EXHIBIT 10.4

MANAGEMENT SERVICES AGREEMENT
(INDEPENDENT CONTRACTOR AGREEMENT)

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

RECITALS

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

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

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

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

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

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

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

Heron the following management services, to-wit:

i.
Chief Executive Officer (CEO);

ii.    Chief Financial Officer (CFO); and

iii.    Commodity Risk Manager.

b.    Time Commitment.

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

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reasonably necessary to perform the services for Heron.

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

Heron.

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

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

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

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

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

iv.    Nothing herein is intended to create an employment contract, or guaranty
of employment, or a guaranty of employment for any length of time to any person.
Each person providing management services hereunder shall, at all times, remain
the employee of GFE designated to provide services as stated herein.
        
2.    TERM AND TERMINATION. The initial term of this Agreement, subject to the
remaining terms and conditions hereof, shall be for three years from the
effective date as stated in the preamble hereof. With respect to the term and
termination hereof:

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

b.    Termination for Cause. Notwithstanding the foregoing, this Agreement may
be terminated for cause, as follows:
        
i.
If a party seeks to terminate this Agreement for cause, it shall deliver to the
other party written notice of termination; which notice shall describe the basis
for determining cause exists; and which notice shall provide 30 days notice and
opportunity to cure.

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

ii.    Cause means:

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

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

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

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

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

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

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

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

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

d.    Payment. Payment by Heron to GFE for all amounts due GFE, shall occur on
the 10th day of each month. Payments for any partial month(s) of services shall
be prorated.
  
4.    SEPARATE RIGHTS AND RESPONSIBILITIES OF GFE AND HERON. The parties agree
that to the following reservation of their separate rights and statement of
their separate responsibilities, to-wit:

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

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

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

a.
Confidentiality. With respect to confidentiality:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

9.    MISCELLANEOUS.

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

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

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

i. If To GFE:

ii. If To Heron:

Granite Falls Energy, LLC
Attn: Chairman of the Board of Directors
Address: 15045 Hwy. 23 SE
                P. O. Box 216
                Granite Falls, MN 56241-0216
                

Heron Lake BioEnergy, LLC
Attn: Chairman of the Board of Directors
Address: 91246 390th Avenue
Heron Lake, MN 56137

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

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

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

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

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

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

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

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

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

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

 
GRANITE FALLS ENERGY, LLC

By: /s/ Paul Enstad                                

       Its: Chairman                                  

HERON LAKE BIOENERGY, LLC

By: /s/ Robert Ferguson                          

       Its: CEO                                           

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