY (Details) - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018
Inventory
Raw materials	$ 932,503	$ 1,215,640
Work in process	732,243	571,228
Finished goods	3,157,429	3,436,175
Supplies	1,454,083	1,175,643
Totals	6,276,258	6,398,686
Ethanol
Inventory
Loss on inventory	537,000	669,000
Corn
Inventory
Loss on inventory	$ 47,000	$ 101,000

DERIVATIVE INSTRUMENTS (Details

DERIVATIVE INSTRUMENTS (Details)	12 Months Ended
	Oct. 31, 2019USD ($)bu	Oct. 31, 2018USD ($)bu
Derivative instruments
Financial Assets	$ 95,823	$ 425,638
Financial Liabilities		$ 25,180
Corn contracts
Derivative instruments
Notional volume | bu	5,398,000	2,685,000
Corn contracts | Commodity Option [Member]
Derivative instruments
Notional volume | bu	4,000,000
Corn contracts | Long/Purchase
Derivative instruments
Notional volume | bu	2,131,000	510,000
Corn contracts | Short/Sale
Derivative instruments
Notional volume | bu	3,267,000	2,175,000
Derivatives held by a broker
Derivative instruments
Restricted cash	$ 52,000	$ 0
Derivatives not designated as hedging instruments
Derivative instruments
Financial Assets	$ 95,823	425,638
Financial Liabilities		25,180
Derivatives not designated as hedging instruments | Commodity Contract | Maximum
Derivative instruments
Derivative term	24 months
Derivatives not designated as hedging instruments | Corn contracts
Derivative instruments
Financial Assets	$ 20,060	425,638
Financial Liabilities		$ 25,180
Derivatives not designated as hedging instruments | Ethanol contracts
Derivative instruments
Financial Assets	$ 75,763

DERIVATIVE INSTRUMENTS, Gains (

DERIVATIVE INSTRUMENTS, Gains (losses) (Details) - Derivatives not designated as hedging instruments - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
Derivative Instruments
Total gain	$ 375,216	$ 1,240,386	$ 728,073
Corn contracts | Cost of goods sold.
Derivative Instruments
Total gain	350,624	1,188,237	962,256
Ethanol contracts | Revenues.
Derivative Instruments
Total gain	$ 24,592	53,747	(218,802)
Natural gas contracts | Cost of goods sold.
Derivative Instruments
Total gain		$ (1,598)	$ (15,381)

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
Property and Equipment
Property and equipment, gross	$ 99,315,502	$ 98,866,379
Less accumulated depreciation	(59,907,307)	(54,716,454)
Net, property and equipment	39,408,195	44,149,925
Depreciation	5,246,000	4,999,000	$ 4,984,000
Land and improvements
Property and Equipment
Property and equipment, gross	9,111,838	9,111,838
Plant building and equipment
Property and Equipment
Property and equipment, gross	88,708,522	87,940,264
Vehicles
Property and Equipment
Property and equipment, gross	700,959	700,959
Office buildings
Property and Equipment
Property and equipment, gross	735,864	738,073
Construction in progress
Property and Equipment
Property and equipment, gross	$ 58,319	$ 375,245

DEBT FACILITIES (Details)

DEBT FACILITIES (Details) - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018
DEBT FACILITIES
Long-term debt	$ 634,180	$ 959,201
Less amounts due on demand or within one year	333,977	391,934
Net long term debt	300,203	567,267
Assessments payable as part of water treatment agreement, with interest at 6.55%, due in 2021
DEBT FACILITIES
Long-term debt	634,180	947,300
Payment	$ 189,393	$ 189,393
Interest rate (as a percent)	6.55%	6.55%
Period of worth of debt	1 year	1 year
Deposit on debt service payments	$ 364,000	$ 364,000
Assessments payable as part of water supply agreement, with interest at 8.73%, due in 2019
DEBT FACILITIES
Long-term debt		11,901
Payment	$ 3,942	$ 3,942
Interest rate (as a percent)	8.73%	8.73%

DEBT FACILITIES - Additional in

DEBT FACILITIES - Additional information (Details) - USD ($)	Mar. 29, 2018	Mar. 31, 2015	Oct. 31, 2019	Oct. 31, 2018	Dec. 31, 2017	Feb. 28, 2015
CoBank | 2020 Credit Facility
Debt financing
Annual fee	$ 2,500
CoBank | 2018 Credit Facility
Debt financing
Annual fee	2,500
Amended revolving term note payable to lending institution
Debt financing
Maximum borrowing capacity	4,000,000		$ 4,000,000	$ 4,000,000	$ 8,000,000	$ 28,000,000
Line of credit future reduction amounts		$ 3,500,000
Amended revolving term note payable to lending institution | 2020 Credit Facility
Debt financing
Maximum borrowing capacity	$ 8,000,000
Unused commitment fee per annum on the unused portion of debt (as a percent)	0.50%
Amended revolving term note payable to lending institution | 2018 Credit Facility
Debt financing
Maximum borrowing capacity			$ 4,000,000	4,000,000
Interest rate at end of period (as a percent)			4.87%
Unused commitment fee per annum on the unused portion of debt (as a percent)	0.50%		0.50%
Aggregate principal amount available for borrowing			$ 4,000,000	4,000,000
Amended revolving term note payable to lending institution | One-Month LIBOR | 2020 Credit Facility
Debt financing
Spread above variable interest rate (as a percent)	3.10%
Amended revolving term note payable to lending institution | One-Month LIBOR | 2018 Credit Facility
Debt financing
Spread above variable interest rate (as a percent)	3.10%		3.10%
Seasonal line of credit payable to lending institution
Debt financing
Maximum borrowing capacity	$ 4,000,000
Seasonal line of credit payable to lending institution | 2018 Credit Facility
Debt financing
Maximum borrowing capacity			$ 4,000,000	4,000,000
Interest rate at end of period (as a percent)			4.62%
Unused commitment fee per annum on the unused portion of debt (as a percent)	0.25%
Aggregate principal amount available for borrowing			$ 4,000,000	$ 4,000,000
Seasonal line of credit payable to lending institution | One-Month LIBOR | 2018 Credit Facility
Debt financing
Spread above variable interest rate (as a percent)			2.85%

DEBT FACILITIES - Estimated ann

DEBT FACILITIES - Estimated annual maturities (Details) - USD ($)	Oct. 31, 2019	Oct. 31, 2018
Estimated maturities of long-term debt
2020	$ 333,977
2021	300,203
Long-term debt	$ 634,180	$ 959,201

MEMBERS' EQUITY (Details)

MEMBERS' EQUITY (Details)	Dec. 21, 2017USD ($)$ / shares	Oct. 31, 2019Vote / sharesshares
Members' Equity
Minimum number of units held to be member		2,500
Number of votes per unit | Vote / shares		1
Distribution declared, per membership unit (in dollars per unit) | $ / shares	$ 0.11
Amount of distribution declared | $	$ 8,573,000
Maximum
Members' Equity
Common Unit, Authorized		80,000,000
Class A units
Members' Equity
Common Unit, Authorized		65,000,000
Class B units
Members' Equity
Common Unit, Authorized		15,000,000

LEASES (Details)

LEASES (Details)	12 Months Ended
	Oct. 31, 2019USD ($)item	Oct. 31, 2018USD ($)	Oct. 31, 2017USD ($)
Leases
Rent expense	$ 2,374,000	$ 2,339,000	$ 2,170,000
Minimum
Leases
Lease term	1 year
Rail Cars
Leases
Equipment lease, quantity | item	138
Monthly lease payment	$ 122,000
Hopper Cars
Leases
Equipment lease, quantity | item	110
Monthly lease payment	$ 64,000

LEASES, Future minimum lease pa

LEASES, Future minimum lease payments (Details)	Oct. 31, 2019USD ($)
Minimum future lease payments
November 1, 2019 to October 31, 2020	$ 1,767,000
November 1, 2020 to October 31, 2021	1,767,000
November 1, 2021 to October 31, 2022	1,767,000
November 1, 2022 to October 31, 2023	1,767,000
November 1, 2023 to October 31, 2024	1,670,000
Thereafter	3,812,000
Total minimum lease commitments	$ 12,550,000

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018
INCOME TAXES
Consolidated financial statement basis of assets	$ 56,595,915	$ 62,020,856
Plus: Organization and start-up costs capitalized	502,566	617,833
Less: Unrealized gains on commodity derivative instruments	(95,823)	(425,638)
Less: Accumulated tax depreciation and amortization greater than financial statement basis	(56,386,730)	(56,330,302)
Plus: Impairment charge	27,844,579	27,844,579
Income tax basis of assets	28,460,507	$ 33,727,328
Financial Statement basis of liabilities	6,995,064
Accrued Rail Car Maintenance	(551,000)
Other Accruals	(183,891)
Income tax basis of liabilities	$ 6,260,174

EMPLOYEE BENEFIT PLANS (Details

EMPLOYEE BENEFIT PLANS (Details) - USD ($)	12 Months Ended
	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
Defined Contribution Plan
Employer match as a percentage of employee deferral	50.00%
Company contributions to the plan	$ 92,000	$ 98,000	$ 90,000
Maximum
Defined Contribution Plan
Maximum contribution as a percentage of employee salary	4.00%

RELATED PARTY TRANSACTIONS - (D

RELATED PARTY TRANSACTIONS - (Details)	1 Months Ended	12 Months Ended
	Jul. 31, 2019	Oct. 31, 2019USD ($)item	Oct. 31, 2018USD ($)	Oct. 31, 2017USD ($)
Agrinatural, LLC
RELATED PARTY TRANSACTIONS
Noncontrolling interest, ownership percentage by noncontrolling owners		27.00%
Board of Governors | Corn
RELATED PARTY TRANSACTIONS
Amount purchased from related party		$ 11,478,000	$ 14,483,000	$ 9,811,000
Accounts payable, related parties		$ 470,000	348,000	602,000
Granite Falls Energy LLC Excluding Heron Lake Bioenergy LLC
RELATED PARTY TRANSACTIONS
Percentage of costs for three management positions incurred by GFE paid by the Company		50.00%
Number of management positions of GFE partially paid for by the Company | item		3
Renewal term		1 year
Period of written notice for termination prior to renewal of agreement		90 days
Amount of related party transaction		$ 438,000	449,000	406,000
Swan Engineering Inc. Management And Operating Agreement
RELATED PARTY TRANSACTIONS
Monthly base fee paid		28,000	38,000	36,000
Monthly variable fee paid		111,000	161,000	157,000
Swan Engineering Inc. Project Management Agreement
RELATED PARTY TRANSACTIONS
Project management and capital work fees		45,000	$ 77,000	$ 44,000
Agrinatural, LLC | Swan Engineering Inc. Management And Operating Agreement
RELATED PARTY TRANSACTIONS
Management fee reduction		$ 4,500
Term of Agreement	5 years
Agrinatural, LLC | Swan Engineering Inc. Project Management Agreement
RELATED PARTY TRANSACTIONS
Percentage of capital expenditures reimbursed to related parties		10.00%
Term of Agreement	5 years
Swan Engineering Inc. And Unrelated Third Party | Agrinatural, LLC
RELATED PARTY TRANSACTIONS
Noncontrolling interest, ownership percentage by noncontrolling owners		27.00%

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details)	Oct. 31, 2019USD ($)	Jan. 01, 2014item	Nov. 01, 2013	Sep. 30, 2019USD ($)gal	May 31, 2006	Oct. 31, 2019USD ($)itemmibu	Oct. 31, 2018USD ($)	Oct. 31, 2017USD ($)	Oct. 31, 2007USD ($)	Oct. 31, 2006USD ($)
COMMITMENTS AND CONTINGENCIES
Impairment charge						$ 27,844,579	$ 27,844,579
Commodity Contract
COMMITMENTS AND CONTINGENCIES
Impairment charge						$ 0	323,000	$ 0
Corn Forward Contracts | Long/Purchase
COMMITMENTS AND CONTINGENCIES
Notional volume | bu						740,000
Ethanol Forward Contracts | Short/Sale
COMMITMENTS AND CONTINGENCIES
Notional value	$ 13,490,000					$ 13,490,000
Anticipated sales (as a percent)						92.00%
Distillers Grains Forward Contracts | Short/Sale
COMMITMENTS AND CONTINGENCIES
Notional value	1,275,000					$ 1,275,000
Anticipated sales (as a percent)						21.00%
Corn Oil Forward Contract | Short/Sale
COMMITMENTS AND CONTINGENCIES
Notional value	$ 468,000					$ 468,000
Anticipated sales (as a percent)						75.00%
Water Supply Development and Distribution Agreement
COMMITMENTS AND CONTINGENCIES
Term of agreement				10 years
Initial volume per minute of capacity that is available from the well for which the entity has exclusive rights (in gallons) | gal				600
City's water well bond payments				$ 735,000
Administrative fee to be paid as water usage fees (as a percent)				5.00%
Administrative fee to be paid as water usage fees				$ 594,000
Percentage of profit to be paid as water usage fees				10.00%
Assessment				$ 367,000
Operating and administrative/maintenance expenses paid				12,000
Flow Charges Per Thousand Gallons Of Water				0.60
Monthly base fee paid				1,500
Operating and maintenance expenses capped				$ 300,000
Percentage in excess of operating and maintenance cost capped				55.00%
Initial term				2 years
Average term				2 years
Water Treatment Agreement
COMMITMENTS AND CONTINGENCIES
Term of agreement					30 years
Assessment									$ 500,000	$ 3,550,000
Operating and administrative/maintenance expenses paid						$ 52,000	92,000	24,000
Ethanol Marketing Agreement
COMMITMENTS AND CONTINGENCIES
Percentage of ethanol and distillers grains products produced by the entity to be purchased, marketed and resold by Gavilon						100.00%
Number of terms agreement automatically renews | item		3
Term of renewal periods	1 year	3 years
Fees and commissions						$ 635,000	604,000	587,000
Ethanol Marketing Agreement | Minimum
COMMITMENTS AND CONTINGENCIES
Written notice for termination of agreement	90 days	3 months
Distillers Grains Marketing Agreement
COMMITMENTS AND CONTINGENCIES
Term of agreement			6 months
Fees and commissions						287,000	252,000	268,000
Distillers Grains Marketing Agreement | Minimum
COMMITMENTS AND CONTINGENCIES
Written notice for termination of agreement			60 days
Corn Oil Marketing Agreement
COMMITMENTS AND CONTINGENCIES
Term of agreement			1 year
Fees and commissions						$ 71,000	$ 83,000	$ 89,000
Corn Oil Marketing Agreement | Minimum
COMMITMENTS AND CONTINGENCIES
Written notice for termination of agreement			90 days
Contract For Natural Gas Pipeline To Plant
COMMITMENTS AND CONTINGENCIES
Distance of the natural gas pipeline from the ethanol plant | mi						16
Rail Car Rehabilitation Agreement
COMMITMENTS AND CONTINGENCIES
Number of hopper rail cars leased | item						50
Estimated total costs to rehabilitate the cars						$ 551,000
Estimated long-term liability of rehabilitation costs	$ 551,000					$ 551,000

BUSINESS SEGMENTS (Details)

BUSINESS SEGMENTS (Details)	3 Months Ended												12 Months Ended
	Oct. 31, 2019USD ($)	Jul. 31, 2019USD ($)	Apr. 30, 2019USD ($)	Jan. 31, 2019USD ($)	Oct. 31, 2018USD ($)	Jul. 31, 2018USD ($)	Apr. 30, 2018USD ($)	Jan. 31, 2018USD ($)	Oct. 31, 2017USD ($)	Jul. 31, 2017USD ($)	Apr. 30, 2017USD ($)	Jan. 31, 2017USD ($)	Oct. 31, 2019USD ($)segment	Oct. 31, 2018USD ($)	Oct. 31, 2017USD ($)
Segment Reporting Information
Number of operating segments | segment													2
Total Revenues	$ 28,267,341	$ 27,367,787	$ 25,494,797	$ 25,697,520	$ 24,365,831	$ 26,252,916	$ 29,880,856	$ 27,972,451	$ 27,994,905	$ 28,541,889	$ 25,990,784	$ 27,390,074	$ 106,827,445	$ 108,472,054	$ 109,917,652
Operating Income (Loss)	(2,535,502)	$ 381,693	$ (1,275,409)	$ (1,953,327)	(1,481,450)	$ 373,043	$ 1,285,823	$ 716,139	$ 2,137,579	$ 1,518,888	$ 1,080,594	$ 2,567,534	(5,382,545)	893,555	7,304,595
Assets	56,595,915				62,020,856								56,595,915	62,020,856
Ethanol production
Segment Reporting Information
Total Revenues													105,395,553
Natural gas pipeline
Segment Reporting Information
Total Revenues													1,431,892
Operating Segments | Ethanol production
Segment Reporting Information
Total Revenues													105,395,553	106,811,761	108,709,255
Operating Income (Loss)													(6,594,653)	(501,475)	6,821,779
Assets	44,097,379				49,540,279								44,097,379	49,540,279
Operating Segments | Natural gas pipeline
Segment Reporting Information
Total Revenues													3,182,958	3,436,880	2,946,438
Operating Income (Loss)													1,878,935	2,116,147	1,177,251
Assets	$ 12,498,536				$ 12,480,577								12,498,536	12,480,577
Intersegment Eliminations
Segment Reporting Information
Total Revenues													(1,751,066)	(1,776,587)	(1,738,041)
Operating Income (Loss)													$ (666,827)	$ (721,117)	$ (694,435)

QUARTERLY FINANCIAL DATA (UNA_3

QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($)	3 Months Ended												12 Months Ended
	Oct. 31, 2019	Jul. 31, 2019	Apr. 30, 2019	Jan. 31, 2019	Oct. 31, 2018	Jul. 31, 2018	Apr. 30, 2018	Jan. 31, 2018	Oct. 31, 2017	Jul. 31, 2017	Apr. 30, 2017	Jan. 31, 2017	Oct. 31, 2019	Oct. 31, 2018	Oct. 31, 2017
QUARTERLY FINANCIAL DATA (UNAUDITED)
Revenues	$ 28,267,341	$ 27,367,787	$ 25,494,797	$ 25,697,520	$ 24,365,831	$ 26,252,916	$ 29,880,856	$ 27,972,451	$ 27,994,905	$ 28,541,889	$ 25,990,784	$ 27,390,074	$ 106,827,445	$ 108,472,054	$ 109,917,652
Gross profit (loss)	(1,779,583)	1,248,103	(419,654)	(1,033,800)	(709,108)	1,092,414	2,127,807	1,581,182	2,913,491	2,251,294	1,850,266	3,414,231	(1,984,934)	4,092,295	10,429,282
Operating income (loss)	(2,535,502)	381,693	(1,275,409)	(1,953,327)	(1,481,450)	373,043	1,285,823	716,139	2,137,579	1,518,888	1,080,594	2,567,534	(5,382,545)	893,555	7,304,595
Net income (loss) attributable to Heron Lake BioEnergy, LLC	$ (2,643,357)	$ 326,579	$ (1,115,152)	$ (2,023,640)	$ (1,580,485)	$ 302,686	$ 1,271,018	$ 861,997	$ 2,002,070	$ 1,414,752	$ 1,019,120	$ 2,832,416	$ (5,455,570)	$ 855,216	$ 7,268,355
Basic and diluted earnings (loss) per unit (Class A and B)	$ (0.03)		$ (0.01)	$ (0.03)	$ (0.02)		$ 0.02	$ 0.01	$ 0.02	$ 0.02	$ 0.01	$ 0.04	$ (0.07)	$ 0.01	$ 0.09

SUBSEQUENT EVENT (Details)

SUBSEQUENT EVENT (Details) - USD ($)	Dec. 11, 2019	Oct. 31, 2019
Other assets
Subsequent Event [Line Items]
Deposits		$ 225,000
HLBE Pipeline Company, LLC | Subsequent Event
Subsequent Event [Line Items]
Purchase of Non-controlling Interest	$ 2,225,000