FARMLAND INDUSTRIES INC, POS AM, 1995-10-02

FARMLAND INDUSTRIES INC
POS AM, 1995-10-02
MEAT PACKING PLANTS

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Registration Statement No. 33-56821

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Post-Effective Amendment No. 1
To
Form S-1
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
FARMLAND INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Kansas 44-0209330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2011
(Primary Standard Industrial Classification Code Number)
3315 N. Oak Trafficway, Kansas City, Missouri 64116-0005
816-459-6000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

J. F. Berardi
Executive Vice President and Chief Financial Officer
Farmland Industries, Inc.
3315 N. Oak Trafficway, Kansas City, Missouri 64116-0005
816-459-6201
(Name, Address, including zip code, and telephone number, including area code,
of agent for service)

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement, as determined by
market conditions.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. ( X )

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ( )

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ( )

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ( )

<TABLE>
CALCULATION OF REGISTRATION FEE

<CAPTION>
PROPOSED PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF BEING OFFERING PRICE OFFERING OR REGISTRATION
SECURITY BEING REGISTERED REGISTERED PER UNIT EXCHANGE PRICE FEE
<S> <C> <C> <C> <C>
Demand Loan Certificates $ 13,600,000 100% $ 13,600,000 $ 4,690
Subordinated Capital
Investment Certificates

-Ten Year $ 44,100,000 100% $ 44,100,000 $ 15,207
-Five Year $ 44,000,000 100% $ 44,000,000 $ 15,172
Subordinated Monthly Income
Capital Investment Certificates
-Ten Year $ 26,700,000 100% $ 26,700,000 $ 9,207
-Five Year $ 13,100,000 100% $ 13,100,000 $ 4,517

Total $ 141,500,000 $ 48,793(1)
<FN>
(1)The fee was paid with the filing of Form S-1 Registration Statement
No. 33- 56821.
</TABLE>

Pursuant to Rule 429, the combined prospectus filed as a part of this
Registration Statement relates as well to Registrant's Form S-1 Registration
Statements No. 33-49253 and No. 33-51319.

PART I
FARMLAND INDUSTRIES, INC.

CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K

ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS

1. Forepart of Cover of Registration Statement
registration Cross Reference Sheet
statement and Front Page of Prospectus
outside front cover
page of Prospectus

2. Inside front and Available Information
outside Reports to Security Holders
back
cover pages of
Prospectus

3. Summary Information, Prospectus Summary
Risk Factors Risk Factors
and Ratio of Earnings
to Fixed Charges
4. Use of Proceeds Use of Proceeds

5. Determination of Not Applicable
Offering Price

6. Dilution Not Applicable

7. Selling Security Not Applicable
Holders

8. Plan of Distribution Plan of Distribution

9. Description of Description of the Ten-Year
Securities to be Subordinated Capital Investment
Registered Certificates

Description of the Five-Year
Subordinated Capital Investment
Certificates

Description of the Ten-Year
Subordinated Monthly Income
Capital Investment Certificates

Description of the Five-Year
Subordinated Monthly Income Capital Investment
Certificates

Description of the Demand Loan
Certificates

10. Interest of Named Legal Matters
Experts and Counsel

11. Information with
Respect to the
Registrant

(a) 1. General The Company
Development Business - General
of Business

2. Financial Note 12 of Notes to Consolidated
Information Financial Statements
About
Industry
Segments

3. Description of Business
Business

(b) Description of Business
Properties

(d) Market Price of Not Applicable
and Dividends on
the Registrant's
Common Equity and
Related
Stockholder
Matters

(e) Financial Index to Farmland
Statements Consolidated
Financial Statements

(f) Selected Selected Consolidated Financial
Financial Data Data

(g) Supplementary Not Applicable
Financial
Information

(h) Management's Management's Discussion and
Discussion and Analysis of Financial Condition
Analysis of and Results of Operations
Financial
Condition and
Results of
Operations

(i) Changes in and Not Applicable
Disagreements
with
Accountants on
Accounting and
Financial
Disclosure

(j) Directors and Management
Executive
Officers

(k) Executive Executive Compensation
Compensation

(l) Security Not Applicable
Ownership of
Certain
Beneficial
Owners and
Management

(m) Certain Certain Transactions
Relationships and
Related
Transactions

12. Disclosure of Not Applicable
Commission Position
on Indemnification
for Securities Act
Liabilities

PROSPECTUS
SUBJECT TO COMPLETION, DATED OCTOBER , 1995

FARMLAND INDUSTRIES, INC.
<TABLE>
<CAPTION>
Amounts Offered to:
The General Existing
Public Security Holders
<S> <C> <C>
SUBORDINATED CAPITAL INVESTMENT CERTIFICATES
TEN-YEAR $ 25,037,000 $ 19,258,000
FIVE-YEAR $ 34,640,000 $ 23,289,000
SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT CERTIFICATES
TEN-YEAR $ 16,161,000 $ 19,211,000
FIVE-YEAR $ 9,635,000 $ 9,843,000
DEMAND LOAN CERTIFICATES $ 57,037,000 $ -0-
</TABLE>

SEE "RISK FACTORS" ON PAGE 8 FOR A DESCRIPTION OF CERTAIN RISK FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THESE SECURITIES. IN
MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

Farmland Industries, Inc. ("Farmland" or the "Company") is offering: (1)
to the owners of its Subordinated Capital Investment Certificates the right to
exchange (see "Exchange Offer") such certificates for an equivalent principal
amount of any Subordinated Monthly Income Capital Investment Certificate ($5,000
minimum) which, at the time of the exchange, is being offered by this
Prospectus, and (2) to the owners of its Subordinated Capital Investment
Certificates, which have been held until eligible for redemption prior to
maturity at the option of the owner, the right to exchange such certificates for
an equivalent principal amount of any Subordinated Capital Investment
Certificate which, at the time of the exchange, is being offered by this
Prospectus. This offer will expire at 12:00 P.M. Eastern Standard Time on
December 31, 1995, unless terminated prior to such date.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

The date of this Prospectus is October , 1995

(Continued from preceding page)

<TABLE>
<CAPTION>
Underwriting
Price to Discounts Proceeds to
Public(1) Commissions(2) Farmland(2)

<S> <C> <C> <C>
Subordinated Capital Investment Certificates*
--$100 minimum
Ten-Year Total $ 25,037,000 $ 25,037,000
Five-Year Total $ 34,640,000 $ 34,640,000
Subordinated Monthly Income Capital
Investment Certificates*
--$5,000 minimum (additional units in
incremental amounts of $1,000 or more)
Ten-Year Total $ 16,161,000 $ 16,161,000
Five-Year Total $ 9,635,000 $ 9,635,000
Demand Loan Certificates*
--$100 minimum
Total $ 57,037,000 $ 57,037,000

<FN>
*See "Determination of the Certificate Interest Rate."
</TABLE>
(1) Farmland's offering of Subordinated Capital Investment Certificates,
Subordinated Monthly Income Capital Investment Certificates and Demand Loan
Certificates (referred to herein as "Debt Certificates") is being made in
compliance with the terms of a partial exemption from the requirements of
Schedule E of the Bylaws of the National Association of Securities Dealers,
Inc. (NASD). As a condition of this partial exemption, a minimum of 80
percent of the dollar amount of aggregate sales made in this offering must
be to individuals or entities who are members of a defined group, the
definition of which has been approved by the NASD.

(2) The Debt Certificates offered hereby for cash and for exchange are offered
on a "best efforts" basis by Farmland Securities Company and American
Heartland Investments, Inc. and may be offered by other broker-dealers
selected by Farmland. See "Plan of Distribution." The offering is for an
indeterminate period of time, not expected to be in excess of two years
with no minimum amount of securities which must be sold. The proceeds to
Farmland are before deducting estimated commissions and expenses to be paid
by Farmland of $4,295,000 and $406,000, respectively, assuming that all
securities offered hereby are sold.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: 500 West Madison
Street, Suite 1400, Chicago, IL 60661 and 7 World Trade Center, 13th Floor, New
York, NY 10048. Copies of such material can also be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

REPORTS TO SECURITY HOLDERS

Farmland intends to make available to holders of its Debt Certificates,
upon written request from any such holder to the address stated on page 4, a
copy of the latest annual report containing the audited consolidated financial
statements of Farmland and its subsidiaries.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF SO GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY FARMLAND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY DISTRIBUTION OF THE SECURITIES UNDER THIS PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AT ANY TIME SUBSEQUENT TO THE RESPECTIVE DATES AT WHICH INFORMATION IS
GIVEN HEREIN OR THE DATE OF THIS PROSPECTUS.

TABLE OF CONTENTS

Page

PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . 14
DETERMINATION OF THE CERTIFICATE INTEREST RATE . . . . . . . . . . . . 25
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . 26
EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
HOW TO ACCEPT EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . 28
HOW TO TRANSFER OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . 28
DESCRIPTION OF THE TEN-YEAR SUBORDINATED CAPITAL
INVESTMENT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . 28
DESCRIPTION OF THE FIVE-YEAR SUBORDINATED CAPITAL
INVESTMENT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . 32
DESCRIPTION OF THE TEN-YEAR SUBORDINATED
MONTHLY INCOME CAPITAL INVESTMENT CERTIFICATES . . . . . . . . . . 36
DESCRIPTION OF THE FIVE-YEAR SUBORDINATED
MONTHLY INCOME CAPITAL INVESTMENT CERTIFICATES . . . . . . . . . . 40
DESCRIPTION OF THE DEMAND LOAN CERTIFICATES . . . . . . . . . . . . . . 43
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
PATRONAGE REFUNDS AND DISTRIBUTION OF NET EARNINGS . . . . . . . . . . 58
EQUITY REDEMPTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . 58
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
QUALIFIED INDEPENDENT UNDERWRITER . . . . . . . . . . . . . . . . . . . 62
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . 67
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 69
INDEX TO FARMLAND CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . 70

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless the context requires otherwise, (i) "Farmland" or the "Company" herein
refers to Farmland Industries, Inc. and its consolidated subsidiaries, (ii) all
references herein to "year" or "years" are to fiscal years ended August 31, and
(iii) all references herein to "tons" are to United States short tons.

FARMLAND INDUSTRIES, INC.
P. O. Box 7305
Kansas City, Missouri 64116
Telephone (816) 459-6000

Business Farmland is an agricultural farm supply and processing and marketing
cooperative headquartered in Kansas City, Missouri that is owned
primarily by its members and operates on a cooperative basis. In 1994,
Farmland's membership consisted of 1,480 cooperative associations of
farmers and ranchers and 1,365 pork or beef producers or associations
of such producers. Founded originally in 1929, Farmland has grown from
revenues of $310,000 during its first year of operation to over $6.6
billion during 1994.

The Company is the largest cooperative in the United States in terms
of revenues. The Company's principal U.S. trade territory is
comprised of 22 midwestern states. During the three years ended
December 31, 1992, average production in those states, as a percent of
the United States total, accounted for 82% of wheat production, 88% of
corn production, 81% of soybean production, 72% of cattle production,
and 82% of hog production. Farmland has endeavored to develop a
significant presence in international markets. In 1994, Farmland had
exports to approximately 85 countries, and derived 37% of its grain
revenues from export sales. Substantially all foreign grain sales
generally are paid in U.S. Dollars.

The Company conducts business primarily in two operating areas:
agricultural inputs and outputs. On the input side of the
agricultural industry, the Company operates as a farm supply
cooperative. On the output side of the agricultural industry, the
Company operates as a processing and marketing cooperative.

The Company's farm supply operations consist of three principal
product divisions - petroleum, crop production and feed - that produce
and distribute farm supply products principally at wholesale. Over
50% of the Company's farm supply products sold in 1994 were produced
in plants owned by the Company or operated by the Company under long-
term lease arrangements. Approximately 65% of the Company's farm
supply products sold in 1994 were to farm cooperative associations
which are members (as defined below) of Farmland. These farm
cooperatives distribute products primarily to farmers and ranchers in
states which comprise the corn belt and the wheat belt and who utilize
the products in the production of farm crops and livestock.

On the output side, the Company's processing and marketing operations
include the processing of pork and beef, the marketing of fresh pork,
processed pork and fresh beef and the storage and marketing of grain.
In 1994, approximately 61% of the hogs processed and 46% of the grain
marketed were supplied to the Company by its members. Substantially
all of the Company's pork and beef products sold in 1994 were
processed in plants owned by the Company.

No material part of the business of any segment of the Company is
dependent on a single customer or a few customers. The Company
competes for market share with numerous participants (including other
cooperatives) with various levels of vertical integration, product and
geographical diversification, sizes and types of operations.
Financial information about the Company's industry segments is
presented in Note 12 of the Notes to Consolidated Financial Statements
included herein.

THE OFFERING
<TABLE>
<CAPTION>
OFFERED AT 100% OF
AGGREGATE FACE AMOUNT

FOR FOR
CASH EXCHANGE

<S> <C> <C>
Description of Securities* (see pages 28, 32, 36, 40, and 43):
Subordinated Capital Investment Certificates - $100 Minimum
Interest payable or compounded semiannually at the
Certificate Interest Rate
10-year maturity $ 25,037,000 $ 19,258,000
5-year maturity $ 34,640,000 $ 23,289,000
Subordinated Monthly Income Capital Investment Certificates
- $5,000 Minimum (additional units may be purchased in
increments of $1,000 or more)
Interest payable monthly at the Certificate Interest Rate
10-year maturity $ 16,161,000 $ 19,211,000
5-year maturity $ 9,635,000 $ 9,843,000
Demand Loan Certificates - $100 minimum $ 57,037,000 $ -0-

*Subordinated Capital Investment Certificates and Subordinated
Monthly Income Capital Investment Certificates are referred
to in this Prospectus as "Subordinated Debt Certificates."
</TABLE>

PLAN OF DISTRIBUTION
Offered on a best efforts basis by Farmland Securities Company ("FSC") and
American Heartland Investments, Inc. ("AHI") and may be offered by selected
broker-dealers. See "Plan of Distribution."

UNDERWRITING DISCOUNTS AND COMMISSIONS
Farmland will pay commissions to FSC not to exceed 4% of the sale price of
Demand Loan Certificates and Subordinated Debt Certificates being offered.
Farmland will pay all expenses and liabilities incurred by FSC, limited to
an amount not to exceed 3% of the aggregate sales price of Demand Loan and
Subordinated Debt Certificates being offered. Farmland will pay to AHI and
to other selected broker-dealers for their services a sales commission of
not more than 4% of the face amount of the Subordinated Debt Certificates
and not more than 1/2 of 1% of the face amount of the Demand Loan
Certificates which the broker-dealers sell. See "Plan of Distribution."

PURPOSE OF THE EXCHANGE OFFER
The purpose of the exchange offer is to extend the period of time for which
Farmland may utilize funds borrowed from an investor in its Subordinated
Debt Securities.

METHOD OF TRANSACTING AN EXCHANGE
The exchange offer may be accepted by delivering any of the Subordinated
Debt Certificates which are eligible for exchange, to Farmland Securities
Company, P.O. Box 7305, Kansas City, Missouri 64116, Dept. 79 or to
American Heartland Investments, Inc., P. O. Box 1303, Salina, Kansas
67402. Such certificates should be assigned to Farmland in the transfer
section (on the reverse side of the certificate) and endorsed by all
persons whose names appear on the face of the certificate. For additional
information regarding the exchange, see "How to Accept Exchange Offer," or
call (816) 459-6360 or write to the above address for specific information.

USE OF PROCEEDS
Any proceeds received will be used to fund portions of capital expenditures
which are estimated to be approximately $323.4 million through the two-year
period ending August 31, 1997, or to redeem any of the $54.1 million of
outstanding Subordinated Debt Certificates, which mature at various times
prior to August 31, 1997, or to redeem any outstanding Subordinated Debt
Certificates prior to maturity at the request of owners to the extent
provided in each Subordinated Debt Certificates' trust indenture. See "Use
of Proceeds," "Business - Other Matters - Capital Expenditures," and
"Description of Subordinated Capital Investment Certificates," "Description
of Subordinated Monthly Income Capital Investment Certificates" and
"Description of Demand Loan Certificates."

SELLING PRICE
100% of Face Amount.

PROVISIONS FOR REDEMPTION OR PREPAYMENT
Owners of the Subordinated Debt Certificates may not liquidate their
investments except under restricted conditions summarized below and as more
fully stated in each of the Subordinated Debt Certificate's respective
trust indenture.

A. Farmland will not redeem any of the Ten-Year Subordinated Capital
Investment Certificates prior to maturity except:

(i) upon death of an owner; or,

(ii) after the date any Ten-Year Subordinated Capital Investment
Certificate becomes eligible for redemption prior to maturity
at the option of the owner, in additional amounts limited in
any month to the greater of $500,000 or 1/2 of 1% of the
balance outstanding under the Ten-Year Subordinated Capital
Investment Certificates' trust indenture at the end of the
previous month, provided such balance outstanding is greater
than $5,000,000. If such balance outstanding is less than
$5,000,000 there will be no limitation on early redemption of
eligible Ten-Year Subordinated Capital Investment
Certificates outstanding under such trust indenture.

B. Farmland will not redeem any of the Five-Year Subordinated Capital
Investment Certificates prior to maturity except:

(i) upon death of an owner; or,

(ii) after the date any Five-Year Subordinated Capital Investment
Certificate becomes eligible for redemption prior to maturity
at the option of the owner, in additional amounts limited in
any month to the greater of $500,000 or 1/2 of 1% of the
balance outstanding under the Five-Year Subordinated Capital
Investment Certificates' trust indenture at the end of the
previous month, provided such balance outstanding is greater
than $5,000,000. If such balance outstanding is less than
$5,000,000 there will be no limitation on early redemption of
eligible Five-Year Subordinated Capital Investment
Certificates outstanding under such trust indenture.

C. Farmland will not redeem the Subordinated Monthly Income Capital
Investment Certificates prior to maturity except upon the death of an
owner.

Farmland has the right to call the Subordinated Capital Investment
Certificates any time after two years from the date of issuance thereof.
See the subcaption, "Redemption" within the description of each type of
certificate.

RISK FACTORS

Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following risk factors before
purchasing the Demand Loan Certificates and Subordinated Debt Certificates
offered hereby.

INCOME TAX MATTERS

On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
notice to Farmland asserting deficiencies in federal income taxes (exclusive of
statutory interest thereon) in the aggregate amount of $70.8 million. The
asserted deficiencies relate primarily to the Company's tax treatment of a
$237.2 million gain resulting from its sale, in July 1983, of the stock of Terra
Resources, Inc. ("Terra") and the IRS's contention that Farmland incorrectly
treated the Terra sale gain as income against which certain patronage-sourced
operating losses could be offset. The statutory notice further asserts that
Farmland incorrectly characterized for tax purposes gains aggregating
approximately $14.6 million, and a loss of approximately $2.3 million, from
dispositions of certain other assets and that Farmland was not entitled to a
claimed intercorporate dividends-received deduction with respect to a $24.8
million distribution received in 1983 from Terra.

On June 11, 1993, Farmland filed a petition in the United States Tax Court
contesting the asserted deficiencies in their entirety. The case was tried on
June 13-15, 1995. Prior to trial, the IRS withdrew its challenge to Farmland's
claimed intercorporate dividends-received deduction and several other minor
issues were resolved. The parties submitted post-trial briefs to the court on
September 14, 1995; reply briefs are due November 15, 1995.

If the United States Tax Court decides in favor of the IRS on all
unresolved issues raised in the statutory notice, Farmland would have additional
federal and state income tax liabilities aggregating approximately $85.8 million
plus accumulating statutory interest thereon (approximately $178.3 million,
before tax benefits of the interest deduction, through August 31, 1995), or
$264.1 million in the aggregate at August 31, 1995. In addition, such a
decision would affect the computation of Farmland's taxable income for its 1989
tax year and, as a result, could increase Farmland's federal and state income
taxes for that year by approximately $5.0 million plus applicable statutory
interest thereon. Finally, the additional federal and state income taxes and
accrued interest thereon, which would be owed based on an adverse decision,
would become immediately due and payable unless the Company appealed the
decision and posted the requisite bond to stay assessment and collection.

The liability resulting from an adverse decision would be charged to
current operations and would have a material adverse effect on the Company and
may affect its ability to pay, when due, principal and interest on the
Subordinated Debt Certificates, the Demand Loan Certificates and the Company's
other indebtedness. In order to pay any such tax claim, the Company would have
to consider new financing arrangements, including the incurrence of indebtedness
and the sale of assets. Moreover, the Company would be required to renegotiate
the Credit Agreement with its bank lenders, as well as other existing financing
agreements with certain other parties, not only to permit such new financing
arrangements, but also to cure events of default under the Credit Agreement and
certain of such other existing financing agreements and to maintain compliance
with various requirements of the Credit Agreement and such other existing
financing agreements, including working capital and funded indebtedness
provisions, in order to avoid default thereunder. No assurance can be given
that such financing arrangements or such renegotiation would be successfully
concluded. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Financial Condition, Liquidity and Capital Resources".

SUBORDINATION AND ADDITIONAL DEBT

The Subordinated Debt Certificates offered by this Prospectus for sale and
for exchange are subordinated in right of payment to all existing and future
Senior Indebtedness (as defined below). Senior Indebtedness of Farmland
includes the Demand Loan Certificate, money borrowed from time to time from
certain financial institutions and amounts due and payable under any instrument
which provides that such amounts are to be Senior Indebtedness. There is no
limitation under any of the trust indentures pursuant to which the Subordinated
Debt Certificates and the Demand Loan Certificates are issued on the amount of
additional debt (secured or unsecured; non-subordinated or subordinated) for
which Farmland may become liable. On the date of this Prospectus, in accordance
with covenants in certain borrowing and lease agreements, the total amount of
funded debt and senior funded debt outstanding may not exceed 52% and 43% of
capitalization, respectively. See "Management Discussion and Analysis of
Financial Condition and Results of Operations" and the subcaption
"Subordination" within the description of each type of certificate.

The Demand Loan Certificates are general unsecured and non-subordinated
obligations of the Company and rank on parity in right of payment with all other
unsecured and non-subordinated indebtedness of the Company.

In addition, the Demand Loan Certificates and the Subordinated Debt
Certificates will be effectively subordinated to all obligations of Farmland's
subsidiaries. Any right of Farmland to receive assets of any of its
subsidiaries upon the liquidation or recapitalization of any such subsidiary
(and the consequent right of holders of the Demand Loan Certificates and the
Subordinated Debt Certificates to participate in those assets) will be subject
to the claims of such subsidiary's creditors, except to the extent that Farmland
itself is recognized as a creditor of such subsidiary. Even if Farmland is
recognized as a creditor of a subsidiary, Farmland's claims still would be
subject to any security interests in the assets of such subsidiary and any
indebtedness or other liability of such subsidiary that is senior to Farmland's
claims. Accordingly, by operation of the foregoing principles, the Demand Loan
Certificates and the Subordinated Debt Certificates will be effectively
subordinated to all indebtedness and other liabilities, including trade accounts
payable, of Farmland's subsidiaries.

As of May 31, 1995, (i) the Company had outstanding $350.1 million
aggregate principal amount of Senior Indebtedness, including the Demand Loan
Certificates, (ii) the Company had outstanding $296.1 million aggregate
principal amount of subordinated indebtedness, including the Subordinated Debt
Certificates, (iii) certain of the Company's subsidiaries had outstanding $170.2
million aggregate principal amount of indebtedness, of which $140.0 million was
nonrecourse to the Company, and (iv) other instruments (principally long-term
leases) then in effect provide for aggregate payments over nine years of
approximately $112.2 million.

RESTRICTED REDEMPTION RIGHTS OF HOLDERS OF SUBORDINATED DEBT CERTIFICATES

OWNERS OF THE SUBORDINATED DEBT CERTIFICATES MAY NOT LIQUIDATE THEIR
INVESTMENTS EXCEPT UNDER RESTRICTED CONDITIONS SUMMARIZED BELOW AND MORE FULLY
STATED IN EACH OF THE SUBORDINATED DEBT CERTIFICATES RESPECTIVE TRUST INDENTURE
THE RESTRICTED REDEMPTION RIGHTS OF HOLDERS OF THE SUBORDINATED DEBT
CERTIFICATES MAY BE UNSUITABLE TO THE INVESTMENT OBJECTIVES OF CERTAIN
PROSPECTIVE INVESTORS.

Farmland will not redeem any of the Subordinated Capital Investment
Certificates prior to maturity except: (i) upon death of an owner; or,
(ii) after the date any Subordinated Capital Investment
Certificate becomes eligible for redemption prior to maturity
at the option of the owner, in additional amounts limited in
any month to the greater of $500,000 or 1/2 of 1% of the
balance outstanding under the Subordinated Capital Investment
Certificates' respective trust indenture at the end of the
previous month, provided such balance outstanding is greater
than $5,000,000. If such balance outstanding is less than
$5,000,000, there will be no limitation on early redemption
of eligible Subordinated Capital Investment Certificates
outstanding under such trust indenture..

Farmland will not redeem the Subordinated Monthly Income Capital Investment
Certificates prior to maturity except upon the death of an owner.

Farmland has the right to call the Subordinated Capital Investment
Certificates any time after two years from the date of issuance thereof. See
the subcaption "Redemption" within the description of each type of certificate.

SOURCE OF FUNDS TO PAY INTEREST AND PRINCIPAL

Farmland does not establish special cash reserves for payment of principal
or interest on its Demand Loan and Subordinated Debt Certificates. In the past,
Farmland has relied on general corporate funds provided by operations, sales of
assets, and other borrowings (including the issuance of other Demand Loan and
Subordinated Debt Certificates) to fund such payments. Farmland intends to make
interest payments on and to redeem Demand Loan and Subordinated Debt
Certificates in accordance with the respective trust indentures with cash from
operations, borrowings, and from issuance of other Demand Loan or Subordinated
Debt Certificates.

GENERAL FACTORS AFFECTING THE BUSINESS

The Company's revenues, margins and net income depend, to a large extent,
on conditions in agriculture and may be volatile due to factors beyond the
Company's control, such as weather, crop failures, federal agricultural
programs, production efficiencies and U.S. imports and exports. In addition,
various federal and state regulations to protect the environment encourage
farmers to reduce the amount of fertilizer and other chemical applications that
they use. Global variables which affect supply, demand and price of crude oil,
refined fuels, natural gas and other commodities may impact the Company's
operations. Historically, changes in the costs of raw materials used in the
manufacture of the Company's finished products have not necessarily resulted in
corresponding changes in the prices at which such products have been sold by the
Company. Management cannot determine the extent to which these factors may
impact future operations of the Company. The Company's cash flow and net income
may continue to be volatile as conditions affecting agriculture and markets for
the Company's products change. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included herein.

LIMITED ACCESS TO EQUITY CAPITAL MARKETS

As a cooperative, the Company cannot sell its common equity securities to
traditional public or private markets. Instead, equity is raised largely from
cooperative voting members, associate members and other persons with which
Farmland is a party to a currently effective patronage agreement (''patrons'').
Farmland's members provide equity through the reinvestment of a portion of the
patronage refunds receivable from the Company. Unless the context otherwise
requires, the term ''member'' as used in this Prospectus Supplement and the
accompanying Prospectus means any voting member, any associate member or any
patron. See ''Business - Patronage Refunds and Distribution of Net Earnings''
and '' - Equity Redemption Plans" included herein.

ENVIRONMENTAL MATTERS

The Company is subject to various stringent federal, state and local
environmental laws and regulations in the United States which regulate the
Company's petroleum operations, farm supply manufacturing and distribution
operations, its food processing and marketing operations and its grain marketing
operations, or which may impose liability for the cleanup of environmental
contamination. The Company has incurred and will continue to incur substantial
capital expenditures and operating costs related to these laws and regulations.
The Company cannot, however, predict the impact of new or amended laws or
regulations, nor can it predict with certainty how existing laws and regulations
will be enforced or interpreted. See ''Management's Discussion and Analysis of
Financial Condition and Results of Operation - Matters Involving the
Environment'' herein and ''Business - Matters Involving the Environment''
included herein.

Many of the Company's current and former facilities have been in operation
for many years and, over such time, the Company and other predecessor operators
of such facilities have generated, used, stored, or disposed of substances or
wastes that are or might be considered hazardous under applicable environmental
laws. As a result of such operations, the soil and groundwater at or under
certain of the Company's current and former facilities have been contaminated,
but to date the Company has not been required to make material expenditures in
connection with the cleanup of contamination at any such facility. However,
material expenditures may be required by the Company in the future to remediate
contamination from past or future releases of hazardous substances or wastes.

The Company wholly or jointly owns or operates 54 manufacturing properties
and has potential responsibility for environmental conditions at a number of
former manufacturing facilities and at waste disposal facilities operated by
third parties. The Company is investigating or remediating contamination at 17
properties. The Company has also been identified as a potentially responsible
party (a ''PRP'') under the federal Comprehensive Environmental Response,
Compensation and Liability Act (''CERCLA'') at various National Priority List
sites and has unresolved liability with respect to the past disposal of
hazardous substances at six such sites. Such laws may impose joint and several
liability on certain statutory classes of persons for the costs of investigation
and remediation of contaminated properties, regardless of fault or the legality
of the original disposal. These persons include the present and former owner or
operator of a contaminated property, and companies that generated, disposed of,
or arranged for the disposal of, hazardous substances found at the property.
During 1993 and 1994, the Company paid approximately $.5 million and $1.4
million, respectively, for environmental investigation and remediation.

The Company currently is aware of probable obligations for environmental
matters at 20 properties. As of May 31, 1995, the Company has made an
environmental accrual of $8.4 million. The Company periodically reviews and, as
appropriate, revises its environmental accruals. Based on current information
and regulatory requirements, the Company believes that the accruals established
for environmental expenditures are adequate.

The Company's actual final costs of resolving certain environmental
matters are not quantifiable, and therefore have not been accrued, because such
matters are in preliminary stages and the timing, extent and costs of various
actions which governmental authorities may require are currently unknown.
Management also is aware of other environmental matters for which there is a
reasonable possibility that the Company will incur costs to resolve. It is
possible that the costs of resolution of the matters described in this paragraph
may exceed the liabilities which, in the opinion of management, are probable and
which costs are reasonably estimable at May 31, 1995. In the opinion of
management, it is reasonably possible for such costs to be approximately an
additional $24.0 million.

ABSENCE OF PUBLIC MARKET

There is currently no trading market for Farmland's Subordinated Debt
Certificates or Demand Loan Certificates. It is unlikely that a secondary
market for these securities will develop.

AFFILIATED UNDERWRITER

Farmland Securities Company ("FSC") is a wholly-owned subsidiary of
Farmland. FSC's business is limited to the offer and sale of securities issued
by Farmland. This offering is being made in compliance with terms of a partial
exemption from requirements of Schedule E of the NASD Bylaws; no persons, other
than persons associated with Farmland or FSC, participated in determining the
price and other terms of the securities offered hereby. See "Plan of
Distribution" included herein.

POTENTIAL TAXABLE GAINS OR LOSSES FROM THE EXCHANGE

An exchange of Certificates in a transaction permitted by this Prospectus
could result in a gain or a loss for purposes of determining taxable income of
holders of Certificates. See "Exchange Offer" included herein.

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data as of the end of and for
each of the years in the five-year period ended August 31, 1994 are derived from
the Consolidated Financial Statements of the Company, which Consolidated
Financial Statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants. The Consolidated Financial Statements as of
August 31, 1994 and 1993 and for each of the years in the three-year period
ended August 31, 1994 (the "Consolidated Financial Statements"), and the
independent auditors' report thereon, are included elsewhere herein. The
following selected consolidated financial data as of and for the nine-month
periods ended May 31, 1995 and May 31, 1994 are derived from unaudited Condensed
Consolidated Financial Statements of the Company (the "May 31, 1995 Financial
Statements") included elsewhere herein. The May 31, 1995 Financial Statements
include all adjustments, consisting of normal recurring accruals, which the
Company considers necessary for a fair presentation of the results of operations
for the periods covered thereby. The information set forth below should be read
in conjunction with information appearing elsewhere herein: "Management's
Discussion and Analysis of Financial Condition and Results of Operations", the
Consolidated Financial Statements and related notes, and the independent
auditors' report which contains an explanatory paragraph concerning income tax
adjustments proposed by the IRS relating to Terra and the May 31, 1995 Financial
Statements and related notes.
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
Year Ended August 31 May 31 May 31

1990 1991 1992 1993 1994 1994 1995

(Amounts in Thousands except ratios)

<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:(1)(2)(3)
Net Sales . . . . $3,377,603 $3,638,072 $3,429,307 $4,722,940 $6,677,933 $4,981,747 $5,325,044
Operating Profit of Industry
Segments . . . . 154,811 156,765 160,912 86,579 155,049 110,465 212,644
Interest Expense (net of interest
capitalized) . . . . 30,090 36,951 27,965 36,764 51,485 (38,310) (39,431)
Income (Loss) Before Income
Taxes and

Extraordinary Item . . 58,184 50,166 70,504 (36,833) 78,766 45,563 150,482
Net Income (Loss) . . . . $ 48,580 $ 42,693 $ 62,313 $ (30,400) $ 73,876 $ 43,308 $ 129,043

DISTRIBUTION OF NET EARNINGS:
Patronage Refunds:
Equity Reinvestments . $ 24,403 $ 17,837 $ 1,038 $ 1,155 $ 44,032 Note 4 Note 4
Cash or Cash
Equivalent . . . . 8,800 12,571 17,918 495 26,580 Note 4 Note 4
Earned Surplus and Other
Equities . . . . 15,377 12,285 43,357 (32,050) 3,264 Note 4 Note 4
. . . .
. . . . $ 48,580 $ 42,693 $ 62,313 $ (30,400) $ 73,876 Note 4 Note 4
RATIO OF EARNINGS TO FIXED
CHARGES(5) . . . . 2.2 1.9 2.5 Note 5 2.2 1.9 4.1

BALANCE SHEETS:
Working Capital . . . . . $ 121,518 $ 122,124 $ 208,629 $ 260,519 $ 290,704 $ 267,924 $ 332,547
Property, Plant and
Equipment,Net . . . . 469,710 490,712 446,002 504,378 501,290 499,203 575,591
Total Assets . . . . 1,352,889 1,369,231 1,526,392 1,719,981 1,926,631 1,873,542 2,078,504
Long-Term Debt (excluding
current maturities) . 273,071 291,192 322,377 485,861 517,806 459,116 481,547
Capital Shares and
Equities . . . . 476,011 497,364 588,129 561,707 585,013 553,064 (4) 584,727 (4)

(1) See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Financial Condition, Liquidity and Capital
Resources" for a discussion of the pending income tax litigation relating
to Terra, a former subsidiary of the Company.

(2) During 1991, the Company changed its method for inventory pricing of
certain petroleum inventories from the first-in, first-out (FIFO)
method previously used to the last-in, first-out (LIFO) method because
the LIFO method better matches current costs with current revenues.
Pro forma effects of retroactive application of the LIFO method are
not determinable.

(3) Acquisitions and Dispositions:

(a) In October 1993, the Company acquired approximately 53% of the common
stock of National Carriers, Inc. ("NCI") and increased its ownership
of NCI to 79% in August 1994. NCI is a trucking company located in
Liberal, Kansas. NCI provides substantially all the trucking service
needs of National Beef Packing Company, L.P. ("NBPC"), a limited
partnership. The purchase price of NCI ($4.4 million) was paid in
cash. See Note 2 of the Notes to Consolidated Financial Statements
included herein.

(b) In December 1993, the Company acquired all the common stock of seven
international grain trading companies (collectively referred to as
"Tradigrain"). The purchase price for Tradigrain ($31.4 million) was
paid in cash. See Note 2 of the Notes to Consolidated Financial
Statements included herein.

(c) During 1993, Farmland acquired a 58% interest in NBPC (having
increased to 68% effective March 1, 1995). Effective April 15, 1993,
NBPC acquired Idle Wild Foods, Inc.'s beef packing plant and feedlot
located in Liberal, Kansas. See Note 2 of the Notes to Consolidated
Financial Statements included herein.

(d) On August 30, 1993, The Cooperative Finance Association ("CFA")
purchased 10,113,000 shares of its voting common stock from Farmland
as part of a recapitalization plan which established CFA as an
independent finance association for its members. As a result of CFA's
stock purchase and amendments to CFA's bylaws, Farmland did not have
voting control of CFA at August 31, 1993 and, therefore, did not
include CFA in its consolidated balance sheet at August 31, 1993.
Farmland's remaining investment in CFA is being accounted for by the
cost method.

(e) Effective June 30, 1992, the Company acquired the grain marketing
assets of Union Equity Co-Operative Exchange ("Union Equity"). See
Note 2 of the Notes to Consolidated Financial Statements included
herein.

(f) The following unaudited financial information for the years ended
August 31, 1992 and 1993 presents pro forma results of operations of
the Company as if the disposition of CFA and the acquisitions of Union
Equity and NBPC had occurred at the beginning of each period
presented. The pro forma financial information includes adjustments
for amortization of goodwill, additional depreciation expense, and
increased interest expense both on recourse and nonrecourse debt
assumed in the acquisitions. The pro forma financial information does
not necessarily reflect the results of operations that would have
occurred had the Company been a single entity which excluded CFA and
included Union Equity and NBPC for the full years 1992 and 1993. See
Note 2 of the Notes to Consolidated Financial Statements included
herein.
<TABLE>
<CAPTION>
August 31 (Unaudited)
1992 1993
(Amounts in Thousands)
<S> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . $ 5,441,303 $ 5,357,867
Income (Loss) Before Extraordinary Item . . $ 47,225 $ (44,040)
</TABLE>

(4) In accordance with the bylaws of Farmland, the member-sourced portion of
consolidated earnings (before income taxes) is determined annually and
distributed to members of Farmland as patronage refunds. The member-sourced
portion of such earnings is determined on the basis of the quantity or value
of business done by Farmland during the year with or for members entitled to
receive patronage refunds. As this determination is made only after the end
of the fiscal year, and because the appropriation of earned surplus is
dependent on the determination of the amount of patronage refunds, and in
view of the fact that the portion of the annual patronage refund to be paid
in cash or Farmland equity (common stock, associate member common stock or
capital credits) is determined (by the Board of Directors at its discretion)
after the amount of the annual patronage refund has been determined, Farmland
makes no provision for patronage refunds in its interim financial statements.
Therefore, the amount of interim net income has been reflected as a separate
item in Farmland's May 31, 1995 condensed consolidated balance sheet and is
not included in capital shares and equities at May 31, 1995.

(5) In computing the ratio of earnings to fixed charges, earnings represent
pretax income (loss) for the enterprise as a whole including 100% of such
income (loss) of minority-owned subsidiaries which have fixed charges, the
Company's share of 50%-owned entities and any distributed earnings (but not
losses or undistributed earnings) of less-than-50% owned entities plus fixed
charges. Fixed charges consist of interest and finance charges on all
indebtedness plus that portion of rentals considered to be the interest
factor. Income was inadequate to cover fixed charges for the year ended
August 31, 1993. The dollar amount of the coverage deficiency was $36.6
million.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company has historically maintained two primary sources for debt
capital: a substantially continuous public offering of its debt securities (the
"continuous debt program") and bank lines of credit.

The Company's debt securities issued under the continuous debt program
generally are offered on a best-efforts basis through the Company's wholly owned
broker-dealer subsidiary, Farmland Securities Company, and through American
Heartland Investments, Inc. (which is not affiliated with Farmland), and also
may be offered by selected unaffiliated broker-dealers. The types of securities
offered in the continuous debt program include certificates payable on demand
and five- and ten-year subordinated debt certificates. The total amount of such
debt outstanding and the flow of funds to, or from, the Company as a result of
the continuous debt program are influenced by the rate of interest which
Farmland establishes for each type of debt certificate offered and by options of
Farmland to call for redemption certain of its outstanding debt certificates.
During the year ended August 31, 1994, and the nine months ended May 31, 1995,
the outstanding balance of demand loan and subordinated debt certificates
increased by $17.6 million and $8.7 million, respectively.

Farmland has a $650.0 million Credit Agreement. The Credit Agreement
provides short-term credit of up to $450.0 million to finance seasonal
operations and inventory, and revolving term credit of up to $200.0 million. At
May 31, 1995, short-term borrowings under the Credit Agreement were $183.0
million, revolving term borrowings were $50.0 million and $37.9 million was
being utilized to support letters of credit issued on behalf of Farmland by
participating banks.

Farmland pays commitment fees under the Credit Agreement of 1/10 of 1%
annually on the unused portion of the short-term commitment and 1/4 of 1%
annually on the unused portion of the revolving term commitment. In addition,
Farmland must maintain consolidated working capital of not less than $150.0
million, consolidated net worth of not less than $475.0 million and funded
indebtedness and senior funded indebtedness of not more than 52% and 43% of
Combined Total Capitalization (as defined in the Credit Agreement),
respectively. All computations are based on consolidated financial data adjusted
to exclude nonrecourse subsidiaries (as defined in the Credit Agreement). At May
31, 1995, Farmland was in compliance with all covenants under the Credit
Agreement. The Credit Agreement expires in May 1997.

The Company maintains other borrowing arrangements with banks and financial
institutions. Under such agreements, at May 31, 1995, $47.2 million was borrowed
and letters of credit issued by banks amounted to $37.9 million. Financial
covenants of these arrangements generally are not more restrictive than under
the Credit Agreement.

In the opinion of management, these arrangements for debt capital are
adequate for the Company's present operating and capital plans. However,
alternative financing arrangements are continuously evaluated.

NBPC, 68%-owned by Farmland, maintains borrowing agreements with a group of
banks which provide financing support for its beef packing operations. Such
borrowings are nonrecourse to Farmland or Farmland's other affiliates. At May
31, 1995, $90.0 million was available under this facility of which $65.7 million
was borrowed and $1.3 million was utilized to support letters of credit. In
addition, NBPC has incurred certain long-term borrowings from Farmland. NBPC has
pledged certain assets to Farmland and such group of banks to support its
borrowings.

Tradigrain, which is comprised of seven international grain trading
subsidiaries of Farmland, has borrowing agreements with various international
banks which provide financing and letters of credit to support current
international grain trading transactions. Obligations of Tradigrain under these
loan agreements are nonrecourse to Farmland or Farmland's other affiliates.

Leveraged leasing has been utilized to finance railcars and a substantial
portion of the Company's fertilizer production equipment. Under the most
restrictive covenants of its leases, the Company has agreed to maintain working
capital of at least $75.0 million, Consolidated Funded Debt of not greater than
65% of Consolidated Capitalization and Senior Funded Debt of not greater than
50% of Consolidated Capitalization (all as defined in the most restrictive
lease).

As a cooperative, Farmland's member-sourced net earnings (i.e., income from
business done with or for members) are distributed to its voting members,
associate members and patrons in the form of common equity, capital credits or
cash. For this purpose, net income or loss was determined in accordance with the
requirements of federal income tax law up to 1994 and is determined in
accordance with generally accepted accounting principles in 1995 and after.
Other income is treated as "nonmember-sourced income". Nonmember-sourced income
is subject to income tax and after-tax earnings are transferred to earned
surplus. Under Farmland's bylaws, the member-sourced income is distributed to
members as patronage refunds unless the earned surplus account, at the end of
that year, is lower than 30% of the sum of the prior year-end balance of
outstanding common stock, associate member stock, capital credits, nonmember
capital and patronage refunds for reinvestment. In such cases, member-sourced
income is reduced by the lesser of 15% or an amount required to increase the
earned surplus account to the required 30%. The amount by which the member-
sourced income is so reduced is treated as nonmember-sourced income. The
member-sourced income remaining is distributed to members as patronage refunds.
For the years 1992, 1993 and 1994, the earned surplus account exceeded the
required amount by $49.5 million, $3.8 million and $2.3 million, respectively.

Generally, a portion of the patronage refund is distributed in cash and the
balance (the "invested portion") is distributed in common stock, associate
member common stock or capital credits (depending on the membership status of
the recipient), or the Board of Directors may determine to distribute the
invested portion in any other form or forms of equities. The invested portion
of the patronage refund is determined annually by the Board of Directors, but
the invested portion of the patronage refund is not deductible for federal
income tax purposes when it is issued unless at least 20% of the amount of the
patronage refund is paid in cash. The invested portion of the patronage refund
is a source of funds from operations which is retained for use in the business
and increases Farmland's equity base. Common stock and associate member common
stock representing the invested portion of patronage refunds may be redeemed by
cash payments from Farmland to holders thereof who participate in Farmland's
base capital plan. Capital credits and other equities of Farmland and Farmland
Foods, Inc., a 99% owned subsidiary ("Foods"), may be redeemed under other
equity redemption plans. The base capital plan and other equity redemption
plans are described under "Business - Equity Redemption Plans" included herein.

In 1994, operations generated a net cash inflow of $106.0 million. Other
major cash sources in 1994 included $34.6 million from dispositions of
investments and notes receivable, $17.9 million (net) from investors in demand
loan and subordinated debt certificates and $17.1 million from sales of
property, plant and equipment.

The primary uses of cash in 1994 included $69.8 million for capital
additions or improvements, $36.6 million (net) for repayment of bank loans and
other notes payable, $35.8 million for acquisition of businesses (Tradigrain and
NCI) and $22.1 million for investments and notes receivable.

Major uses of cash during the nine months ended May 31, 1995 include net
payments of $90.1 million to decrease the balance of bank loans and other notes
outstanding, $26.3 million for patronage refunds and dividends distributed from
earnings of the 1994 fiscal year, $86.5 million for capital expenditures, $12.3
million for the redemption of equities under the Farmland base capital plan and
special redemption plan and $19.0 million for acquisition of investments and
notes receivable. Major sources of cash in the same period included $87.0
million from operations, $56.3 million from an increase in the balance of checks
and drafts outstanding and $37.6 million from the disposition of investments and
notes receivable.

In July 1983, Farmland sold the stock of Terra, a wholly owned subsidiary
engaged in oil and gas exploration and production operations, and exited its oil
and gas exploration and production activities. The gain from the sale of Terra
amounted to $237.2 million for tax reporting purposes.

On March 24, 1993, the IRS issued a statutory notice to Farmland asserting
deficiencies in federal income taxes (exclusive of statutory interest thereon)
in the aggregate amount of $70.8 million. The asserted deficiencies relate
primarily to the Company's tax treatment of a $237.2 million gain resulting from
its sale, in July 1983, of the stock of Terra and the IRS's contention that
Farmland incorrectly treated the Terra sale gain as income against which certain
patronage-sourced operating losses could be offset. The statutory notice
further asserts that Farmland incorrectly characterized for tax purposes gains
aggregating approximately $14.6 million, and a loss of approximately $2.3
million, from dispositions of certain other assets and that Farmland was not
entitled to a claimed intercorporate dividends-received deduction with respect
to a $24.8 million distribution received in 1983 from Terra.

No provision has been made in the Consolidated Financial Statements for
federal or state income taxes (or interest thereon) in respect of the IRS claims
described above. Farmland believes that it has meritorious positions with
respect to all of these claims.

In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
likely than not that the courts will ultimately conclude that Farmland's
treatment of the Terra sale gain was substantially, if not entirely, correct.
Such counsel has further advised, however, that none of the issues involved in
this dispute is free from doubt, and there can be no assurance that the courts
will ultimately rule in favor of Farmland on any of these issues.

RESULTS OF OPERATIONS FOR YEARS ENDED AUGUST 31, 1992, 1993 AND 1994

The increase (decrease) in sales and operating profit by business segment
in each of the years in the three-year period ended 1994, compared with the
respective prior year, is presented in the table below.

Management's discussion of business segment sales, operating profit or loss
and other factors affecting the Company's income before income taxes and
extraordinary item during 1992, 1993 and 1994 follows the table.
<TABLE>
<CAPTION>
Change in Income Before Income
Change in Sales Taxes and Extraordinary Item
1992 1993 1994 1992 1993 1994
Compared Compared Compared Compared Compared Compared
with 1991 with 1992 with 1993 with 1991 with 1992 with 1993
(Amounts in Millions) (Amounts in Millions)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) OF
BUSINESS SEGMENT -
SALES AND OPERATING
PROFIT OR LOSS:
Petroleum . . . . . . . . . . $ (210) $ (92) $ (32) $ 17 $ (13) $ 32
Crop Production . . . . . . . (138) (13) 278 (13) (60) 74
Feed . . . . . . . . . . . . (21) 34 49 (3) (1) (4)
Food Processing and Marketing 21 563 943 14 (8) 4
Grain Marketing . . . . . . . 155 798 674 (1) 1 (34)
Other . . . . . . . . . . . . (16) 4 43 (10) 7 (4)
$ (209) $ 1,294 $ 1,955 $ 4 $ (74) $ 68
<CAPTION>
<S> <C> <C> <C>
CORPORATE EXPENSES AND OTHER:
General corporate expenses (increase) decrease . . . . . . . . . . . . 13 9 (9)
Other income and deductions (net) increase (decrease) . . . . . . . . . (5) 7 14
Interest expense (increase) decrease . . . . . . . . . . . . . . . . . 9 (9) (14)
Equity in income of investees increase (decrease) . . . . . . . . . . . (1) (10) 23
Minority owners' interest in income
of subsidiaries (increase) decrease . . . . . . . . . . . . . . . . -0- (1) 5
Provision for loss on disposition
of assets (increase) decrease . . . . . . . . . . . . . . . . . . . -0- (29) 29
Income before income taxes and
extraordinary item increase (decrease) . . . . . . . . . . . . . . . $ 20 $(107) $ 116
</TABLE>

In computing the operating profit or loss of a business segment, none of
the following have been added or deducted: corporate, general and administrative
expenses which cannot practicably be identified or allocated to a business
segment, interest expense, equity in income (loss) of investees, and
miscellaneous income or deductions.

PETROLEUM

SALES

Sales of petroleum products reflect a decrease of $31.9 million in 1994
compared with 1993 primarily due to lower prices of refined fuels and propane.
The effect of lower prices was to reduce reported sales by approximately $62.4
million. Part of this decrease was offset by the effect of a 6% increase in
refined fuels and propane unit sales.

Sales of the petroleum segment decreased $92.2 million in 1993 compared
with 1992, primarily a result of a 12% decrease in unit sales of refined fuels
(gasoline, diesel and distillates) and a 2% decline of the average selling price
thereof. Unit sales decreased principally because the Company sold its
investment in National Cooperative Refinery Association ("NCRA") in June 1992.
The refined fuels unit sales decrease in 1993 reduced sales by approximately
$92.2 million compared with 1992 and lower prices of refined fuels reduced sales
by $17.7 million. Sales of other products (principally asphalt and coke)
decreased $12.4 million. Propane sales increased approximately $30.1 million in
1993 due to a 27% increase in unit sales and 18% higher prices.

In 1992, sales of petroleum products declined $209.7 million compared with
1991. This decrease resulted primarily because unit sales of refined products
(gasoline, distillate and diesel) and the average prices of these products were
each lower in 1992 than 1991 by 4% and 16%, respectively. The unit sales and
price declines reduced sales of these products by approximately $37.3 million
and $154.2 million, respectively. In addition, propane prices in 1992 averaged
approximately 82% of the prior year's level, which reduced sales by
approximately $13.5 million.

OPERATING PROFIT

Results from petroleum operations increased $31.7 million in 1994 compared
with 1993 primarily because unit margins on diesel fuels with low levels of
sulfur (required by the Environmental Protection Agency ("EPA") for diesel fuel
sold after September 30, 1993) were higher than the prior year. These margins
were significantly higher immediately after the crossover to the low sulfur
level diesel fuels. In addition, margins on other refined fuels improved in
1994 compared with 1993 because the cost per barrel of crude oil decreased and
because production at the Coffeyville, Kansas refinery was substantially higher
than in the prior year. Unit margins on diesel fuels with low sulfur levels
have decreased to, and are expected to remain, near normal levels.

Operating profit of the petroleum segment decreased $12.8 million in 1993
compared with 1992. The favorable effects of improved margins in propane and
lower marketing and administrative expenses were more than offset by the
unfavorable effects of lower income from distributing fuels produced by NCRA and
the write-down to market value of certain petroleum inventories.

Operating profit of the petroleum segment was $8.2 million in 1992 compared
with a loss of $9.3 million in 1991. Most of this improvement resulted from
elimination in 1992 of losses experienced in 1991 on petroleum futures
contracts. The Company changed its hedging practice in March 1991.

CROP PRODUCTION

SALES

Crop production sales in 1994 increased $278.5 million compared with 1993
due to higher plant nutrient prices and unit sales. The average price per ton
of nutrient increased approximately 13.3% and unit sales increased approximately
1.1 million tons or 18%.

Sales of the crop production segment decreased $13.0 million in 1993
compared with 1992. Nitrogen fertilizer sales increased $54.1 million due to 8%
higher unit sales and because the average selling price increased 3%. Phosphate
fertilizer sales decreased $64.7 million. This decrease is primarily a result
of the sale of the Green Bay, Florida phosphate plant to a 50%-owned joint
venture. Subsequent to this sale (on November 15, 1991) export sales from the
Green Bay plant have not been reported in the Company's operations. In 1992,
the Company's sales included export sales from the Green Bay plant of $60.9
million.

The crop production segment's sales declined $137.7 million in 1992
compared with 1991. Substantially all of this decrease resulted from lower unit
sales and prices for phosphate fertilizers. The Company reported 30% lower
phosphate unit sales in 1992 which reduced sales approximately $117.3 million.
This decrease resulted principally from the sale on November 15, 1991 of the
Green Bay, Florida phosphate plant to a 50%-owned joint venture. In addition,
sales of phosphate fertilizers decreased approximately $18.2 million, because
the average price was 7% lower. Sales of turf and garden products were
approximately $2.9 million lower.

OPERATING PROFIT

Operating profits of the crop production business in 1994 increased $74.4
million compared with 1993. This increase resulted from higher unit sales and
unit margins. Unit margins in 1994 were approximately twice the level of 1993
which increased operating profit in this segment approximately $66.8 million.
Unit sales increased over one million tons (18%) which increased operating
profit by approximately $10.8 million. In addition, included in the statement
of operations in the caption, "Equity in income (loss) of investees", is $15.3
million in 1994 representing the Company's share of net income from fertilizer
joint ventures. This is an increase of $23.4 million compared with 1993.
Demand for plant nutrients in 1994 was stronger than in 1993 due to an increase
in the number of acres under cultivation, principally corn acreage (corn acreage
harvested was relatively low in 1993 due to wet weather and the resulting floods
in the Company's trade territory). In addition, demand for plant nutrients was
stimulated by favorable weather conditions during the fall and spring
application seasons. The increased demand for plant nutrients translated into
higher unit sales and margins and contributed significantly to the Company's
increased net income in 1994.

Operating profit of the crop production segment decreased $60.3 million in
1993 compared with 1992, primarily because of a 29% higher natural gas cost (the
principal raw material consumed in producing nitrogen fertilizer) which was not
recovered through selling prices. Fertilizer margins decreased approximately
$43.2 million because of higher natural gas cost. In addition, phosphate
fertilizer margins decreased approximately $7.1 million because decreased
phosphate fertilizer selling prices more than offset decreased cost. In
addition, the Company's share of the net loss of fertilizer ventures (included
in the Company's Consolidated Statement of Operations in the caption "Equity in
income (loss) of investees") was $8.2 million in 1993 compared with a loss of
$1.3 million in 1992.

The crop production segment's operating profit of $111.9 million decreased
$13.4 million in 1992 compared with 1991. The decrease resulted primarily from
lower phosphate fertilizer selling prices and from realignment of the Company's
phosphate fertilizer production operations into two 50%-owned ventures.

FEED

SALES

Sales of feed products increased $48.7 million in 1994 compared with 1993.
Unit sales of formula feed and feed ingredients each increased approximately 10%
which generated a $39.6 million increase in sales. The balance of the sales
increase resulted primarily from higher feed ingredient prices.

Sales of the feed segment increased $33.9 million in 1993 compared with
1992, primarily because of higher unit sales. Formula feed unit sales increased
approximately 9% which increased sales $20.3 million. Feed ingredients unit
sales increased approximately 12% which increased sales by $18.1 million. In
addition, sales of animal health products increased $2.0 million. Lower formula
feed selling prices partly offset the effect of higher unit sales.

The feed segment's sales for 1992 decreased $20.9 million compared with
1991, principally because feed ingredients unit sales decreased 22%. Unit sales
of feed ingredients decreased because sales efforts were directed from products
with near break-even margins to products with higher margins. Feed ingredient
sales decreased approximately $41.7 million because of the unit sales decline.
Feed ingredient prices increased an average of 8% which increased sales by
approximately $11.2 million and formula feed sales increased $6.8 million,
principally due to higher unit sales.

OPERATING PROFIT

Operating profit of the feed business segment decreased $3.7 million in
1994 compared with 1993. Gross margins decreased approximately $.5 million
reflecting lower margins on feed ingredients and pet food of $.8 million and $.4
million, respectively, partly offset by $.7 million higher margins on animal
health products. In addition, feed sales, marketing and administration expenses
increased $3.2 million primarily due to higher commissions and other variable
compensation plans.

Operating profit of the feed segment of $20.7 million in 1993 decreased
slightly compared with 1992. The decrease was due to the impact of lower
selling prices.

Operating profit of the feed segment for 1992 of $21.3 million decreased
$3.2 million compared with 1991. The decrease resulted from $1.3 million lower
patronage refunds received on purchases from other cooperatives and from $2.5
million higher expenses partly offset by $.4 million higher gross margins.

FOOD PROCESSING AND MARKETING

SALES

Sales of the food processing and marketing business increased $943.0
million in 1994 compared with 1993. Sales of beef increased $735.5 million
principally because NBPC has been included in the Company's 1994 results for the
full year. NBPC was acquired in April 1993. Pork sales increased $207.5
million, due mostly to including operations of the Monmouth, Illinois plant in
the Company's results for a full year in 1994. This plant was acquired in
February 1993. In addition, sales of specialty meats of the Company's Carando
division increased $13.0 million.

Food processing and marketing sales increased $562.5 million in 1993
compared with 1992, primarily due to business acquisitions. In April 1993, the
Company and partners organized NBPC. Farmland acquired a 58% ownership interest
in NBPC (such interest having increased to 68% effective March 1, 1995) which
acquired a beef packing plant and feedlot located in Liberal, Kansas. As a
result of this acquisition, the Company's sales included beef sales of $442.1
million in 1993. In February 1993, Foods purchased a pork processing plant
located at Monmouth, Illinois. As a result of this acquisition, sales of pork
products increased approximately $90.0 million. Sales of fabricated pork
products at the Company's other plants increased $17.0 million and sales of
specialty meats of the Carando division increased $8.3 million.

Sales of the food processing and marketing segment in 1992 increased $21.1
million compared with 1991. Sales of specialty meats increased $51.1 million
primarily because these products were not included in sales for 1991 prior to
April 1, when the Company acquired three specialty meats plants. Fresh and
processed pork sales were lower than in 1991 because the effect of lower
wholesale prices was greater than the effect of higher unit sales.

OPERATING PROFIT

Operating profit in the food processing and marketing segment of $20.6
million in 1994 reflects an increase of $4.1 million compared with 1993. The
increase includes $13.0 million higher operating profit of the pork business
partly offset by an $8.9 million decrease of operating profit of the beef
business. Operating profit from pork processing and marketing operations
increased primarily due to higher volume and higher margins on fresh pork,
branded pork, hams and specialty meats of the Carando division. Operating
profit of the beef business decreased owing to weak consumer demands for beef
and industry price competition.

Operating profit of the food processing and marketing segment decreased
$8.7 million in 1993 compared with 1992. The decrease is primarily due to a
4.6% increase in live hog costs. Margins on fabricated products and hams
increased $3.6 million and $4.4 million, respectively, and margins on beef
products (not included in the Company's operations in 1992) were $4.2 million.
These increases resulted from acquisitions which increased sales as discussed
above. However, these increases were more than offset by the effects of the
4.6% increase in live hog costs which could not be fully recovered through
increased wholesale prices of fresh and processed pork products and by higher
selling and administrative expenses.

Operating profit of the food processing and marketing segment for 1992
increased $13.8 million compared with 1991. The improvement includes higher
gross margins of approximately $26.8 million, partially offset by approximately
$13.4 million higher selling, general and administrative expenses. The gross
margin increase includes $9.9 million higher margins on specialty meats
attributable to ownership of specialty meats plants during all of 1992, compared
with only five months of 1991. Additional improvements of gross margins
resulted from a more favorable spread between the costs of live hogs and
wholesale pork prices, from higher unit sales, and from a shift of sales to
value-added products with higher unit margins. Selling, general and
administrative expenses of this segment increased, primarily due to expenses
incurred in connection with the specialty meats plants which were operated by
the Company for only five months in the prior year.

GRAIN MARKETING

SALES AND OPERATING PROFIT

Grain sales increased $673.6 million in 1994 compared with 1993 primarily
due to the acquisition of Wells-Bowman Trading Company and from operating
elevators in Utah and Idaho which were leased to the Company in 1994.

The grain marketing business had an operating loss of $33.5 million in 1994
compared with near break-even operations in 1993. The operating loss in 1994
includes an operating loss of $14.4 million in the international operations of
Tradigrain and an operating loss of $19.1 million in the Company's grain
division. The loss in 1994 resulted primarily from negative unit margins on
international grain transactions and higher domestic operating expenses.

Grain operations which were acquired in July 1992 reported sales for the
full year in 1993 of $953.5 million. Sales for the two months ended August 31,
1992 were $155.2 million.

In 1993, operating profit of the grain business was $.1 million compared
with a loss of $.7 million for the two months ended August 31, 1992. In 1993,
grain marketing operations were relocated to Kansas City from Enid, Oklahoma, an
export elevator at Houston, Texas was sold and certain duplicative
administrative costs were eliminated. As a result, cost reductions were
realized in 1993.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses ("SG&A") increased $81.5
million in 1994 compared with 1993. However, as a percent of sales, these
expenses were slightly lower in 1994 than in 1993. Approximately $17.6 million
of the increase resulted from acquisition of Tradigrain and NCI and from
including NBPC in the Company's financial statements for the full year in 1994.
Approximately $29.0 million of the increase was in pork marketing and processing
and resulted primarily from including the Monmouth, Illinois pork plant in the
Company's operations for a full year, and from higher sales of pork. Farm
supply businesses and the grain marketing business had higher SG&A of $13.1
million and $3.4 million, respectively. The balance of the SG&A increase was
primarily due to variable compensation plans.

These expenses decreased $12.3 million in 1993 compared with 1992 primarily
due to SG&A directly connected to business segments. Corporate, general and
administrative expenses, not identified to business segments (see Note 12 of the
Notes to Consolidated Financial Statements) decreased $9.3 million in 1993
compared with 1992.

In 1992, corporate general and administrative expenses not identified to
business segments decreased $5.2 million compared with 1991. This decrease was
mostly due to lower retirement plan costs, reduced corporate advertising and
reduced coverage and cost of liability insurance.

OTHER INCOME (DEDUCTIONS)

INTEREST EXPENSE

Interest expense reflects an increase of $14.7 million in 1994 compared
with 1993. The increase is primarily attributable to including the interest
costs of NBPC's beef operations in the Company's financial statements for a full
year in 1994, the acquisition of NCI and Tradigrain in May 1994 and by higher
interest rates.

Interest expense increased $8.8 million in 1993 compared with 1992 due to
an increase of the average level of borrowings, partly offset by lower interest
rates. Interest expense decreased $8.9 million in 1992 compared with 1991. The
decrease results from lower borrowings and lower interest rates.

PROVISION FOR LOSS ON DISPOSITION OF ASSETS

At August 31, 1993, management was negotiating to sell the Company's
refinery at Coffeyville, Kansas. Based on the progress of negotiation and the
transactions contemplated, operations for 1993 included a $20.0 million
provision for loss on the sale of the refinery. Accordingly, the net carrying
value of property, plant and equipment was reduced by $20.0 million at August
31, 1993. The transactions contemplated were subject to certain conditions,
including negotiation of final agreements. During 1994, management determined
that final sale terms anticipated by the potential purchaser were not in the
Company's best interest. Accordingly, negotiations were terminated, and the
sale was not consummated.

In 1993, the Company entered discussions with a potential purchaser of a
dragline. Based on these discussions, the Company estimated a loss of $6.2
million from the sale. Accordingly, at August 31, 1993, the carrying value of
the dragline was written down by $6.2 million and a provision for this loss was
included in the Company's Consolidated Statement of Operations for the year then
ended. In 1994, this sale was consummated on terms substantially as expected.

At August 31, 1993, the carrying value of a pork processing plant at Iowa
Falls, Iowa was written down by $3.3 million to an estimated disposal value.

CAPITAL EXPENDITURES

See "Business - Capital Expenditures" included herein.

OTHER, NET

In June 1993, the Company filed a lawsuit against 43 insurance carriers and
other parties (the "Defendants") seeking declaratory judgments regarding
Defendants' insurance coverage obligations for environmental remediation costs.
In 1994, the Company negotiated settlements with 20 insurance companies and, as
part of the settlements, the Company provided Defendants with releases of
various possible environmental obligations. As a result of these settlements,
the Company received cash payments of $13.6 million in 1994 and has included
such amount in the caption "Other income (deductions): Other, net" in the
Company's Consolidated Statement of Operations for the year then ended.

MATTERS INVOLVING THE ENVIRONMENT

See "Business - Matters Involving the Environment" included herein.

RESULTS OF OPERATIONS FOR NINE MONTHS ENDED MAY 31, 1995 AND NINE MONTHS ENDED
MAY 31, 1994

SALES

Sales for the nine months ended May 31, 1995 increased 6.9% compared with
the corresponding period of the prior year. The increase includes $373.4 million
higher sales of agricultural output products (grain and food), offset by $23.0
million lower sales of farm production input products (crop production products,
petroleum and feed) and $7.1 million lower sales of other products and services.

Sales of agricultural output products increased due to higher grain prices
and volume, higher beef volume and as a result of an acquisition on March 31,
1995 by NBPC (68%-owned by Farmland) of the assets of Hyplains Beef, LLC.

Sales of agricultural input products decreased due to lower sales in the
feed and crop production business segments, partly offset by increased sales in
the petroleum business segment.

Sales of the feed business segment decreased because volume and prices of
formula feed and feed ingredients decreased. Sales of the crop production
business segment reflect a net decrease due to placing the Company's crop
protection operations in a 50%-owned joint venture on January 1, 1995.
Subsequent to the formation of this joint venture, sales of these products have
not been included in the Company's financial statements. The effect of decreased
sales of crop protection products was mostly offset by an $85.6 million increase
in sales of crop nutrients. This increase resulted from higher prices, partly
offset by a slight decrease in volume which reflected the wet spring season and
delayed planting activities. Sales of petroleum products increased primarily
because of higher gasoline volume and prices. This effect was partly offset by
lower distillate and propane unit sales and by lower prices of all other refined
products and propane.

NET INCOME

Net income for the nine months ended May 31, 1995 increased $85.7 million
compared with the corresponding period of the prior year. The increase included
increases in operating profits in crop production, food processing and marketing
and grain marketing of $70.6 million, $45.0 million and $31.5 million,
respectively. In addition, the net results of joint ventures engaged in crop
production and beef operations increased $11.5 million and $4.2 million,
respectively. The effect of these increases on net income was reduced by an
operating loss in the petroleum business segment of $9.7 million in the nine
months ended May 31, 1995 compared with an operating profit of $24.4 million in
the corresponding period of the prior year and a $5.9 million decrease in
operating profit in the feed business. In addition, general corporate expenses
increased $9.2 million, income taxes increased $19.2 million and the deduction
for minority owners' interest increased $7.7 million which was principally a
result of increased income of the beef business.

Operating profit of the Company's crop production business increased
primarily as a result of increased prices, partly offset by a slight decrease in
unit sales. In addition, net income from joint ventures engaged in fertilizer
operations increased because of higher volume and prices. Operating profit of
the food processing and marketing business increased because live hog and cattle
costs decreased without a corresponding decline in wholesale prices. In
addition, the number of hogs and cattle processed increased. Operating results
in the grain marketing business increased due to higher volume and more
favorable unit margins on all types of grains handled. The petroleum business
segment had an operating loss for the nine months ended May 31, 1995, as the
revenues received from selling refined products were below the costs of
purchasing and refining crude oil.

SG&A increased $20.2 million in the nine months ended May 31, 1995 compared
with the corresponding period of the prior year. Approximately $11.0 million of
the increase was directly connected to business segments (primarily the grain
and pork businesses) and has been included in the determination of the operating
profit of business segments. General corporate expenses, not identified to
business segments, increased reflecting higher cost of variable compensation
plans and employee pension expenses.
The estimated effective tax rate for the nine months ended May 31, 1995 was
based on historical effective rates. The actual effective tax rate may be
subject to subsequent revision. The effective tax rate for fiscal year 1994 has
been used to provide income taxes for the nine months ended May 31, 1994.

RECENT ACCOUNTING PRONOUNCEMENTS

In the first quarter of 1995, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 115, ''Accounting for Certain
Investments in Debt and Equity Securities'' (''Statement 115''), which was
issued by the Financial Accounting Standards Board (''FASB'') in May 1993.
Statement 115 expands the use of fair value accounting and the reporting for
investments in equity securities that have readily determinable fair values and
for all investments in debt securities. The effect of the Company's
implementation of Statement 115 at September 1, 1994 was insignificant.

In the first quarter of 1995, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 112, ''Employer's Accounting for
Postemployment Benefits'' (''Statement 112''), which was issued by FASB in
November 1992. Statement 112 establishes standards of accounting and reporting
for the estimated cost of benefits provided to former or inactive employees. The
effect of the Company's implementation of Statement 112 at September 1, 1994 was
insignificant.

DETERMINATION OF THE CERTIFICATE INTEREST RATE

The Certificate Interest Rate ("CIR") is the interest rate per annum on the
Subordinated Debt Certificates as determined by Farmland, from time to time,
after giving consideration to the current rates of interest established by
various money markets, and Farmland's need for funds. With respect to the
Demand Loan Certificates, the CIR is the interest rate for Demand Loan
Certificates as determined, from time to time, by Farmland. Any change in the
CIR will not affect the CIR on any Subordinated Capital Investment Certificates,
Subordinated Monthly Income Capital Investment Certificates, or Demand Loan
Certificates for which the full purchase price was received prior to the change.
Except as hereinafter provided, each Demand Loan Certificate shall earn interest
at the CIR in effect on the date of issuance of such Demand Loan Certificate for
a period of six (6) months only: provided, however, that if during such six (6)
month period the CIR for Demand Loan Certificates is increased to a rate higher
than that currently in effect for a Demand Loan Certificate, then each such
Demand Loan Certificate shall earn interest at the increased rate from the
effective date of the increase to the end of such Demand Loan Certificate's then
current six (6) month period. Six (6) months from the date of issuance of each
Demand Loan Certificate and each six (6) month anniversary date thereafter, such
Demand Loan Certificate shall, if not redeemed, earn interest at the CIR for
Demand Loan Certificates in effect on such anniversary date, but only for a six
(6) month period from such anniversary date, subject to the escalation
provisions previously set forth. A decrease in the CIR for Demand Loan
Certificates will have no effect on the CIR of any Demand Loan Certificate
issued prior to the decrease unless such decreased rate is in effect on the
first day of the next subsequent six (6) month period of such outstanding Demand
Loan Certificate.

On the date of this Prospectus, the CIR was 7.75% on Five-Year and 8.25% on
Ten-Year Subordinated Capital Investment Certificates; 7.75% on Five-Year, and
8.25% on Ten-Year Subordinated Monthly Income Capital Investment Certificates;
and 5.50% on Demand Loan Certificates. Whenever the CIR is changed, this
Prospectus shall be amended to specify the interest rate in effect, after the
effective date of the change as specified in the amendment, on the Certificates
to be offered pursuant to such Prospectus. Whenever the CIR is changed each
respective Demand Loan Certificate and Subordinated Debt Certificate owner is
notified in writing of the change as specified in the amendment. Information
concerning the CIR can be obtained from the Prospectus or from Farmland
Securities Company, Post Office Box 7305, Kansas City, Missouri 64116 (telephone
1-800-821-8000, extension 6360). See "Description of the Ten-Year and Five-Year
Subordinated Capital Investment Certificates," "Ten-Year and Five-Year
Subordinated Monthly Income Capital Investment Certificates" and "Demand Loan
Certificates."

USE OF PROCEEDS

The offering is made on a best efforts basis with no established minimum
amount of Subordinated Debt Certificates and Demand Loan Certificates that must
be sold. No assurance can be provided as to the amount of net proceeds the
Company may receive as a result of this offering. Assuming that all of the
Subordinated Debt and Demand Loan Certificates offered hereby are sold, net
proceeds to the Company will be approximately $137.8 million after deducting
estimated commissions and expenses. Any proceeds to the Company from this
offering may be used: 1) to fund portions of the Company's capital expenditures
and investments in ventures which are expected to be approximately $323.4
million and $67.0 million, respectively, through the two-year period ending
August 31, 1997; 2) to refinance approximately $54.1 million of Subordinated
Debt Certificates with interest rates of 7.25% to 11% which mature at various
times prior to August 31, 1997; or 3) to redeem Subordinated Debt Certificates
prior to maturity at owners' requests, restricted to the limited redemption
rights of owners as described in each Subordinated Debt Certificates respective
trust indenture. To the extent that proceeds from sales of the securities
offered hereby are less than amounts required for these purposes, such
insufficient amounts may be obtained from operations, from bank or other
borrowings or from other financing arrangements. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Financial
Condition, Liquidity and Capital Resources", "Other Matters - Capital
Expenditures" and the subcaption "Redemptions" within the description of each
type of certificate.

PLAN OF DISTRIBUTION

The securities offered by this Prospectus for cash and for exchange are
offered by FSC, AHI and may be offered by other broker-dealers selected by
Farmland. The offering is on a best efforts basis. There is no requirement
that any minimum amount of securities offered hereby must be sold. The offering
shall be for an indeterminate period of time not expected to be in excess of two
years.

FSC, located at 3315 North Oak Trafficway, Kansas City, Missouri, is a
wholly-owned subsidiary of Farmland organized for the sole purpose of offering
Farmland's Demand Loan and Subordinated Debt Certificates for sale to the
general public and/or for exchange and to solicit offers therefor which are
subject to acceptance by Farmland. FSC is a member of the NASD and the
Securities Investor Protection Corporation (SIPC). FSC's involvement in this
offering is in compliance with terms of a partial exemption from requirements of
Schedule E of the NASD Bylaws; no persons, other than persons associated with
Farmland or FSC, participated in determining the price and other terms of the
securities offered hereby. FSC is under no firm commitment or obligation to
solicit offers for any specified amount of such debt securities. FSC's
commitment is to use its best efforts to solicit such orders. Farmland will pay
commissions to FSC not to exceed 4% of the aggregate price of Demand Loan
Certificates and Subordinated Debt Certificates being offered. Farmland will
pay all expenses and liabilities incurred by FSC, limited to an amount not to
exceed 3% of the aggregate sales price of Demand Loan and Subordinated Debt
Certificates being offered. FSC is a registered broker-dealer under the
Securities Exchange Act of 1934, as amended, but has only limited authority to
engage in the offer and sale of securities issued by Farmland. Farmland will
indemnify FSC for certain liabilities under the Securities Act of 1933, as
amended, (the "Securities Act").

The Company has engaged AHI, located at 110 E. Iron, P. O. Box 1303,
Salina, Kansas 67402, to offer Farmland Demand Loan and Subordinated Debt
Certificates to the general public and for exchange and to solicit offers
therefore which are subject to acceptance by Farmland. Farmland may engage
other broker-dealers that are qualified to offer and sell the Demand Loan
Certificates and Subordinated Debt Certificates in a particular state and that
are members of the National Association of Securities Dealers, Inc. AHI and
each broker-dealer participating in this offering shall be held responsible for
complying with all statutes, rules and regulations of all jurisdictions in which
each participating broker-dealer offers the Demand Loan and Subordinated Debt
Certificates for sale. Farmland will pay to AHI and may pay to other selected
broker-dealers for their services a sales commission of not more than 4% of the
face amount of Subordinated Debt Certificates and not more than 1/2 of 1% of the
face amount of Demand Loan Certificates which AHI and other selected
broker-dealers sell. In addition, Farmland will pay to AHI and may pay to other
selected broker-dealers an unallocated due diligence and marketing fee of not
more than 1/2 of 1% of the face amount of such certificates the broker-dealers
sell. Farmland may indemnify AHI and other selected broker-dealers for certain
liabilities arising out of violations by Farmland of blue sky laws, or the
Securities Act.

Interstate/Johnson Lane Corporation, a member of the NASD, participated as
a qualified independent underwriter in the "due diligence" review with respect
to the preparation of this Prospectus and received approximately $45,000 for
such participation. As discussed above, Interstate/Johnson Lane Corporation
will not be participating in the pricing of this issue.

EXCHANGE OFFER

Farmland is offering: (1) to the owners of its Subordinated Capital
Investment Certificates the right to exchange such certificates for an
equivalent principal amount of any Subordinated Monthly Income Capital
Investment Certificate ($5,000 minimum) which, at the time of the exchange, is
being offered by this Prospectus. The option to exchange a Subordinated Capital
Investment Certificate into a Subordinated Monthly Income Capital Investment
Certificate is not affected by the period of time the Subordinated Capital
Investment Certificate has been held. Farmland will not redeem Subordinated
Monthly Income Capital Investment Certificates prior to maturity except upon
death of the owner. (2) Farmland is offering to the owners of its Subordinated
Capital Investment Certificates, which have been held until eligible for
redemption prior to maturity at the option of the owner, the right to exchange
such certificates for an equivalent principal amount of any Subordinated Capital
Investment Certificate which, at the time of the exchange, is being offered by
this Prospectus. The option to exchange into Subordinated Capital Investment
Certificates is affected by the period of time the outstanding certificate has
been held. The required holding period is as follows:
Then, to be
If, at the time of issuance eligible for exchange,
the maturity period the certificate must
of the certificate held was: have been held for:
(In Years) (In Years)
5 2
10 3
15 5
20 5

The exchange will be made effective on the day certificates eligible for
exchange are received at Farmland's office in Kansas City, Missouri, provided,
however, that any certificates received within a ten (10) day period preceding
the record date of such certificates, the exchange shall be made effective as of
the first day following such record date. The exchange is irrevocable after the
effective date, but is revocable at any time prior to the effective date.
Notice of an owner's revocation may be in writing, delivered to the address
given below (see "How to Accept Exchange Offer") or by telephone to (816)
459-6360. This exchange offer will expire at 12:00 P.M. Eastern Standard Time
on December 31, 1995, unless terminated prior to such date. Owners of
certificates eligible for exchange shall be notified by letter from Farmland at
least 30 days prior to the effective date of Farmland's termination of this
exchange offer.

Any interest accrued on a certificate being exchanged will be paid on the
day the exchange is made effective.

The opinion of Robert B. Terry, Vice President and General Counsel of
Farmland, which opinion is set forth herein in full as follows, is: The
exchange of certificates would be considered as taxable exchanges. The basis
for determining a taxable gain or loss on a taxable exchange is for an owner to
take into account as gain or loss the difference between the fair market value
of the security being received and his basis (usually cost) in the security
being exchanged. As a practical matter, most owners should have no gain or loss
since the securities were sold at 100% of Face Amount and are being exchanged at
100% of Face Amount. However, since it is possible for a prior owner to have
sold his certificate to another person at a cost which is more or less than he
had paid for it, a subsequent owner could have a different cost than the
original issued cost. Any gain or loss recognized on a taxable exchange would
be taken into account for purpose of federal income taxes as a gain or loss from
the sale or disposition of a capital asset and would be short-term gain or loss
unless, at the time of exchange, it had been held for a period of more than
twelve months. Owners of these certificates should seek advice from their tax
advisor before accepting the exchange offer.

HOW TO ACCEPT EXCHANGE OFFER

The exchange offer may be accepted by delivering any of the Subordinated
Capital Investment Certificates, which are eligible for exchange (see "Exchange
Offer" immediately above), to Farmland Securities Company, P.O. Box 7305, Kansas
City, Missouri 64116 or American Heartland Investments, Inc. P. O. Box 1303,
Salina, Kansas, 67402. The certificates should be assigned to Farmland in the
transfer section (on the reverse side of the certificate) and endorsed by all of
the persons whose names appear on the face of the certificate. Should any
registered owner be incapable of endorsing the certificate, additional
documentation may be necessary. Call (816) 459-6360 or write to the above
address for specific information. Should registered owners wish to have the new
certificate issued to persons other than as shown on the certificate being
surrendered in the exchange, the endorsement signatures must be guaranteed by a
commercial bank or trust company officer or a NASD member firm representative.
The exchange offer must be accompanied by a completed "Order and Receipt for
Investment" form supplied by Farmland Securities Company or American Heartland
Investments, Inc. The U.S. Treasury Form W-9 Backup Withholding Certificate
included on the order form must be completed and signed by the principal owner
of the new certificate.

HOW TO TRANSFER OWNERSHIP

To transfer ownership of certificates, the certificates should be assigned
to the new owner(s) in the transfer section on the reverse side of the
certificate and endorsed by all persons named on the face of the certificate.
Should any registered owner be incapable of endorsing the certificate,
additional documentation may be necessary. Call (816) 459-6360 or write
Farmland Industries, Inc., P.O. Box 7305, Kansas City, Mo. 64116, Dept. 79 for
specific information. All transfer requests require that endorsement signatures
be guaranteed by a commercial bank or trust company officer or an NASD member
firm representative. Requests for transfer should be accompanied by a completed
transfer form supplied by Farmland. The U.S. Treasury Form W-9 Backup
Withholding Certificate included with or on the transfer form must be completed
and signed by the new principal owner.

The transfer will be made effective on the day certificates to be
transferred are received at Farmland's office in Kansas City, Missouri,
provided, however, that any certificates received within a ten (10) day period
preceding the record date of such certificates, the transfer shall be made
effective as of the first day following such record date.

DESCRIPTION OF THE TEN-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES

The Ten-Year Subordinated Capital Investment Certificates, hereinafter
within this section ("Description of the Ten-Year Subordinated Capital
Investment Certificates") referred to as "Certificates," bearing an interest
rate hereinafter described and referred to as the "Certificate Interest Rate,"
are issued under an indenture (the "Indenture of November 8, 1984") dated
November 8, 1984, as amended January 3, 1985 and December 3, 1991, between
Farmland Industries, Inc. ("Farmland") and Commerce Bank of Kansas City,
National Association, Kansas City, Missouri, as Trustee (the "Trustee.")

The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete. The section references therein refer to the sections of
the Indenture of November 8, 1984. Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as a
part of the statements, made, and such statements are qualified in their
entirety by such reference.

GENERAL

The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable. Interest on the principal sum at the Certificate
Interest Rate per annum is payable at the election of the owner, made at the
time of purchase, (i) semiannually or (ii) at maturity or at the date of
redemption if redeemed prior to maturity. See "Certificate Interest Rate"
below. The Certificates are issued in amounts of $100 or more as of the first
day on which payment of the full purchase price has been received by Farmland in
Kansas City, Missouri. Any payments (other than wire transfers) received after
noon shall be deemed received by Farmland on the next business day. Wire
transfers are effective when funds are received. The Certificates mature ten
years from date of issue. The payment of the principal at maturity may, at the
request of the owner, be paid in a lump sum or in equal monthly, quarterly,
semiannual or annual installments, including interest on the unpaid balance at
the rate of six percent (6%) per annum, over a period of not more than
thirty-six months.

The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 8, 1984, but such Indenture does not limit
the amount of other securities, either secured or unsecured, which may be issued
by Farmland. At August 31, 1995, a total of $126.6 million was outstanding.

Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statements
upon written request of the owner to Farmland Industries, Inc., P. O. Box 7305,
Kansas City, Missouri 64116. Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.

CERTIFICATE INTEREST RATE

The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate. The Certificate Interest Rate will be such rate as in effect
on the date of issuance, as Farmland may from time to time determine, but any
change of the Certificate Interest Rate will not affect the Certificate Interest
Rate on any Certificate for which the full purchase price was received prior to
the change. See "Determination of the Certificate Interest Rate."

Interest at the Certificate Interest Rate per annum is payable on the
principal sum at the election of the purchaser, made at the time of purchase, in
one of the following ways: (i) semiannually on January 1 and July 1 to owners
of record on the last preceding December 31 and June 30, respectively; or (ii)
at maturity, or at the date of redemption if redeemed prior to maturity,
compounded semiannually on December 31 and June 30 at the Certificate Interest
Rate which is stated on the face of the Certificate. Any election to receive
payment of the interest semiannually is irrevocable. The election to receive
payment of the interest at maturity, or at the date of redemption if redeemed
prior to maturity, will be terminated upon written request of the owner, such
termination to be effective as of the last previous interest compounding date.
Such termination is irrevocable and, at the same time, is an election to
thereafter receive payment of the interest semiannually. Any interest
attributable to periods starting with the date of purchase and ending with the
effective date of the written request of the holder to terminate the election to
receive payment of the interest at maturity or at the date of redemption if
redeemed prior to maturity will be paid upon receipt of the written request to
terminate the election. Farmland shall have the right at any time by notice to
the owner to terminate any obligation to continue retaining the interest of any
owner pursuant to an owner's election. Such termination shall be effective as
of the opening of business on the day following the first interest compounding
date after such notice is mailed to the owner and the owner will be paid all the
interest in the owner's account on the effective date.

REMEDIES IN EVENT OF DEFAULT

The Indenture of November 8, 1984 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes). The Indenture describes
the duties and alternative courses of action which, upon the occurrence of a
default, will be taken by the Trustee as directed by written notice of the
holders of a majority of the principal amount of the Certificates then
outstanding. The Indenture provides that action taken by the Trustee, as a
result of default, will not impair and that no other provisions in the Indenture
will impair the rights of any certificate owner to receive payment of the
principal of and interest on such Certificates on or after the respective dates
expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of an
interest payment for a period not exceeding three years from its due date.

SUBORDINATION

The payment of the principal and interest on the Certificates is, to the
extent set forth in the Indenture of November 8, 1984, subordinate in right of
payment to the extent set forth in the Indenture to the prior payment in full of
all Senior Indebtedness, whether now outstanding or hereafter incurred. Senior
Indebtedness is defined as (a) the principal of and interest on indebtedness of
Farmland (other than the indebtedness of Farmland with respect to its
Subordinated Certificates of Investment issued under indentures dated February
25, 1970 and under indentures dated November 29, 1971; and with respect to its
Subordinated Capital Investment Certificates issued under indentures dated July
29, 1974, and under an indenture dated November 29, 1976, and under an indenture
dated October 24, 1978, and under an indenture dated October 24, 1979, and under
an indenture dated May 20, 1980, and under indentures dated November 5, 1980 and
under indentures dated November 8, 1984; and with respect to its Subordinated
Monthly Income Capital Investment Certificates issued under an indenture dated
July 29, 1974, and under an indenture dated October 24, 1979, and under an
indenture dated November 5, 1980, and under an indenture dated November 8, 1984,
and under an indenture dated November 11, 1985; and with respect to its
Subordinated Individual Retirement Account Certificates issued under an
indenture dated November 20, 1981 and under an indenture dated November 8, 1984)
for money borrowed from or guaranteed to banks, trust companies, insurance
companies, or pension trusts or evidenced by securities issued under the
provisions of an indenture or similar instrument between Farmland and a bank or
trust company other than indebtedness evidenced by instruments which expressly
provide that such indebtedness is not superior, or (b) indebtedness created
after the date of the Indenture of November 8, 1984, as to which the instrument
creating or evidencing the indebtedness provides that such indebtedness is
superior in right of payment to the Certificates.

In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or in
bankruptcy, insolvency, receivership or other proceeding of Farmland, the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment. After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have been
entitled if there had been no subordination. By reason of such subordination,
in the event of Farmland's insolvency, holders of Senior Indebtedness may
receive more, ratably, and owners of the Certificates may receive less, ratably,
than other creditors of Farmland (Section 4.05(a)).

REDEMPTION

The Certificates may be redeemed, after two (2) years from date of
issuance, at the option of Farmland at any time prior to maturity, on at least
ten days written notice, at face value plus accrued interest to the date of
redemption only. The Indenture of November 8, 1984 permits Farmland to select
in any manner at its discretion the Certificates to be redeemed.

Commencing three (3) years after date of issuance, a limited amount of
Certificates can be redeemed prior to maturity during each month. The maximum
amount that Farmland will redeem prior to maturity during any month is the
greater of $500,000 or 1/2 of 1% of the balance outstanding provided the balance
outstanding is greater than $5,000,000. If the balance outstanding is less than
$5,000,000 there will be no limitation on early redemption of eligible
Certificates.

The 1/2 of 1% limitation is determined as follows:

(1) Add the face amount of Certificates held by all
investors at the end of the preceding month to establish
the "combined amount" held by investors at the end of
the preceding month.

(2) Multiply the "combined amount" by 1/2 of 1%.

If the amount made available for redemption prior to maturity (as
determined in step one and two) exceeds the amount requested for redemption
prior to maturity, such excess is carried over to the next month and added to
the amount available for redemption prior to maturity, provided however that any
excess will not be carried beyond Farmland's fiscal year end.

Redemption prior to maturity will be made upon the surrender of such
eligible Certificates properly endorsed accompanied by written request for early
redemption to Farmland, in the order in which such written requests for
redemption prior to maturity are received by Farmland. In addition to the
amount available for redemption prior to maturity as determined above,
redemptions will be made in the case of death of an owner of the Certificates
upon written request of the legal owner accompanied by satisfactory proof of
ownership. Redemptions prior to maturity will be made at the face value of the
Certificates plus interest to the date of redemption only. Amounts available
for redemption prior to maturity are not set aside in a separate fund (Section
3.01 and 3.02).

CONCERNING THE TRUSTEE

The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture. In
the case of a default, the owners of a majority in aggregate principal amount of
the Certificates outstanding at the time of the occurrence of a default have the
right to require the Trustee to take action to remedy such default. Upon the
occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

The Indenture of November 8, 1984 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indenture shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
Certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

The Indenture of November 8, 1984 provides that any of the following shall
constitute a default: (1) failure to pay principal when due; (2) failure to pay
interest on Certificates when due, continued for 60 days; (3) certain events of
bankruptcy or insolvency; and (4) failure to perform any other covenant or
agreement contained in the Indenture, continued for 90 days. Failure to pay
either principal or interest when due during the pendency of any dissolution or
liquidation proceeding or action to endorse payment of indebtedness shall also
constitute such a default (Section 6.01).

The Indenture of November 8, 1984 provides that the Trustee shall within 90
days after the occurrence of a default, not including periods of grace, give to
the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment of
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate owners
(Section 6.02).

The Indenture of November 8, 1984 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the conditions
and covenants provided for in this Indenture as may be required from time to
time by the Securities and Exchange Commission. Summaries of any such reports
filed with the Trustee or the Securities and Exchange Commission pursuant to
rules and regulations as prescribed by the Securities and Exchange Commission
shall be transmitted to the owners of Certificates in the manner and to the
extent provided for in the Indenture (Section 5.03).

The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).

DESCRIPTION OF THE FIVE-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES

The Five-Year Subordinated Capital Investment Certificates, hereinafter
within this section ("Description of the Five-Year Subordinated Capital
Investment Certificates") referred to as "Certificates," bearing an interest
rate herein after described and referred to as the "Certificate Interest Rate,"
are issued under an indenture (the "Indenture of November 8, 1984") dated
November 8, 1984, as amended January 3, 1985 and December 3, 1991, between
Farmland Industries, Inc. ("Farmland") and Commerce Bank of Kansas City,
National Association, Kansas City, Missouri, as Trustee (the "Trustee.")

The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete. The section references therein refer to the sections of
the Indenture of November 8, 1984. Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as a
part of the statements made, and such statements are qualified in their entirety
by such reference.

GENERAL

The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable. Interest on the principal sum at the Certificate
Interest Rate per annum is payable at the election of the owner made at the time
of purchase (i) semiannually or (ii) at maturity or at the date of redemption if
redeemed prior to maturity. See "Certificate Interest Rate" below. The
Certificates are issued in amounts of $100 or more as of the day on which
payment of the full purchase price has been received by Farmland in Kansas City.
Any payments (other than wire transfers) received after noon shall be deemed
received by Farmland on the next business day. Wire transfers are effective
when funds are received. The Certificates mature five years from date of issue.
The payment of the principal at maturity may, at the request of the owner, be
paid in a lump sum or in equal monthly, quarterly, semiannual or annual
installments, including interest on the unpaid balance at the rate of six
percent (6%) per annum, over a period of not more than thirty-six months.

Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statements
upon written request of the owner to Farmland Industries, Inc., P.O. Box 7305,
Kansas City, Missouri 64116. Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.

CERTIFICATE INTEREST RATE

The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate. The Certificate Interest Rate will be such rate as is in
effect on the date of issuance, as Farmland may from time to time determine, but
any change of the Certificate Interest Rate will not affect the Certificate
Interest Rate on any Certificate for which the full purchase price was received
prior to the change. See "Determination of the Certificate Interest Rate."

Interest at the Certificate Interest Rate per annum is payable on the
principal sum at the election of the purchaser, made at the time of purchase, in
one of the following ways: (i) semiannually on January 1 and July 1, to owners
of record on the last preceding December 31 and June 30, respectively; or (ii)
at maturity or at the date of redemption if redeemed prior to maturity,
compounded semiannually, on December 31 and June 30 at the Certificate Interest
Rate which is stated on the face of the Certificate. Any election to receive
payment of the interest semiannually is irrevocable. The election to receive
payment of the interest at maturity, or at the date of redemption if redeemed
prior to maturity, will be terminated upon written request of the owner, such
termination to be effective as of the last previous interest compounding date.
Such termination is irrevocable and, at the same time, is an election to
thereafter receive payment of the interest semiannually. Any interest
attributable to periods starting with the date of purchase and ending with the
effective date of the written request of the holder to terminate the election to
receive payment of the interest at maturity or at the date of redemption if
redeemed prior to maturity will be paid upon receipt of the written request to
terminate the election. Farmland shall have the right at any time by notice to
the owner to terminate any obligation to continue retaining the interest of any
owner pursuant to an owner's election. Such termination shall be effective as
of the opening of business on the day following the first interest compounding
date after such notice is mailed to the owner and the owner will be paid all the
interest in the owner's account on the effective date.

REMEDIES IN EVENT OF DEFAULT

SUBORDINATION

The payment of the principal and interest on the Certificates is, to the
extent set forth in the Indenture of November 8, 1984, subordinate in right of
payment to the prior payment in full of all Senior Indebtedness, whether now
outstanding or hereafter incurred. Senior Indebtedness is defined as (a) the
principal of and interest on indebtedness of Farmland (other than the
indebtedness of Farmland with respect to its Subordinated Certificates of
Investment issued under indentures dated February 25, 1970 and under indentures
dated November 29, 1971; and with respect to its Subordinated Capital Investment
Certificates issued under indentures dated July 29, 1974, and under an indenture
dated November 29, 1976, and under an indenture dated October 24, 1978, and
under an indenture dated October 24, 1979, and under an indenture dated May 20,
1980, and under indentures dated November 5, 1980 and under indentures dated
November 8, 1984; and with respect to its Subordinated Monthly Income Capital
Investment Certificates issued under an indenture dated July 29, 1974, and under
an indenture dated October 24, 1979, and under an indenture dated November 5,
1980, and under an indenture dated November 8, 1984, and under an indenture
dated November 11, 1985; and with respect to its Subordinated Individual
Retirement Account Certificates issued under an indenture dated November 20,
1981 and under an indenture dated November 8, 1984) for money borrowed from or
guaranteed to banks, trust companies, insurance companies, or pension trusts or
evidenced by securities issued under the provisions of an indenture or similar
instrument between Farmland and a bank or trust company other than indebtedness
evidenced by instruments which expressly provide that such indebtedness is not
superior, or (b) indebtedness created after the date of the Indenture of
November 8, 1984, as to which the instrument creating or evidencing the
indebtedness provides that such indebtedness is superior in right of payment to
the Certificates.

In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or in
bankruptcy, insolvency, receivership or other proceeding of Farmland the holders
of all Senior Indebtedness shall be entitled to receive payment in full before
the owners of the Certificates are entitled to receive payment. After payment
in full of the Senior Indebtedness, the owners of the Certificates will be
entitled to participate in any distribution of assets, both as such owners and
by virtue of subrogation to the rights of the holders of the Senior Indebtedness
to the extent that the Senior Indebtedness was benefited by the receipt of
distributions to which the owners of the Certificates would have been entitled
if there had been no subordination. By reason of such subordination, in the
event of Farmland's insolvency, holders of Senior Indebtedness may receive more,
ratably, and owners of the Certificates may receive less, ratably, than other
creditors of Farmland (Section 4.05(a)).

REDEMPTION

The Certificates may be redeemed, after two (2) years from date of
issuance, at the option of Farmland at any time prior to maturity, on at least
ten days' written notice, at face value plus accrued interest to the date of
redemption only. The Indenture of November 8, 1984 permits Farmland to select
in any manner at its discretion the Certificates to be redeemed.

Commencing two (2) years after date of issuance, a limited amount of
Certificates can be redeemed prior to maturity during each month. The maximum
amount that Farmland will redeem prior to maturity during any month is the
greater of $500,000 or 1/2 of 1% of the balance outstanding provided the balance
outstanding is greater than $5,000,000. If the balance outstanding is less than
$5,000,000 there will be no limitation on early redemption of eligible
Certificates.

The 1/2 of 1% limitation is determined as follows:

(1) Add the face amount of Certificates held by each
investor at the end of the preceding month to establish
the "combined amount" held by investors at the end of
the preceding month.

(2) Multiply the "combined amount" by 1/2 of 1%.

Redemption prior to maturity will be made upon the surrender of such
eligible Certificates properly endorsed accompanied by written request for early
redemption to Farmland, the order in which such written requests for redemption
prior to maturity are received by Farmland. In addition to the amount available
for redemption prior to maturity as determined above, redemptions will be made
in the case of death of an owner of the Certificates upon written request of the
legal owner accompanied by satisfactory proof of ownership. Redemptions prior
to maturity will be made at the face value of the Certificates plus interest to
the date of redemption only. Amounts available for redemption prior to maturity
are not set aside in a separate fund (Section 3.01 and 3.02).

CONCERNING THE TRUSTEE

The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture. In
the case of a default, the owners of a majority in aggregate principal amount of
the Certificates outstanding at the time of the occurrence of a default have the
right to require the Trustee to take action to remedy such default. Upon the
occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in the
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indenture shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
Certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).

DESCRIPTION OF THE TEN-YEAR SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT
CERTIFICATES

The Ten-Year Subordinated Monthly Income Capital Investment Certificates,
hereinafter within this section ("Description of the Ten-Year Subordinated
Monthly Income Capital Investment Certificates") referred to as "Certificates,"
bearing an interest rate hereinafter described and referred to as the
"Certificate Interest Rate," are issued under an indenture (the "Indenture of
November 8, 1984") dated November 8, 1984, as amended January 3, 1985, between
Farmland Industries, Inc. ("Farmland") and Commerce Bank of Kansas City,
National Association, Kansas City, Missouri, as Trustee (the "Trustee.")

The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete. The section references therein refer to the sections of
the Indenture of November 8, 1984. Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as a
part of the statements made, and such statements are qualified in their entirety
by such reference.

GENERAL

The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable. The Certificates are issued in amounts of $5,000 or
more and in additional increments of $1,000 or more as of the day on which
payment of the full purchase price has been received by Farmland in Kansas City,
Missouri. Any payments (other than wire transfers) received after noon shall be
deemed received by Farmland on the next business day. Wire transfers are
effective when funds are received. The Certificates mature ten years from date
of issue. Interest on the principal sum at the Certificate Interest Rate per
annum is payable monthly on the first day of each month following the month in
which a Certificate is issued. The payment of the principal at maturity may, at
the request of the owner, be paid in a lump sum or in equal monthly, quarterly,
semiannual or annual installments, including interest on the unpaid balance at
the rate of six percent (6%) per annum, over a period of not more than
thirty-six months.

Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statement
upon written request of the owner to Farmland Industries, Inc., P.O. Box 7305,
Kansas City, Missouri 64116. Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.

CERTIFICATE INTEREST RATE

REMEDIES IN EVENT OF DEFAULT

SUBORDINATION

The payment of the principal and interest on the Certificates is, to the
extent set forth in the Indenture of November 8, 1984, subordinate in right of
payment to the prior payment in full of all Senior Indebtedness, whether now
outstanding or hereafter incurred. Senior Indebtedness is defined as (a) the
principal of and interest on indebtedness of Farmland (other than the
indebtedness of Farmland with respect to its Subordinated Certificates of
Investment issued under indentures dated February 25, 1970 and under indentures
dated November 29, 1971; and with respect to its Subordinated Capital Investment
Certificates issued under indentures dated July 29, 1974, and under an indenture
dated November 29, 1976, and under an indenture dated October 24, 1978, and
under an indenture dated October 24, 1979, and under an indenture dated May 20,
1980, and under indentures dated November 5, 1980, and under indentures dated
November 8, 1984, and under an indenture dated November 11, 1985; and with
respect to its Subordinated Monthly Income Capital Investment Certificates
issued under an indenture dated July 29, 1974, and under an indenture dated
October 24, 1979, and under an indenture dated November 5, 1980 and under an
indenture dated November 8, 1984, and under an indenture dated November 11,
1985; and with respect to its Subordinated Individual Retirement Account
Certificates issued under an indenture dated November 20, 1981 and under an
indenture dated November 8, 1984) for money borrowed from or guaranteed to
banks, trust companies, insurance companies, or pension trusts or evidenced by
securities issued under the provisions of an indenture or similar instrument
between Farmland and a bank or trust company other than indebtedness evidenced
by instruments which expressly provide that such indebtedness is not superior,
or (b) indebtedness created after the date of the Indenture of November 8, 1984,
as to which the instrument creating or evidencing the indebtedness provides that
such indebtedness is superior in right of payment to the Certificates.

In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or
bankruptcy, insolvency, receivership or other proceeding of Farmland, the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment. After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have been
entitled if there had been no subordination. By reason of such subordination,
in the event of Farmland's insolvency, holders of Senior Indebtedness may
receive more, ratably, and owners of the Certificates may receive less, ratably,
than other creditors of Farmland (Section 4.05(a)).

REDEMPTION

The Certificates can not be called for redemption by Farmland at any time
prior to maturity (Section 3.01).

In addition, Farmland will not redeem the Certificates prior to maturity
upon request of the owner. Redemption will be made in the case of death of an
owner of the Certificates upon written request of the legal owner accompanied by
satisfactory proof of ownership. Redemptions prior to maturity will be made at
the face value of the Certificates plus interest to the date of redemption only.
Amounts available for redemption prior to maturity are not set aside in a
separate fund (Section 3.02).

CONCERNING THE TRUSTEE

The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture. In
the case of a default, the owners of a majority in aggregate principal amount of
the Certificates outstanding at the time of the occurrence of a default have the
right to require the Trustee to take action to remedy such default. Upon the
occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indentures shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

The Indenture of November 8, 1984 provides that the Trustee shall within 90
days after the occurrence of a default, not including periods of grace, give to
the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment or
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate owners
(Section 6.02).

The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the Indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).

DESCRIPTION OF THE FIVE-YEAR SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT
CERTIFICATES

The Five-Year Subordinated Monthly Income Capital Investment Certificates,
hereinafter within this section ("Description of the Five-Year Subordinated
Monthly Income Capital Investment Certificates") referred to as "Certificates,"
bearing an interest rate hereinafter described and referred to as the
"Certificate Interest Rate," are issued under an indenture dated November 11,
1985 (the "Indenture of November 11, 1985") between Farmland Industries, Inc.
("Farmland") and Commerce Bank of Kansas City, National Association, Kansas
City, Missouri, as Trustee (the "Trustee").

The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 11, 1985, and do not
purport to be complete. The section references therein refer to the sections of
the Indenture of November 11, 1985. Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as a
part of the statements made, and such statements are qualified in their entirety
by such reference.

GENERAL

The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable. The Certificates are issued in amounts of $5,000 or
more and in additional increments of $1,000 or more as of the day on which
payment of the full purchase price has been received by Farmland in Kansas City,
Missouri. Any payments (other than wire transfers) received after noon shall be
deemed received by Farmland on the next business day. Wire transfers are
effective when funds are received. The Certificates mature five years from date
of issue. Interest on the principal sum at the Certificate Interest Rate per
annum is payable monthly on the first day of each month to the owners of record
on such payment date commencing with the first day of the month which follows
the month in which the certificate is issued. The payment of the principal at
maturity may, at the request of the owner, be paid in a lump sum or in equal
monthly, quarterly, semiannual or annual installments, including interest on the
unpaid balance at the rate of six percent (6%) per annum, over a period of not
more than thirty-six months.

The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 11, 1985, but such Indenture does not limit
the amount of other securities, either secured or unsecured, which may be issued
by Farmland. At August 31, 1995, a total of $21.6 million was outstanding.

CERTIFICATE INTEREST RATE

The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate. The Certificate Interest Rate will be such rate as is in
effect at the date of issuance, as Farmland may from time to time determine, but
any change of the Certificate Interest Rate will not affect the Certificate
Interest Rate on any Certificate for which the full purchase price was received
prior to the change. See "Determination of the Certificate Interest Rate."

REMEDIES IN EVENT OF DEFAULT

The Indenture of November 11, 1985 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes). The Indenture describes
the duties and alternative courses of action which, upon the occurrence of a
default, will be taken by the Trustee as directed by written notice of the
holders of a majority of the principal amount of the Certificates then
outstanding. The Indenture provides that action taken by the Trustee, as a
result of default, will not impair and that no other provisions in the Indenture
will impair the rights of any certificate owner to receive payment of the
principal of and interest on such Certificates on or after the respective dates
expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of an
interest payment for a period not exceeding three years from its due date.

SUBORDINATION

The payment of the principal and interest on the Certificates is, to the
extent set forth in the Indenture of November 8, 1984, subordinate in right of
payment to the prior payment in full of all Senior Indebtedness, whether now
outstanding or hereafter incurred. Senior Indebtedness is defined as (a) the
principal of and interest on indebtedness of Farmland (other than the
indebtedness of Farmland with respect to its Subordinated Certificates of
Investment issued under indentures dated February 25, 1970, and under indentures
dated November 29, 1971; and with respect to its Subordinated Capital Investment
Certificates issued under indentures dated July 29, 1974, and under an indenture
dated November 29, 1976, and under an indenture dated October 24, 1978, and
under an indenture dated October 24, 1979, and under an indenture dated May 20,
1980, and under indentures dated November 5, 1980, and under indentures dated
November 8, 1984, and under an indenture dated November 11, 1985; and with
respect to its Subordinated Monthly Income Capital Investment Certificates
issued under an indenture dated July 29, 1974, and under an indenture dated
October 24, 1979, and under an indenture dated November 5, 1980, and under an
indenture dated November 8, 1984, and under an indenture dated November 11,
1985; and with respect to its Subordinated Individual Retirement Account
Certificates issued under an indenture dated November 20, 1981, and under an
indenture dated November 8, 1984) for money borrowed from or guaranteed to
banks, trust companies, insurance companies, or pension trusts or evidenced by
securities issued under the provisions of an indenture or similar instrument
between Farmland and a bank or trust company other than indebtedness evidenced
by instruments which expressly provide that such indebtedness is not superior,
or (b) indebtedness created after the date of the Indenture of November 11,
1985, as to which the instrument creating or evidencing the indebtedness
provides that such indebtedness is superior in right of payment to the
Certificates.

REDEMPTION

The Certificates can not be called for redemption by Farmland at any time
prior to maturity (Section 3.01).

CONCERNING THE TRUSTEE

The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 11, 1985, and is to
perform only such duties as are specifically set forth in that Indenture. In
the case of a default, the owners of a majority in aggregate principal amount of
the Certificates outstanding at the time of the occurrence of a default have the
right to require the Trustee to take action to remedy such default. Upon the
occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

The Indenture of November 11, 1985 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

The Indenture of November 11, 1985 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures,provided that no such supplemental indentures shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

The Indenture of November 11, 1985 provides that any of the following shall
constitute a default: (1) failure to pay principal when due; (2) failure to pay
interest on Certificates when due, continued for 60 days; (3) certain events of
bankruptcy or insolvency; and (4) failure to perform any other covenant or
agreement contained in the Indenture, continued for 90 days. Failure to pay
either principal or interest when due during the pendency of any dissolution or
liquidation proceeding or action to endorse payment of indebtedness shall also
constitute such a default (Section 6.01).

The Indenture of November 11, 1985 provides that the Trustee shall within
90 days after the occurrence of a default, not including periods of grace, give
to the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment or
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate owners
(Section 6.02).

The Indenture of November 11, 1985 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the conditions
and covenants provided for in this Indenture as may be required from time to
time by the Securities and Exchange Commission. Summaries of any such reports
filed with the Trustee or the Securities and Exchange Commission pursuant to
rules and regulations as prescribed by the Securities and Exchange Commission
shall be transmitted to the owners of Certificates in the manner and to the
extent provided for in the Indenture (Section 5.03).

The Indenture of November 11, 1985 does not require any periodic evidence
to be furnished as to the absence of default or as to compliance with the terms
of the Indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

The Indenture of November 11, 1985 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).

DESCRIPTION OF THE DEMAND LOAN CERTIFICATES

The Demand Loan Certificates are issued under an indenture (the "Indenture
of November 20, 1981") dated November 20, 1981, as amended January 4, 1982,
between Farmland Industries, Inc. ("Farmland") and Commerce Bank of Kansas City,
National Association, Kansas City, Missouri as Trustee (the "Trustee.")
Effective January 31, 1989, Commerce Bank resigned as Trustee and UMB Bank,
National Association, Kansas City, Missouri has been appointed the Trustee.

The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 20, 1981 and do not
purport to be complete. The section references therein refer to the sections of
the Indenture of November 20, 1981. Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
part of the statements made, and such statements are qualified in their entirety
by such reference.

GENERAL

The Demand Loan Certificates are direct obligations of Farmland but are not
secured and are not negotiable. The Demand Loan Certificates are issued in
amounts of $100 or more, and dated on the day payment of the full purchase price
is received by Farmland in Kansas City, Missouri. Any payments (other than wire
transfers) received after noon shall be deemed received by Farmland on the next
business day. Wire transfers are effective when funds are received. If
purchased and held by a member of Farmland for a one (1) month period or by any
other purchaser for a six (6) month period immediately following the date of
issue the principal amount of the Demand Loan Certificates will bear interest at
the Certificate Interest Rate (herein referred to as the "CIR.") The CIR is the
interest rate for the Demand Loan Certificates as determined, from time to time,
by Farmland. Except as hereinafter provided, each Demand Loan Certificate shall
earn interest at the CIR in effect on the date of issuance of such Demand Loan
Certificate for a period of six (6) months only; provided, however, that if
during such six (6) month period the CIR is increased to a rate higher than that
currently in effect for the Demand Loan Certificates, then each such Demand Loan
Certificate shall earn interest at the increased rate from the effective date of
the increase to the end of such Demand Loan Certificate's then current six (6)
month period. Six (6) months from the date of issue of each Demand Loan
Certificate and each six (6) month anniversary date thereafter, such Demand Loan
Certificate shall, if not redeemed, earn interest at the CIR in effect on such
anniversary date, but only for a six (6) month period from such anniversary
date, subject to the escalation provisions previously set forth. A decrease in
the CIR will have no effect on any Demand Loan Certificate issued prior to the
decrease until the first day of the next subsequent six (6) month period of such
outstanding Demand Loan Certificate. Holders of Demand Loan Certificates are
notified of the effective date of any change of the CIR which effects the Demand
Loan Certificates held. The Demand Loan Certificates may be redeemed at face
value plus interest to date of redemption at the option of the owner, at any
time. No partial redemptions will be permitted. If redeemed by a Farmland
member cooperative during a one (1) month period or by any other purchaser
during a six (6) month period immediately following the date of issuance, the
Demand Loan Certificates shall bear interest from date of issuance to date of
redemption at a demand rate of 2% below the CIR. Interest on the principal
amount of any Demand Loan Certificate held longer than six (6) months will be
computed at the effective CIR and is payable in one of the following ways at the
option of the owner, made at the time of purchase and irrevocable as to the
purchaser: (i) six (6) months after the date of issuance and at the end of each
and every six (6) month period thereafter until the Demand Loan Certificate is
surrendered for redemption, or (ii) only at the date of redemption compounded
semi-annually at the effective CIR.

The issuance of Demand Loan Certificates is limited to $500,000,000
outstanding at any one time under the Indenture of November 20, 1981 but such
Indenture does not limit the amount of other securities either secured or
unsecured, which may be issued by Farmland. At August 31, 1995, a total of
$13.9 million was outstanding.

REDEMPTION

Farmland will redeem the Demand Loan Certificates at any time upon written
request of the owner. If the certificate is surrendered for redemption by a
Farmland member cooperative during a one (1) month period or by any other owner
during a six (6) month period immediately following the date of issuance,
interest computed at the applicable demand rate from date of issuance to date of
redemption will be paid at the time of redemption of the Demand Loan
Certificate. If the Demand Loan Certificate is held for a period longer than
six (6) months from date of issuance, interest from the last previous date on
which interest was paid or compounded to the date of redemption computed at the
applicable CIR will be paid upon redemption. Any interest held for compounding
by Farmland in accordance with an interest option made by the purchaser will be
paid upon redemption of the Demand Loan Certificate.

CONCERNING THE TRUSTEE

The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, the corporation designated to act as Trustee under the Indenture,
resigned effective January 31, 1989 and UMB Bank, National Association, Kansas
City, Missouri, has been appointed the Trustee under the Indenture of November
20, 1981 and is to perform only such duties as are specifically set forth in
that Indenture. In the case of a default, the owners of a majority in aggregate
principal amount of the Demand Loan Certificates outstanding at the time of the
occurrence of a default have the right to require the Trustee to take action to
remedy such default. Upon the occurrence of a default, the Trustee may, and
upon the written request of a majority in aggregate principal amount of the
Demand Loan Certificates outstanding shall, declare the principal of all Demand
Loan Certificates and interest accrued thereon immediately due and payable
(Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

The Indenture of November 20, 1981 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Demand Loan Certificates then outstanding, to
execute supplemental indentures adding to or changing any provisions of the
indenture of November 20, 1981, or supplemental indentures, provided that no
such supplemental indenture shall (1) extend the fixed maturity of any Demand
Loan Certificates, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest, without the consent of the owner of each
Demand Loan Certificate so affected, or (2) reduce the 66-2/3% requirement as to
the consent of the owners of the Demand Loan Certificates for changes in any
supplemental indenture, without the consent of the owner of all Demand Loan
Certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

The Indenture of November 20, 1981 provides that any of the following shall
constitute a default: (1) failure to pay principal on Demand Loan Certificates
when due; (2) failure to pay interest on Demand Loan Certificates when due,
continued for 60 days; (3) certain events of bankruptcy or insolvency; and (4)
failure to perform any other covenant or agreement contained in the Indenture,
continued for 90 days. Failure to pay either principal or interest when due
during the pendency of any dissolution or liquidation proceeding or action to
endorse payment of indebtedness shall also constitute such a default (Section
6.01).

The Indenture of November 20, 1981 provides that the Trustee shall within
90 days after the occurrence of a default, not including periods of grace, give
to the Demand Loan Certificate owners notice of all such defaults unless such
defaults have been cured; provided, that, except in the case of default in the
payment of principal of or interest on any of the Demand Loan Certificates, the
Trustee shall be protected in withholding such notice if and so long as the
Trustee determines that the withholding of such notice is in the interest of the
Demand Loan Certificate owners (Section 6.02).

The Indenture of November 20, 1981 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the conditions
and covenants provided for in this Indenture as may be required from time to
time by the Securities and Exchange Commission. Summaries of any such reports
filed with the Trustee or the Securities and Exchange Commission pursuant to
rules and regulations as prescribed by the Securities and Exchange Commission
shall be transmitted to the owners of Certificates in the manner and to the
extent provided for in the Indenture (Section 5.03).

The Indenture of November 20, 1981 does not require any periodic evidence
to be furnished as to the absence of default or as to compliance with the terms
of the Indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

The Indenture of November 20, 1981 shall be discharged upon payment or
redemption of all Demand Loan Certificates or upon deposit with the Trustee of
funds sufficient therefor (Section 12.01).

LEGAL MATTERS

Robert B. Terry, Vice President and General Counsel of the Registrant, has
given an opinion upon the legality of the securities being registered and upon
certain other legal matters in connection with the registration of these
securities.

THE COMPANY

Farmland is an agricultural farm supply and processing and marketing
cooperative headquartered in Kansas City, Missouri that is primarily owned by
its members and operates on a cooperative basis. Founded originally in 1929,
Farmland has grown from revenues of $310,000 during its first year of operation
to over $6.6 billion during 1994. Members are entitled to receive patronage
refunds distributed by Farmland from its member-sourced annual net earnings.
Unless the context otherwise requires, the term "member" herein means (i) any
voting member, (ii) any associate member, or (iii) any other person with which
Farmland is a party to a currently effective patronage refund agreement (a
"patron"). See "Business - Patronage Refunds and Distribution of Net Earnings".

Farmland was formally incorporated in Kansas in 1931. Its principal
executive offices are at 3315 North Oak Trafficway, Kansas City, Missouri 64116
(telephone 816-459-6000).

MEMBERSHIP

Membership requirements are determined by Farmland's Articles of
Incorporation and the Board of Directors of Farmland (the ''Board of
Directors'').

VOTING MEMBERS

Farmland's current requirements for voting membership are as follows: (1)
Voting membership is limited to (a) farmers' and ranchers' cooperative
associations which have purchased farm supplies
from or provided grain to Farmland during Farmland's two most recently
completed years, and
(b) producers of hogs and cattle or associations of such producers which have
provided hogs or cattle to Farmland during Farmland's two most recent years. (2)
Voting members must maintain a minimum investment of $1,000 in par value of
Farmland common stock. (3) A cooperative must limit voting to agricultural
producers and conduct a majority of its business with voting producers.

ASSOCIATE MEMBERS

Farmland's associate members have all the rights of membership except that
they do not have the right to vote at a meeting of the shareholders of Farmland.

Farmland's current requirements for associate membership are as follows:
(1) Any person meeting the requirements for voting membership can be an
associate member. (2) Associate members must maintain a minimum investment of
$1,000 in par value of Farmland associate member common stock. (3) Associations
other than those owned 100% by voting members and associate members of Farmland
must conduct business on a cooperative basis and must have a minimum of 25
active members. (4) Hog and/or cattle feeding businesses must derive a majority
of earned income from such feeding business and agree to provide Farmland with
the information it needs to pay patronage refunds from its hog and/or cattle
marketing operations to members or other associate members that are eligible to
receive such refunds.

In 1994, Farmland's membership consisted of 1,480 cooperative associations
of farmers and ranchers and 1,365 pork or beef producers or associations of such
producers. See ''Business - Patronage Refunds and Distribution of Net
Earnings''.

BUSINESS

GENERAL

The Company is the largest cooperative in the United States in terms of
revenues. The Company's principal U.S. trade territory is comprised of 22
midwestern states. During the three years ended December 31, 1992, average
productions in those states, as a percent of the United States total, accounted
for 82% of wheat production, 88% of corn production, 81% of soybean production,
72% of cattle production and 82% of hog production. Farmland has endeavored to
develop a significant presence in international markets. In 1994, Farmland had
exports to approximately 85 countries, and derived 37% of its grain revenues
from export sales. Foreign grain sales generally are paid in U.S. Dollars.

The Company conducts business primarily in two operating areas:
agricultural inputs and outputs. On the input side of the agricultural
industry, the Company operates as a farm supply cooperative. On the output side
of the agricultural industry, the Company operates as a processing and marketing
cooperative.

The Company's farm supply operations consist of three principal product
divisions - petroleum, crop production and feed. Principal products of the
petroleum division are refined fuels, propane, by-products of petroleum refining
and a complete line of car, truck and tractor tires, batteries and accessories.
Principal products of the crop production division are nitrogen, phosphate and
potash fertilizers, and, through the Company's ownership in the Wilfarm joint
venture, a complete line of insecticides, herbicides and mixed chemicals.
Principal products of the feed division include swine, dairy, pet, beef,
poultry, mineral and specialty feeds, feed ingredients and supplements, animal
health products and livestock services. Over 50% of the Company's farm supply
products sold in 1994 were produced in plants owned by the Company or operated
by the Company under long-term lease arrangements. Approximately 65% of the
Company's sales of farm supply products sold in 1994 were at wholesale to farm
cooperative associations which are members of Farmland. These farm cooperatives
distribute products primarily to farmers and ranchers in states which comprise
the corn belt and the wheat belt and who utilize the products in the production
of farm crops and livestock.

On the output side, the Company's processing and marketing operations
include the processing of pork and beef, the marketing of fresh pork, processed
pork and fresh beef and the storage and marketing of grain. In 1994,
approximately 61% of the hogs processed and 46% of the grain marketed were
supplied to the Company by its members. Substantially all of the Company's pork
and beef products sold in 1994 were processed in plants owned by the Company.

No material part of the business of any segment of the Company is dependent
on a single customer or a few customers. Financial information about the
Company's industry segments is presented in Note 12 of the Notes to Consolidated
Financial Statements included herein.

The Company competes for market share with numerous participants with
various levels of vertical integration, product and geographical
diversification, sizes and types of operations. In the petroleum industry,
competitors include major oil companies, independent refiners, other
cooperatives and product brokers. Competitors in the crop production industry
include global producers of nitrogen and phosphate fertilizers (some of which
are cooperatives) and product importers and brokers. The feed, pork and beef
industries are comprised of a large variety of competitive participants.

PETROLEUM

MARKETING

The principal product of this business segment is refined fuels.
Approximately 68% of refined fuels product sales in 1994 resulted from
transactions with Farmland's members. The balance of the Company's refined
fuels product sales were principally through retailing chains in urban areas.
Based on total volume of refined fuels withdrawn at terminal storage facilities
along pipelines which serve most of the Company's trade territory, the Company
estimates its market share in rural markets is approximately 8%. Other
petroleum products include lube oil, grease, by-products of petroleum refining
and a complete line of car, truck and tractor tires, batteries and accessories.
Sales of petroleum products as a percent of the Company's consolidated sales for
1992, 1993 and 1994 were 29%, 19% and 13%, respectively.

Competitive methods in the petroleum industry include service, product
quality and pricing. However, in refined fuel markets, price competition is
most dominant. Many participants in the industry engage in one or more of the
industry's processes (oil production and transportation, refining, wholesale
distribution and retailing). The Company participates in the industry primarily
as a midcontinent refiner and as a wholesale distributor of petroleum products.

PRODUCTION

The Company owns refineries at Coffeyville, Kansas and at Phillipsburg,
Kansas. Prior to June 30, 1992 the Company owned approximately 30% of the
National Cooperative Refinery Association ("NCRA"). As a 30% owner, Farmland
was required to purchase 30% of the production of this refinery. On June 30,
1992, the Company sold its ownership interest in NCRA.

The refinery at Phillipsburg, Kansas is closed. A loading terminal located
at the refinery remains in operation. The carrying value of this refinery at
August 31, 1994 was approximately $1.9 million ($1.6 million at May 31, 1995).
The Company is evaluating alternative uses for this facility and cannot at this
time determine the extent of any losses related to the closure of the refinery,
but such losses are expected not to be significant. During the four months of
1992 in which it operated, sales associated with products of the Phillipsburg
refinery amounted to approximately $20.9 million and the refinery processed
871,000 barrels of crude oil.

Production volume for 1992, 1993 and 1994 is as follows:

Barrels of Crude Oil Processed
Daily Average
Based on 365 Days per Year
Location 1992 1993 1994
(barrels)

Coffeyville, Kansas . . . . . . 57,000 53,000 64,211

The Coffeyville refinery produced 23 million barrels of motor fuels and
heating fuels in 1992, 20 million barrels in 1993, and 25 million barrels in
1994. Approximately 68% of petroleum product sales in 1994 represented products
produced at this location.

Management terminated negotiations with a potential purchaser of the
Coffeyville refinery in 1994 when final sale terms were determined not to be in
the Company's best interest. See Note 17 of the Notes to Consolidated Financial
Statements included herein. In July 1994, the Company acquired a mothballed
refinery in Texas which is being reassembled at the Coffeyville refinery site.
When reassembly is complete in 1996, crude oil processing capacity is expected
to increase.

RAW MATERIALS

Farmland's refinery at Coffeyville, Kansas is designed to process high
quality crude oil with low sulfur content ("sweet crude"). Competition for
sweet crude and declining production in proximity of the refinery has increased
its cost of raw material relative to such cost for coastal refineries with the
capacity for processing and access to lower quality crude grades. The Company's
pipeline/trucking gathering system collects approximately 27% of its crude oil
supplies from producers near its refineries. Additional supplies are acquired
from diversified sources. Modifications to the Coffeyville refinery to increase
its capability to process efficiently crude oil streams containing greater
amounts of lower quality crude are continuing.

Crude oil is purchased approximately 45 to 60 days in advance of the time
the related refined products are to be marketed. Certain of these advance crude
oil purchase transactions, as well as fixed price refined products advance sales
contracts, are hedged utilizing petroleum futures contracts.

During periods of volatile crude oil price changes or in extremely short
crude supply conditions, the Company's petroleum operations could be affected to
a greater extent than petroleum operations of more vertically integrated
competitors with crude oil supplies available from owned producing reserves. In
past periods of relatively severe crude oil shortages, various governmental
regulations such as price controls and mandatory crude oil allocating programs
have been implemented to spread the adversity among all industry participants.
There can be no assurance as to what, if any, government action would be taken
if a crude oil shortage were to develop.

CROP PRODUCTION

MARKETING

The Company's crop production business segment includes nitrogen-,
phosphate-, and potash-based fertilizer products and, through the Company's
ownership in the Wilfarm joint venture, a complete line of crop protection
products such as insecticides, herbicides and mixed chemicals. Sales of the
crop production business segment as a percent of consolidated sales for 1992,
1993 and 1994 were 26%, 19% and 17%, respectively.

Competition in the plant nutrient industry is dominated by price
considerations. However, during the spring and fall plant nutrient application
seasons, farming activities intensify and delivery service capacity is a
significant competitive factor. Therefore, the Company maintains a significant
capital investment in distribution assets and a seasonal investment in inventory
to support its manufacturing operations. The Company has plant nutrient custom
dry blending, liquid mixing, storage and distribution facilities at 15 locations
throughout its trade territory.

The Company's sales of crop production products are primarily at wholesale
to local cooperative associations (members and customers of the Company). In
view of this member/customer relationship, management believes that, with
respect to such customers, the Company has a slight competitive advantage.

Domestic competition, mainly from other regional cooperatives, major
petroleum companies with chemical divisions and integrated chemical companies,
is intense due to customers' sophisticated buying tendencies and production
strategies that focus on costs and service. Also, foreign competition exists
from producers of crop production products manufactured in countries with lower
cost natural gas supplies (the principal raw material in nitrogen-based
fertilizer products). In certain cases, foreign producers of fertilizer for
export to the United States may be subsidized by their respective governments.

PRODUCTION

The Company manufactures nitrogen-based crop production products. Based
on total production capacity, the Company is one of the largest producers of
anhydrous ammonia fertilizer in the United States. The Company owns and
produces nitrogen-based products at four anhydrous ammonia plants, four urea
ammonium nitrate plants and two urea plants. In addition, the Company operates
three anhydrous ammonia plants under long-term lease arrangements.

The Company owns and produces phosphate-based products at one plant and
has 50% ownership interest in two ventures which produce phosphate-based
products.
<TABLE>
Nitrogen fertilizer production information for 1992, 1993 and 1994 is as
follows:
<CAPTION>
Actual Annual Production
Anhydrous Ammonia
Plant Location 1992 1993 1994
(tons)
<S> <C> <C> <C>
Lawrence, Kansas . . . . . . . . . . . . 450,000 375,000 443,000
Dodge City, Kansas . . . . . . . . . . . 254,000 241,000 257,000
Fort Dodge, Iowa . . . . . . . . . . . . 240,000 232,000 256,000
Beatrice, Nebraska . . . . . . . . . . . 250,000 243,000 277,000
Enid, Oklahoma (2 plants)* . . . . . . . 1,017,000 969,000 985,000
Pollock, Louisiana* . . . . . . . . . . . 501,000 490,000 526,000

* Indicates leased plants.
</TABLE>

Synthetic anhydrous ammonia is the basic component of other commercially
produced nitrogen-based crop production products and uses natural gas as the
major raw material.

Ammonia is used as the principal raw material in the production of value-
added nitrogen-based products such as urea, ammonium nitrate, urea ammonium
nitrate solutions and other products.

Production of urea, ammonium nitrate, urea ammonium nitrate solutions and
other nitrogen-based products from anhydrous ammonia, as a raw material, for
1992, 1993 and 1994 is as follows:

<TABLE>
<CAPTION>
Actual Annual Production
Plant Location 1992 1993 1994
(tons)
<S> . . . . . . . . . . . . . . . <C> <C> <C>
Lawrence, Kansas . . . . . . . . 635,000 661,000 654,000
Enid, Oklahoma . . . . . . . . . 442,000 473,000 433,000
Dodge City, Kansas . . . . . . . 217,000 205,000 163,000
Beatrice, Nebraska . . . . . . . 177,000 166,000 162,000
</TABLE>

Ammonia also is used to react with phosphoric acid to produce phosphoric
acid products such as liquid mixed fertilizer, diammonium phosphate and
monoammonium phosphate.

The Company owns a phosphate chemical plant located in Joplin, Missouri and
land in Florida which contains an estimated 40 million tons of phosphate rock.
The Joplin plant produces ammonium phosphate which is combined in varying ratios
with muriate of potash to produce 12 different fertilizer grade products. In
addition, feed grade phosphate (dicalcium phosphate) is produced at this
facility.

Production at the Joplin plant for 1992, 1993 and 1994 is as follows:
<TABLE>
<CAPTION>
Actual Annual Production
1992 1993 1994
(tons)
<S> <C> <C> <C>
Ammonium Phosphate . . . . . . . . . . . 88,000 72,000 75,000
Feed Grade Phosphate . . . . . . . . . . 129,000 141,000 157,000
</TABLE>

Prior to November 15, 1991, the Company owned and operated a phosphate
chemical plant located in Green Bay, Florida. Effective November 15, 1991, the
Company and Norsk Hydro a.s. formed Farmland Hydro, L.P. ("Hydro") to
manufacture phosphate fertilizer products for distribution to international
markets. Hydro operates a phosphate plant at Green Bay, Florida and owns
phosphate rock reserves located in Hardee County, Florida which contain an
estimated 40 million tons of phosphate rock. The Company provides management
and administrative services and Norsk Hydro a.s. provides marketing services to
Hydro. The joint venture's plant produces phosphoric acid products such as
super acid, diammonium phosphate and monoammonium phosphate. Annual production
in short tons of such products for the ten months in 1992 during which the joint
venture operated, for 1993 and for 1994 was 880,000, 1,216,000 and 1,437,000,
respectively. The phosphate rock required to operate the joint venture's plant
is presently purchased from outside suppliers and adequate supplies of sulfur
are available from several producers.

Plans for development of the phosphate reserves owned by the Company and
Hydro have not been established in view of the availability of adequate supplies
of phosphate rock from alternative sources.

The Company and J.R. Simplot Company formed a joint venture in April 1992,
SF Phosphates, Limited, to own and operate a phosphate mine located in Vernal,
Utah, a phosphate chemical plant located in Rock Springs, Wyoming and a 96-mile
pipeline connecting the mine to the plant. The plant produces monoammonium
phosphate and super acid with annual production of 138,000 tons for the five
months of operations in 1992, 440,000 tons for 1993 and 465,000 tons for 1994.
Under the joint venture agreement, the Company and J.R. Simplot Company purchase
the production of the joint venture in proportion to their ownership.

The Company and Mississippi Chemical Company have entered into a letter of
intent to form a joint venture to develop, construct and operate a 1,725 metric
ton per day ammonia production facility at the Brighton Industrial Site, at
LaBrea in the Republic of Trinidad and Tobago. The partners expect the plant to
be funded by a combination of nonrecourse project financing and equity. The
Company expects to fund its equity position in the project (estimated to amount
to approximately $67.0 million) from currently available sources of capital.
Although production start up is expected early in 1998, there can be no
assurance that the joint venture will proceed, that such nonrecourse financing
will be obtained at all or on favorable terms or that production will commence
at such time.

RAW MATERIALS

Natural gas, the largest single component of nitrogen-based fertilizer
production, is purchased directly from natural gas producers. Natural gas
purchase contracts are generally market sensitive and contract prices change as
the market price for natural gas changes. The Company's management believes
that the flexible pricing attributes of its gas supply contracts, without
relinquishing rights to long-term supplies, are essential to its competitive
position. In addition, the Company has a hedging program which utilizes natural
gas futures and options to reduce risks of market price volatility.

Natural gas is delivered to the Company's facilities under pipeline
transportation service agreements which have been negotiated with each plant's
delivering pipeline. Natural gas delivery to the plants could be curtailed
under regulations of the Federal Energy Regulatory Commission if the pipeline's
capacity were required to serve priority users such as residences, hospitals and
schools. In such case, production could be curtailed. No significant
production has been lost because of curtailments in transportation, and no such
curtailment is anticipated.

FEED

Products in the Company's feed line include swine, beef, poultry, dairy,
pet, mineral and specialty feeds, feed ingredients and supplements, animal
health products and livestock services.

This business segment's sales were approximately 13%, 10% and 8% of
consolidated sales for the years 1992,1993 and 1994, respectively.
Approximately 45% of the feed business segment's sales in 1994 was attributable
to products manufactured in the Company's feed mills. The Company operates feed
mixing plants at 19 locations throughout its territory, an animal protein and
premix plant located in Eagle Grove, Iowa, a premix plant in Marion, Ohio and a
pet food plant in Muncie, Kansas.

Feed production is as follows:
<TABLE>
<CAPTION>
Actual Annual Production
1992 1993 1994
(tons)
<S> <C> <C> <C>
22 feed mills (combined) . . . . . . . 954,000 1,030,000 1,118,000
</TABLE>

In addition, the Company's feed operations include placement of Company-
owned feeder pigs with individuals who have contractual arrangements with the
Company to feed pigs on a fee basis until weight gain is finished. During 1992,
1993 and 1994, approximately 46,300 pigs, 113,000 pigs and 250,100 pigs,
respectively, were finished under this program. The majority of the finished
pigs were sold to a 99%-owned subsidiary, Farmland Foods, Inc. ("Foods"), for
processing.

The Company owns less than a 50% interest in Alliance Farm Cooperative
Association (formerly Yuma Feeder Pig Limited Liability Company) which operates
swine farrowing facilities.

The Company operates a facility for production of quality swine breeding
stock. These animals are placed with farrowers under contractual arrangements.
In addition, the Company purchases swine breeding stock for placement with such
farrowers.

The Company conducts research in genetic selection, breeding, animal health
and nutrition at its research facility in Bonner Springs, Kansas. Through local
cooperative associations of farmers and ranchers, the Company participates in
livestock and hog services designed to produce lean, feed-efficient animals and
help livestock producers select feed formulations which maximize weight gain.

PORK PROCESSING AND MARKETING

PRODUCTION

The Company's pork processing and marketing operations are conducted
through Foods which operates eight food processing facilities. Meat processing
facilities at Springfield, Massachusetts, Carey, Ohio, and New Riegel, Ohio
produce Italian-style specialty meats and ham products. A facility at Wichita,
Kansas processes pork into fresh sausage, and pork, beef and chicken into hot
dogs, dry sausage and other luncheon meats. A facility in Denison, Iowa and one
in Crete, Nebraska function as pork abattoirs and have additional capabilities
for processing pork into bacon, ham and smoked meats. An additional facility at
Monmouth, Illinois was purchased on February 15, 1993. These facilities also
process fresh pork into primal cuts for additional processing into fabricated
meats which are sold to commercial users and to retail grocery chains, as well
as case-ready and label-branded cuts for retail distribution. The eighth plant
located in Carroll, Iowa is primarily a packaging facility for canned or cook-
in-bag products. A facility at San Leandro, California was closed on September
1, 1993. A previously closed pork processing plant at Iowa Falls, Iowa is held
for sale.

Production for 1992, 1993 and 1994 is as follows:
<TABLE>
<CAPTION>
Actual Weekly Production
On a One-Shift Basis
1992 1993 1994
(pounds)
<S> <C> <C> <C>
Wichita, Kansas . . . . . . .. . 1,618,000 1,514,000 1,884,000
Carroll, Iowa* . . . . . . .. . 1,131,000 1,204,000 1,111,000
San Leandro, California** . .. . 269,000 243,000 -0-
Springfield, Massachusetts .. . 560,000 666,000 747,000
Carey/Riegel, Ohio . . . . .. . 220,000 231,000 275,000
Denison, Iowa . . . . . . . .. . 39,000 37,000 40,000
Crete, Nebraska . . . . . . .. . 46,000 45,000 47,000
Monmouth, Illinois*** . . . .. . -0- 25,000 28,000
<FN>

*All ham products were produced on two work shifts per day during 1992, 1993
and 1994.
**Closed September 1, 1993.
***The Company did not own the Monmouth facility in 1992.
</TABLE>

MARKETING

The Company's pork marketing operations include meat processing, primarily
pork, and marketing. Products marketed include fresh pork, fabricated pork,
smoked meats, ham, bacon, fresh sausage, dry sausage, hot dogs, and packing
house by-products. These products are marketed under the Farmland, Maple River,
Marco Polo, Carando, Regal and other brand names. Product distribution is
through national and regional retail food chains, food service accounts,
distributors and international marketing activities.

Pork marketing is a highly competitive industry with many suppliers of live
hogs, fresh pork and processed pork products. Other meat products such as beef,
poultry and fish also compete directly with pork products. Competitive methods
in this segment include price, product quality, product differentiation and
customer service.

BEEF PROCESSING AND MARKETING

PRODUCTION

As of August 31, 1994, the Company's beef processing and marketing
operations were conducted through two ventures. National Beef Packing Company,
L.P. ("NBPC"), formed in April 1993, is located in Liberal, Kansas and is
58%-owned by Farmland (having increased to 68% effective March 1, 1995).
Hyplains Beef, L.C., formed in July 1992, is located in Dodge City, Kansas and
is 50%-owned by Farmland. As of September 1995, such beef processing and
marketing operations are conducted through NBPC, which is now 68%-owned by
Farmland. These facilities function as beef abattoirs and have capabilities for
processing fresh beef into primal cuts for additional processing into fabricated
or boxed beef. During 1994, the two plants operated at 97% capacity and
slaughtered 1,708,000 cattle.

MARKETING

Products in the Company's beef processing and marketing operations include
fresh beef, boxed beef and packing house by-products. Product distribution is
through national and regional retail and food service customers under the
Farmland Black Angus Beef and other brand names. There is also a limited amount
of international product distribution.

Beef marketing is a highly competitive industry with many suppliers of live
cattle, fresh beef and processed beef. Other meat products such as pork,
poultry and fish also compete directly with beef products. Competitive methods
in this industry include price, product quality and customer service.

GRAIN MARKETING

Effective June 30, 1992, the Company acquired substantially all the
business and assets of Union Equity Co-Operative Exchange ("Union Equity"). The
grain marketing and storage operations of the Company as described herein are
substantially the same as the grain operations previously conducted by Union
Equity.

The Company markets wheat, milo, corn, soybeans, barley and oats, with
wheat constituting the majority of the marketing business. The Company
purchases grain from members and nonmembers located in the Midwestern part of
the United States. Once the grain is purchased, the Company assumes all risks
related to selling such grain. Since grain is a commodity, pricing of grain in
the United States is principally conducted through bids based on the commodity
futures markets.

The Company is exposed to risk of loss in the market value of its grain
inventory and fixed price purchase contracts if grain market prices decrease,
and is exposed to loss on its fixed price sales contracts if grain market prices
increase. To reduce the price change risk associated with holding positions in
grain, the Company takes opposite and offsetting positions by entering into
grain commodity futures contracts. Such contracts have terms of up to one year.
The Company's strategy is to maintain hedged positions on as close to 100% of
its position in grain as is possible. During 1994, the Company maintained
hedges on approximately 95.3% of its grain positions. Based on total assets at
the beginning and end of 1994, the average market value of grain positions not
hedged during the year amounted to approximately 1/5 of 1% of the Company's
average total assets. While hedging activities reduce the risk of loss from
changing market values of grain, such activities also limit the gain potential
which otherwise could result from changes in market prices of grain.

In 1994, approximately 37% of grain revenues were from export sales. The
five largest purchasers in terms of total revenues from grain operations were
Mexico (6%), Jordan (5%), Egypt (4%), Israel (4%) and South Africa (2%). In
1992 and 1993, export sales or sales to domestic customers for export accounted
for approximately 55% and 60%, respectively, of consolidated grain revenues. A
majority of the grain export sales are under price subsidies or credit
arrangements guaranteed by the United States government, primarily through
programs administered by the United States Department of Agriculture ("USDA").
Export-related sales are subject to international political upheavals and
changes in other countries' trade policies which are not within the control of
the United States or the Company. Foreign sales of grain generally are paid in
U.S. Dollars.

TRADIGRAIN

In December 1993, the Company acquired all the common stock of seven
international grain trading companies (collectively referred to as "Tradigrain")
formerly owned by B.P. Nutrition B.V. Tradigrain imports, exports and ships all
major grains from the major producing countries to final consumers which are
either governmental entities, private companies or other major grain companies.

Tradigrain's purchases of grain are made on a cash basis against
presentation of documents. Its sales of grain are mostly done against confirmed
letters of credit at sight or on 180/360 days deferred basis. The volume of
grain traded by Tradigrain varies from seven to ten million metric tons per year
and represents total sales of between $800 million to $1.2 billion per year.
For purposes of the Company's Consolidated Financial Statements, on Tradigrain
transactions, the Company recognizes as revenues net margin on grain traded
rather than the value of the commodities involved in the trades.

PROPERTY

The Company owns or leases 30 inland elevators and one export elevator with
a total capacity of approximately 177,045,000 bushels of grain. The location,
type, number and aggregate capacity in bushels of the elevators at July 31, 1995
are as follows:

AGGREGATE
LOCATION TYPE NUMBER CAPACITY

Amarillo, Texas . Inland 1 3,226,000
Black, Texas . . Inland 1 1,418,000
Commerce City, Colorado Inland 1 3,234,000

Darrouzett, Texas Inland 1 1,277,000
Enid, Oklahoma . Inland 4 50,300,000
Fairfax, Kansas . Inland 1 10,047,000
Galveston, Texas Export 1 3,253,000
Hutchinson, Kansas Inland 3 25,268,000

Idaho and Utah . Inland 11 9,825,000
Lincoln, Nebraska Inland 1 5,099,000
Omaha, Nebraska . Inland 2 4,266,000
Saginaw, Texas . Inland 2 37,274,000
Topeka, Kansas . Inland 1 12,055,000
Wichita, Kansas . Inland 1 10,503,000

RESEARCH

The Company operates a research and development farm near Bonner Springs,
Kansas where many aspects of animal nutrition are studied. The research is
directed toward improving the nutrition and feeding practices of livestock and
pets.

Research related to commercialization of a wheat processing plant to
produce wheat gluten as a replacement source for raw material used in certain
consumer products has been completed and technology for an economically viable
plant has been developed. Farmland has formed Heartland Wheat Growers, L.P., a
joint venture with local cooperatives, and is building a wheat processing plant
in Russell, Kansas that will process approximately 4.25 million bushels of wheat
per year. See " - Capital Expenditures".

Expenditures related to Company-sponsored product and process improvements
amounted to $3.3 million, $3.3 million and $2.7 million for the years ended
1992, 1993 and 1994, respectively.

CAPITAL EXPENDITURES

In 1995 the Company made capital expenditures of $132.0 million. These
expenditures related to the expansion of the Coffeyville, Kansas refinery
to production levels of 90,000 barrels per day. In addition, the NBPC's
facility in Liberal, Kansas is undergoing major expansion as is the pork
processing facility in Crete, Nebraska. Expenditures of the crop production
division include upgrading several existing facilities to improve gas
efficiencies and expanding UAN facilities in Lawrence, Kansas and at several
storage terminals. The Company is also building a wheat processing plant in
Russell, Kansas.

The Company plans expenditures for capital additions and improvements of
approximately $323.4 million during the years 1996 and 1997. In addition, the
Company plans to increase by $67.0 million its investment in a joint venture
which is expected to construct and operate an anhydrous ammonia plant in
Trinidad.

Expenditures planned for the crop production business total $188.3 million
and include: $23.0 million construction of a urea ammonium nitrate ("UAN")
plant adjacent to the Fort Dodge, Iowa anhydrous ammonium plant (this facility
will upgrade anhydrous ammonium to produce approximately 210,000 tons of UAN per
year); $6.0 million to increase anhydrous ammonia and UAN production by 52,500
tons and 10,500 tons, respectively, at the Dodge City, Kansas facility; $50.0
million for acquisition of facilities operated by the Company under leasing
agreements; $25.0 million for the purchase and modification of a storage
facility for imported ammonia (of which $18.0 million is expected to be expended
in this period); and $91.3 million for operating efficiencies, environmental and
safety issues and for operating necessities or betterments.

Capital expenditures in the feed business segment are estimated to be
$23.4 million. These projected expenditures are for feed mill and livestock
production efficiencies, operating necessities and replacements.

Capital expenditures in the petroleum business segment are expected to be
$94.9 million and include approximately $45.7 million to increase daily crude
oil processing capacity at the Coffeyville, Kansas refinery of which $41.8
million is to be expended in this period. The remaining projected expenditures
of the petroleum business segment are as follows: $19.8 million for operating
necessities; $10.5 million for increased operating efficiency; and $22.8 million
for environmental and safety issues.

Capital expenditures of approximately $58 million are planned in the food
processing and marketing business segment. An expansion of the National Beef
facility at Liberal, Kansas is planned at an approximate cost of $12.2 million
of which $5.8 million is to be expended in this period. A microwave bacon
project at the Wichita facility is planned at an approximate cost of $4.1
million. At the Denison, Crete, and Monmouth plants, the carcass coolers will
be upgraded at an approximate cost of $5 million. The remaining $43.1 million
will be mostly for operational improvement and replacements.

Capital expenditures of approximately $5.4 million planned for the grain
business segment are mainly for expansion and replacements.

Capital expenditures of $27.2 million are planned for the other operations
and corporate groups. The Company intends to expend approximately $4.5 million
for upgrades related to the information services area of which $3 million will
be expended in this period. The remaining expenditures are planned for
operating necessities and improvements.

The Company intends to fund its capital program with cash from operations
or from its primary sources of debt capital. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources."

MATTERS INVOLVING THE ENVIRONMENT

The Company is subject to various stringent federal, state and local
environmental laws and regulations, including those governing the use, storage,
discharge and disposal of hazardous materials as the Company uses hazardous
substances and generates hazardous wastes in the ordinary course of its
manufacturing process. The Company recognizes liabilities related to remediation
of contaminated properties when the related costs are probable and can be
reasonably estimated. Estimates of these costs are based upon currently
available facts, existing technology, undiscounted site specific costs and
currently enacted laws and regulations. In reporting environmental liabilities,
no offset is made for potential recoveries. Such liabilities include estimates
of the Company's share of costs attributable to potentially responsible parties
(''PRPs'') which are insolvent or otherwise unable to pay. All liabilities are
monitored and adjusted regularly as new facts or changes in law or technology
occur.

The Company wholly or jointly owns or operates 54 manufacturing properties
and has potential responsibility for environmental conditions at a number of
former manufacturing facilities and at waste disposal facilities operated by
third parties. The Company is investigating or remediating contamination at 17
properties. The Company has also been identified as a PRP under the federal
Comprehensive Environmental Response, Compensation, and Liability Act
(''CERCLA'') at various National Priority List sites and has unresolved
liability with respect to the past disposal of hazardous substances at six such
sites. Such laws may impose joint and several liability on certain statutory
classes of persons for the costs of investigation and remediation of
contaminated properties, regardless of fault or the legality of the original
disposal. These persons include the present and former owner or operator of a
contaminated property, and companies that generated, disposed, or arranged for
the disposal, of hazardous substance found at the property. During 1993 and
1994, the Company paid approximately $.5 million and $1.4 million, respectively,
for environmental investigation and remediation.

The Company's actual final costs of addressing certain environmental
matters are not quantifiable, and therefore have not been accrued, because such
matters are in preliminary stages and the timing, extent and costs of various
actions which governmental authorities may require are currently unknown.
Management also is aware of other environmental matters for which there is a
reasonable possibility that the Company will incur costs to resolve. It is
possible that the costs of resolution of the matters described in this paragraph
may exceed the liabilities which, in the opinion of management, are probable and
which costs are reasonably estimable at May 31, 1995. In the opinion of
management, it is reasonably possible for such costs to be approximately an
additional $24.0 million.

Under the Resource Conservation Recovery Act of 1976 (''RCRA''), the
Company has five closure and five post-closure plans in place for six locations.
Closure and post-closure plans also are in place for three landfills and two
injection wells as required by state regulations. Operations are being conducted
at these locations and the Company does not plan to terminate such operations in
the foreseeable future. Therefore, the Company has not accrued these
environmental exit costs. The Company accrues these liabilities when plans for
termination of plant operations have been made. Such closure and post-closure
costs are estimated to be $5.7 million at May 31, 1995 (and is in addition to
the $24.0 million described in the preceding paragraph).

The Company is currently involved in three administrative proceedings
brought by Region VII of the Environmental Protection Agency (''EPA'') with
respect to alleged violations under the Clean Air Act, the Emergency Planning
and Community Right-to-Know Act and RCRA at the Coffeyville refinery. The
Company is currently negotiating with the EPA concerning these matters and
believes that such negotiations may result in compromise settlements, including
the possible implementation of a Supplemental Environmental Project in
connection with the Clean Air Act proceeding. Absent such settlements, the
Company may contest the EPA's allegations. Accordingly, no provision has been
made in the Company's financial statements for these proposed penalties.

Specifically, the three administrative proceedings are described as
follows:

(1) The Company is a party to an administrative enforcement action brought
by Region VII of the EPA which alleges violations of the Emergency
Planning and Community Right-to-Know Act and the release reporting
requirements of CERCLA at its Coffeyville, Kansas refinery. This
proceeding involves alleged violations of release reporting
requirements and seeks a civil penalty in the amount of $350,000.

(2) The Company is a party to an administrative enforcement action brought
by Region VII of the EPA which alleges violations of RCRA at its
Coffeyville, Kansas refinery. In this proceeding, the EPA has proposed
a civil penalty in the amount of approximately $1.4 million.

(3) The Company has been informed by the U.S. Department of Justice of its
intent to bring an enforcement action alleging certain violations of
the Clean Air Act at its Coffeyville, Kansas refinery. The U.S.
Department of Justice has informed the Company that it will seek a
civil penalty of at least $1.6 million.

Protection of the environment requires the Company to incur expenditures
for equipment or processes, which expenditures may impact the Company's future
net income. However, the Company does not anticipate that its competitive
position will be adversely affected by such expenditures or by laws and
regulations enacted to protect the environment. Environmental expenditures are
capitalized when such expenditures provide future economic benefits. In 1994,
the Company had capital expenditures of approximately $2.6 million to prevent
future discharges into the environment. In 1995, such capital expenditures
(through May 31, 1995) were approximately $2.0 million. The majority of such
expenditures was for improvements at the Coffeyville refinery. Management
believes the Company currently is in substantial compliance with existing
environmental rules and regulations.

GOVERNMENT REGULATION

The Company's business is conducted within a legal environment created by
numerous federal, state and local laws which have been enacted to protect the
public's interest by promoting fair trade practices, safety, health and welfare.
The Company's operating procedures conform to the intent of these laws and
management believes that the Company currently is in compliance with all such
laws, the violation of which could have a material adverse effect on the
Company.

Certain policies may be implemented from time to time by the USDA, the
Department of Energy or other governmental agencies which may impact the demands
of farmers and ranchers for the Company's products or which may impact the
methods by which certain of the Company's operations are conducted. Such
policies may impact the Company's farm supply and marketing operations.

Management is not aware of any newly implemented or pending policies
having a significant impact or which may have a significant impact on operations
of the Company.

EMPLOYEE RELATIONS

At August 31, 1995, the Company had approximately 12,700 employees.
Approximately 41% of the Company's employees were represented by unions having
national affiliations. The Company's relationship with employees is considered
to be generally satisfactory. No labor strikes or work stoppages within the last
three fiscal years have had a materially adverse effect on the Company's
operating results. Current labor contracts expire on various dates through March
1997. There are no wage re-openers in any of the collective bargaining
agreements.

PATRONAGE REFUNDS AND DISTRIBUTION OF NET EARNINGS

For purposes of this section, (1) annual earnings for 1994 and earlier
years means earnings before income taxes determined in accordance with federal
income tax law, and (2) annual earnings for 1995 and after means earnings before
income taxes determined in accordance with generally accepted accounting
principles.

Farmland operates on a cooperative basis. In accordance with its bylaws,
Farmland returns the member-sourced portion of its annual net earnings to its
members as a patronage refund. Each member's portion of the annual patronage
refund is determined by the quantity or value of business transacted by the
member with Farmland during the year for which the patronage is paid in
comparison with Farmland's total member-sourced earnings for such year in the
patronage allocation unit for which the patronage is paid.

Generally, a portion of the annual patronage refund is returned in cash,
and for the balance of the patronage refund (the "invested portion") the members
receive Farmland common stock, associate member common stock or capital credits
(the equity type received is determined by the membership status). The invested
portion of the patronage refund is determined annually by the Board of
Directors. The annual patronage refund is returned to members as soon as
practical after the end of each fiscal year. The Internal Revenue Code of 1986,
as amended, allows a cooperative to deduct from its taxable income the total
amount of the patronage refunds returned, provided that not less than 20% of the
total patronage refund returned is cash. The bylaws of Farmland provide that
the Board of Directors has complete discretion with respect to the handling and
ultimate disposition of any member-sourced losses.

For the years ended 1992, 1993 and 1994, Farmland returned the following
patronage refunds:
<TABLE>
<CAPTION>
Cash or Cash
Equivalent Portion Invested Portion Total Patronage
of Patronage Refunds of Patronage Refunds Refunds
(Amounts in thousands)
<S> <C> <C> <C>
1992 . . . . . . . $ 17,449 $ -0- $ 17,449
1993 . . . . . . . -0- -0- -0-
1994 . . . . . . . 26,552 44,032 70,584
</TABLE>

Nonpatronage income or loss (income or loss from activities not directly
related to the cooperative marketing or purchasing activities of Farmland) is
subject to income taxes computed on the same basis as such taxes are computed on
the income or loss of other corporations.

EQUITY REDEMPTION PLANS

The Equity Redemption Plans described below, namely the Base Capital Plan
(as defined below), the estate settlement plan and the special equity redemption
plans (collectively, the "Plans") may be changed at any time or from time to
time at the sole and absolute discretion of the Board of Directors. The Plans
are also not binding upon the Board of Directors or the Company, and the Board
of Directors reserves the right to redeem, or not redeem, any equities of the
Company without regard to whether such action or inaction is in compliance with
the Plans. The factors which may be considered by the Board of Directors in
determining when, and under what circumstances, the Company may redeem equities
include, but are not limited to, the terms of the Company's Base Capital Plan,
income and other tax considerations, the Company's results of operations,
financial position, cash flow, capital requirements, long-term financial
planning needs and other relevant considerations. By retaining discretion to
determine the amount, timing and ordering of any equity redemptions, the Board
of Directors believes that it can continue to assure that the best interests of
the Company and thus of its members will be protected.

BASE CAPITAL PLAN

For the purposes of acquiring and maintaining adequate capital to finance
the business of the Company, the Board of Directors has established a base
capital plan ("Base Capital Plan").

The Base Capital Plan provides a mechanism for determining the Company's
total capital requirements and each voting member's and associate member's share
thereof (the base capital requirement). As part of the Base Capital Plan, the
Board of Directors may, in its discretion, provide for redemption of Farmland
common stock or associate member common stock held by voting members or
associate members who have an investment in Farmland common stock or associate
member common stock which exceeds the voting members' or associate members' base
capital requirement. The Base Capital Plan provides a mechanism under which the
cash portion of the patronage refund payable to voting members or associate
members will depend upon the degree to which such voting members or associate
members meet their base capital requirements.

ESTATE SETTLEMENT PLAN

The estate settlement plan provides that in the event of the death of an
individual (a natural person) equity holder, the equity holdings of the deceased
will be redeemed at par value with the exception of purchased equity holdings
owned by the deceased for less than five years. This provision is subject to a
limitation of $1.0 million in any one fiscal year without further authorization
by the Board of Directors.

SPECIAL EQUITY REDEMPTION PLANS

From time to time and for all profitable years following 1987, the Company
has redeemed portions of its outstanding equity under various special equity
redemption plans.

Each such plan has been designed to return cash to members or former
members of Farmland or Foods by redeeming certain types of outstanding equity.
The order in which each type of equity is redeemed is determined by the Board of
Directors. Except for preferred stock sold through a public offering in 1984,
substantially all the equity redeemed under these plans was originally issued as
part of the Company's patronage refunds. See "Patronage Refunds and
Distribution of Net Earnings".

The special equity redemption plan is designed to provide a systematic
method for redemption of outstanding equity which is not subject to redemption
through other Plans, such as the Base Capital Plan or the estate settlement
plan.

At August 31, 1994, provisions of the special equity redemption plan
included:

1. No special redemption will be made if the redemption of equities may
result in a violation of covenants in loan agreements and similar
instruments; and

2. The targeted amount for special redemptions is a percentage of
consolidated net income (member and nonmember). The percentage is
determined based on the ratio of Funded Indebtedness to Capitalization
(as defined in the special equity redemption plan) before the special
redemption but after giving effect to the distribution of cash and the
redemption of equities under the Base Capital Plan. The calculation
for special redemptions is as follows:

Total Special Equity
Funded Indebtedness as Redemption
as a Percent of as a Percent of
Capitalization Consolidated Net Income

> 50 % None
48 - 50 % 2.5 %
44 - 47 % 5.0 %
40 - 43 % 7.5 %
< 40 % 10.0 %

3. The priority for redeeming equities under the Special Redemption
Program will be as follows listed in order of first to be redeemed.

a. Capital Credits (Series of Ten) which, on or before August 31,
1992, were issued to and held by, any dissolved cooperative for
the benefit of its membership. One-third of the total outstanding
amount of such Capital Credits, Series of Ten to be redeemed pro
rata to such holders following each of the next three fiscal year-
ends.

b. Capital Credits (Series of Ten) outstanding ten years or longer --
paid in order of lowest numbered series first.

c. Capital Credits held by individual livestock producers age 70 or
older that have been held for five years or longer -- paid in
descending order of age of the individual (oldest person first).
Holders of equities in Farmland Foods, Inc. will have their
equities redeemed on the same basis as holders of Farmland equity.
Former Farmland Foods equity holders who accepted the exchange
offer for Farmland Industries' equities in 1991 will be deemed to
have met the five-year holding requirement for those equities
involved in the exchange.

d. Capital Credits (Series of Ten) outstanding five years or longer -
- paid in order of lowest numbered series first.

e. Capital Credits held by individual livestock producers age 65 or
older that have been held for five years or longer -- paid in
descending order of age of the individual (oldest person first).
Holders of equities in Farmland Foods, Inc. will have their
equities redeemed on the same basis as holders of Farmland equity.
Former Farmland Foods equity holders who accepted the exchange
offer for Farmland Industries' equities in 1991 will be deemed to
have met the five-year holding requirement for those equities
involved in the exchange.

f. Any Capital Credits outstanding for twenty years or more -- paid
in order of year issued, oldest first. Holders of equities in
Farmland Foods, Inc. will have their equities redeemed on the same
basis as holders of Farmland equity. Former Farmland Foods equity
holders who accepted the exchange offer for Farmland Industries'
equities in 1991 will be deemed to have met the five-year holding
requirement for those equities involved in the exchange.
Nonmember capital will participate on the same basis as capital
credits in the redemption.

g. Capital Credits (Series of Ten) remaining balance -- paid in order
of lowest numbered series first.

h. Minority held equities in Farmland Foods, Inc. remaining balance -
- paid in descending order of years outstanding, oldest first.

i. Any Capital Credits outstanding for ten years or more -- paid in
order of year issued, oldest first. Nonmember capital will
participate on the same basis as capital credits in the
redemption.

j. Any Common Stock or Associate Member Common Stock outstanding for
twenty years or more -- in order of year issued, oldest first.

k. Any Capital Credit outstanding for five years or more -- paid in
order of year issued, oldest first. Nonmember capital will
participate on the same basis as capital credits in the
redemption.

l. Any Common Stock or Associate Member Common Stock outstanding for
five years or more -- paid in order of year issued, oldest first.

Presented below are the amounts approved for redemption of equity by the
Board of Directors under the Base Capital Plan, the estate settlement plan and
the special equity redemption plans for all years following 1987, the year in
which the Company returned to profitability following the loss years of the mid-
1980's. The amounts approved for redemption of equity were paid in cash in the
fiscal year following approval.

<TABLE>
<CAPTION>
Base Capital Estate Special Equity
Plan Settlement Plan Redemption Plans Total Plan
Redemptions* Redemptions Redemptions Redemptions
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
1988 $ -0- $ 16 $ 5,368 $ 5,384
1989 -0- 13 15,518 15,531
1990 -0- 78 20,029 20,107
1991 2,300 4 5,351 7,655
1992 6,707 234 6,755 13,696
1993 -0- 127 12 139
1994 8,740 126 4,108 12,974
<FN>
* The Base Capital Plan became effective in 1991.
</TABLE>

LEGAL PROCEEDINGS

In the opinion of Robert B. Terry, Vice President and General Counsel of
Farmland, there is no litigation existing or pending against Farmland or any of
its subsidiaries that, based on the amounts involved or the defenses available
to the Company, would have a material adverse effect on the financial position
of the Company except for the pending tax litigation relating to Terra
Resources, Inc. ("Terra"), a former subsidiary of the Company, as explained in
Note 7 of the Notes to Consolidated Financial Statements. See "Risk Factors -
Income Tax Matters" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Financial Condition, Liquidity and Capital
Resources."

The Company is currently involved in three administrative proceedings
brought by Region VII of the EPA. See "Business - Matters Involving the
Environment".

EXPERTS

The Consolidated Financial Statements and financial statement schedules of
Farmland as of August 31, 1993 and 1994, and for each of the years in the three-
year period ended August 31, 1994 included herein and elsewhere in the
Registration Statement, have been included herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein and upon the authority
of such firm as experts in accounting and auditing. The report of KPMG Peat
Marwick LLP covering the Consolidated Financial Statements contains an
explanatory paragraph concerning income tax adjustments proposed by the Internal
Revenue Service relating to Terra.

QUALIFIED INDEPENDENT UNDERWRITER

Interstate/Johnson Lane Corporation, a member of the NASD, has participated
as a qualified independent underwriter in the "due diligence" review with
respect to the preparation of this Prospectus. See "Plan of Distribution"
regarding the exception from pricing by the qualified independent underwriter.

MANAGEMENT

The directors of Farmland are as follows:

<TABLE>
<CAPTION>
Total
Expiration Years of
of Service
Age as of Positions Present as
August 31, Held With Term as Board
Name 1994 Farmland Director Member Business Experience During Last Five Years

<S> <C> <C> <C> <C> <C>
Albert J. Shivley 51 Chairman 1995 10 General Manager--American Pride Co-op
of the Association, Brighton, Colorado, a local
Board cooperative association of farmers and ranchers.

H. D. Cleberg 55 President 1997 4 Mr. Cleberg has been with Farmland since 1968.
and Chief He was named as president-elect in February 1991
Executive and became President in April 1991. From
Officer September 1990 to January 1991 he served as
Senior Vice President and Chief Operating
Officer, Agricultural Group. From April 1989 to
August 1990 he served as Executive Vice
President, Operations.

Otis H. Molz 63 Vice 1997 11 Producer--Deerfield, Kansas. Mr. Molz has served
Chairman as Chairman of the Board of the National Bank for
and Vice Cooperatives since January 1993. He served as
President Chairman of the Board of Directors of Farmland
Industries, Inc. from December 1991 to December
1992. He served as First Vice President of the
National Bank for Cooperatives from January 1990
to January of 1993. He was Second Vice Chairman
from January 1, 1989 to January 1, 1990.

Lyman Adams, Jr. 43 1995 2 General Manager--Cooperative Grain and Supply,
Hillsboro, Kansas, a local cooperative
association of farmers and ranchers.

Ronald J. Amundson 50 1997 6 General Manager--Central Iowa Cooperative,
Jewell, Iowa, a local cooperative association of
farmers and ranchers.

Baxter Ankerstjerne 58 1996 4 Producer--Peterson, Iowa. Since December 1988
Mr. Ankerstjerne has served as Chairman of the
Board of Directors of Farmers Cooperative,
Association, Marathon, Iowa, a local cooperative
association of farmers and ranchers.

Jody Bezner 53 1997 3 Producer--Texline, Texas.

Richard L. Detten 60 1996 7 Producer--Ponca City, Oklahoma.

Steven Erdman 44 1995 2 Producer--Bayard, Nebraska

Warren Gerdes 46 1995 1 General Manager--Farmers Cooperative Elevator
Company, Buffalo Lake, Minnesota, a local
cooperative association of farmers and ranchers.

Ben Griffith 45 1995 5 General Manager--Central Cooperatives, Inc.,
Pleasant Hill, Missouri, a local cooperative
association of farmers and ranchers.

Gail D. Hall 52 1997 6 General Manager--Lexington Cooperative Oil
Company, Lexington, Nebraska, a local cooperative
association of farmers and ranchers.

Jerome Heuertz 53 1997 * General Manager--Farm Service Cooperative,
Council Bluffs, Iowa, a local cooperative
association of farmers and ranchers.

Barry Jensen 49 1996 4 Producer--White River, South Dakota. Since May
1989 Mr. Jensen has served as President of
Farmers Co-op Oil Association, Winner, South
Dakota, a local cooperative association of
farmers and ranchers.

Greg Pfenning 45 1997 2 Producer--Hobart, Oklahoma. Director of Hobart &
Roosevelt Cooperative, a local cooperative
association of farmers and ranchers.

Vonn Richardson 61 1996 7 Producer--Plains, Kansas. President of The
Plains Equity Exchange and Cooperative Union,
Plains, Kansas, a local cooperative association
of farmers and ranchers.

Monte Romohr 41 1996 4 Producer--Gresham, Nebraska. In March 1988,
Mr. Romohr became President of Farmers Co-op
Business Association, Shelby, Nebraska, a local
cooperative association of farmers and ranchers.

Joe Royster 42 1996 1 General Manager--Dacoma Farmers Cooperative,
Inc., Dacoma, Oklahoma, a local cooperative
association of farmers and ranchers.

Paul Ruedinger 64 1995 11 Producer--Van Dyne, Wisconsin.

Raymond J. Schmitz 63 1996 7 Producer--Baileyville, Kansas

Theodore J. Wehrbein 49 1995 8 Producer--Plattsmouth, Nebraska. Past Director
of Nehawka Farmers Cooperative Company,
Nehawka, Nebraska, a local cooperative
association of farmers and ranchers.

Robert Zinkula 64 1996 4 Producer--Mount Vernon, Iowa. Secretary and
Treasurer of Linn Cooperative Oil Company,
Marion, Iowa, a local cooperative association of
farmers and ranchers.

*Mr. Heuertz was elected to the Farmland Industries, Inc. Board of Directors
in December 1994.
</TABLE>

Directors are elected for a term of three years by the shareholders
of Farmland at its annual meeting. The expiration dates for such three-year
terms are sequenced so that about one-third of Farmland's Board of Directors is
elected each year. H. D. Cleberg is serving as director-at-large; the
remaining twenty-one directors were elected from nine geographically defined
districts in Farmland's territory. The executive committee consists of Ronald
Amundson, Ben Griffith, Otis Molz, Monte Romohr, Albert Shivley and
H. D. Cleberg. With the exception of H.D. Cleberg, President and Chief
Executive Officer, members of the executive committee serve as chairman of
standing committees of the Board of Directors as follows: Ronald Amundson,
corporate responsibility committee; Ben Griffith, audit committee; Otis Molz,
compensation committee; Monte Romohr, finance committee; and Albert Shivley,
nominating committee.

The executive officers of Farmland are:
<TABLE>
<CAPTION>

Age as of
August 31,
Name 1994 Principal Occupation and Other Positions

<S> <C> <C>
J. F. Berardi 51 Executive Vice President and Chief Financial Officer - Mr. Berardi
joined Farmland March 1, 1992 to serve in his present position.
Mr. Berardi served as Executive Vice President and Treasurer of
Harcourt Brace Jovanovich, Inc., a diversified Fortune 200 company,
and was a member of its Board of Directors from 1988 until 1990.
From 1986 to 1989 Mr. Berardi served as Senior Vice President and
Chief Financial Officer of Harcourt Brace Jovanovich, Inc.

H. D. Cleberg 55 President and Chief Executive Officer - Mr. Cleberg has been with
Farmland since 1968. He was appointed to his present position
effective April 1991. From September 1990 to March 1991 he served as
Senior Vice President and Chief Operating Officer. From April 1989

to August 1990 he served as Executive Vice President, Operations. From
October 1987 to March 1989 he served as Vice President and
General Manager, Fertilizer and Ag Chemicals Operations, and from
July 1986 to September 1987 he served as President, Farmland Foods.
Prior to July 1986 he held several executive management positions,
most recently Vice President, Field Services and Operations Support.

S. P. Dees 51 Executive Vice President, Farmland and Director General of Farmland
Industrias, S.A. de C.V. - Mr. Dees was appointed to his present
position in September 1993. From October 1990 to September 1993 he
served as Executive Vice President, Administrative Group and General
Counsel. Mr. Dees joined Farmland in October 1984, serving as Vice
President and General Counsel, Law and Administration until September
1990. He was a partner in the law firm of Stinson, Mag and Fizzell,
Kansas City, Missouri, from 1971 until his employment by Farmland.

G. E. Evans 50 Senior Vice President, Agricultural Production Marketing/Processing -
Mr. Evans has been with Farmland since 1971. He was appointed to his
present position in January 1992. From April 1991 to January 1992 he
served as Senior Vice President, Agricultural Inputs. He served as
Executive Vice President, Agricultural Marketing from October 1990 to
March 1991. He served as Executive Vice President, Operations from
January 1990 to September 1990. He served as Vice President,
Farmland Industries and President, Farmland Foods from October 1987
to December 1989. He served as Vice President and General Manager,
Feed Operations from June 1986 to September 1987, and from May 1983
to June 1986 he served as Vice President, Feed Operations.

R. W. Honse 51 Executive Vice President, Agricultural Inputs Operations - Mr. Honse has
been with Farmland since September 1983. He was appointed to his
present position in January 1992, and served as Executive Vice
President, Agricultural Operations from October 1990 to January 1992.
From April 1989 to September 1990, he served as Vice President and
General Manager, Crop Production Operations. From July 1986 to March
1989 he served as General Manager of the Florida phosphate fertilizer
complex.

B. L. Sanders 53 Vice President and Corporate Secretary - Dr. Sanders has been with
Farmland since 1968. He was appointed to his present position in
September 1991. From April 1990 to September 1991 he served as Vice
President, Strategic Planning and Development. From October 1987 to
March 1990 he served as Vice President, Planning. From July 1986 to
September 1987 he served as Director, Management Information
Services. From July 1984 to June 1986 he served as Executive
Director, Corporate Strategy and Research and from 1968 to June 1984,
as Executive Director, Economic and Market Research.

EXECUTIVE COMPENSATION
</TABLE>

The following table sets forth the annual compensation awarded to, earned
by, or paid to the Chief Executive Officer and the Company's next four most
highly compensated executive officers for services rendered to the Company in
all capacities during 1994, 1993 and 1992.

<TABLE>
<CAPTION>
Annual Compensation
Employee
Year Variable Other
Name and Ending Compensation Annual
Principal Position August 31 Salary Plan Compensation
<S> <C> <C> <C> <C>
H. D. Cleberg, . . . . . . . . . . 1994 $ 439,728 $ 338,481
President and . . . . . . . . . . 1993 $ 433,506
Chief Executive Officer 1992 $ 408,972 $ 185,745

G. E. Evans, . . . . . . . . . . 1994 $ 278,304 $ 217,761
Senior Vice President 1993 $ 278,304
Agricultural Production 1992 $ 255,900 $ 114,257
Marketing/Processing

R. W. Honse, . . . . . . . . . . 1994 $ 251,532 $ 205,206
Executive Vice President 1993 $ 231,964
Agricultural Inputs Operations 1992 $ 204,686 $ 94,433

J. F. Berardi, . . . . . . . . . . 1994 $ 216,252 $ 146,576
Executive Vice President 1993 $ 206,016
and Chief Financial Officer 1992 $ 100,008 $ 28,075

S. P. Dees, . . . . . . . . . . 1994 $ 205,066 $ 119,093 $ 124,138(a)
Executive Vice President 1993 $ 205,366
Farmland and Director 1992 $ 195,738 $ 51,521
General of Farmland
Industrias, S.A. de C.V.

<FN>
(a) Mr. Dees received a differential remuneration and reimbursements for
taxes in connection with foreign assignments.
</TABLE>

An Annual Employee Variable Compensation Plan, a Long-Term Management
Incentive Plan, and an Executive Deferred Compensation Plan have been
established by the Company to meet the competitive salary programs of
other companies, and to provide a method of compensation which is based
on the Company's performance.

Under the Company's Annual Employee Variable Compensation Plan, all
regular salaried employees totalcompensation is based on a combination of base
and variable pay. The variable compensation payment isdependent upon the
employee's position, the performance of the Company for the fiscal year or
other performance criteria of the individual's operating unit. Variable
compensation is awarded only in years thatthe Company achieves a performance
level, approved each year by the Board of Directors. The Company intends
for its total cash compensation (base plus variable) to be competitive,
recognizing that in the event the Company fails to achieve a predetermined
threshold level of performance, the base pay alone will place the employees
well under market rates. This system of variable compensation allows the
company to keep its fixed costs (base salaries) lower, and only increase
payroll costs consistent with the Company's ability to pay. Amounts accrued
under this plan for the years ended August 31, 1994, 1993 and 1992 amounted
to $17,779,000, $-0- and $10,033,000, respectively. Distributions under
this plan are made annually after the close of each fiscal year.

Under the Long-Term Management Incentive Plan, the Company's executive
management employees are paid cash bonus amounts determined by a formula which
takes into account the level of management and the average annual net income
of the Company over a three-year period. The current Long-Term Management
Incentive Plan is effective September 1, 1994 through August 31, 1996. For
the year ended August 31, 1994, the Company accrued $1,607,000 under this
plan. The Company's performance did not reach a level where incentive was
earned under the Long-Term Management Incentive Plan that covered the
three-year period ended August 31, 1993. As a result, operations in 1993 were
credited by $2,463,000 to reverse provisions for management incentive awards
previously charged against operations in 1992 and 1991 ($1,171,000 and
$1,292,000, respectively).

The Company's Executive Deferred Compensation Plan permits executive
employees to defer part of their salary and/or part or all of their bonus
compensation. The amount to be deferred and the period for deferral
is specified by an election made semi-annually. Payments of deferred amounts
shall begin at the earlier of the end of the specified deferral period,
retirement, disability or death. The employee's deferred account balance is
credited annually with interest at the highest rate of interest paid by the
Company on any subordinated debt certificate sold during the year. Payment
of an employee's account balance shall, at the employee's election, be a lump
sum or in ten annual installments. Amounts deferred pursuant to the plan for
the accounts of the named individuals during the fiscal years 1994, 1993 and
1992 are included in the cash compensation table.

The Company established the Farmland Industries, Inc. Employee Retirement
Plan ("Plan") in 1986 for all employees whose customary employment is at the
rate of at least 1000 hours per year. Participation in the Plan is optional
prior to age 34, but mandatory thereafter. Approximately 6,560 active and
6,540 inactive employees were participants in the Plan on August 31, 1994.
The Plan is funded by employer and employee contributions to provide lifetime
retirement income at normal retirement age 65, or a reduced income beginning
as early as age 55. The Plan also contains provisions for death and
disability benefits. The Plan has been determined qualified under the
Internal Revenue Code. The Plan is administered by a committee appointed by
the Board of Directors of Farmland, and all funds of the Plan are held by a
bank trustee in accordance with the terms of the trust agreement. It is the
present intent to continue this plan indefinitely. The Company's funding
policy is to make the maximum annual contributions to the Plan's trust fund
that can be deducted for federal income tax purposes. Company contributions
made to the Plan for the year ended August 31, 1994 were $2,885,000.
No contributions were made to the Plan in 1993 and 1992.

Payments to participants in the Plan are based upon length of
participation and compensation (limited to $150,000 annually for any employee)
reported to the Plan for the four highest of the last ten years of
employment. See note 11 of the notes to consolidated financial statements.
In 1982, the Tax Equity and Fiscal Responsibility Act (TEFRA) imposed a
maximum retirement benefit whichmay be paid by a qualified retirement plan.
At the present time, that limit is $118,000.

The following table sets forth the estimated annual benefits payable at
age 65 for members of the Retirement Plan, which benefits are not reduced
by virtue of Social Security payments:

<TABLE>
<CAPTION>
Remuneration Years of Service
Salaries 15 20 25 30
<S> <C> <C> <C> <C>
$ 100,000. . . . . . . . . $ 26,250 $ 35,000 $ 43,750 $ 52,500
125,000. . . . . . . . . 32,812 43,750 54,687 65,625
150,000. . . . . . . . . 39,375 52,500 65,625 78,750
175,000. . . . . . . . . 45,937 61,250 76,562 91,875
200,000. . . . . . . . . 52,500 70,000 87,500 105,000
225,000. . . . . . . . . 59,062 78,750 98,437 118,125*
250,000. . . . . . . . . 65,625 87,500 109,375 131,250*
275,000. . . . . . . . . 72,187 96,250 120,312* 144,375*
300,000. . . . . . . . . 78,750 105,000 131,250* 157,500*
<FN>
*Exceeds the actual amount which can be paid pursuant to the present limitations
of TEFRA.
</TABLE>

Subject to the $150,000 maximum limit on annual compensation which may be
covered by a qualified pension plan, amounts included in the cash compensation
table do not vary substantially from the compensation covered by the pension
plan.

The following table sets forth the credited years of service for the
executive officers of the Company at August 31, 1994.

Name Years of Creditable Service

H. D. Cleberg . . . . . . . . . . . . 29
G. E. Evans . . . . . . . . . . . . . 20
R. W. Honse . . . . . . . . . . . . . 20
J. F. Berardi . . . . . . . . . . . . 1
S. P. Dees . . . . . . . . . . . . . . 9

The Company established the Farmland Industries, Inc. Supplemental
Executive Retirement Plan ("SERP") effective January 1, 1994. The SERP is
intended to supplement the retirement income of executive participants
in the Farmland Industries, Inc. Employee Retirement Plan whose retirement
benefit would otherwise be reduced because of the limitation of the Internal
Revenue Code on the amount of salary which can be included in the
computation of retirement income ($150,000) or the amount of retirement
benefit which may be paid by a qualified retirement plan ($118,000).

The Company's Board of Directors has appointed an Administrative
Committee to administer the SERP. To fund the SERP, the Company purchased
cash value life insurance polices on the lives of plan participants. The
Company owns these insurance policies and has the sole right to name policy
beneficiaries. The total SERP premiums for all participants for the eight
months ended August 31, 1994 was $621,012 of which $383,736 wascharged to
operations.

The Company's obligation to pay supplemental retirement benefits under
the SERP is limited to the aggregate cash value of the life insurance policies
designated by the Administrative Committee as policies of the SERP.
If the benefits under the plan for a year would exceed the total cash value
of the policies, each participant's payment will be reduced.

CERTAIN TRANSACTIONS

The Company transacts business in the ordinary course with its directors
and with its local cooperative members with which the directors are associated
on terms no more favorable than those available to its other local cooperative
members.

INDEX TO FARMLAND CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheet, May 31, 1995 (unaudited) . . . . 71

Consolidated Statements of Operations
for the nine months
ended May 31, 1995 and May 31, 1994 (unaudited) . . . . . . 73

Consolidated Statement of Cash Flows
for the nine months
ended May 31, 1995 and May 31, 1994 (unaudited) . . . . . . 74

Notes to Unaudited Interim Consolidated
Financial Statements . . . . . . . . . . . . . . . . . . . . 75

Independent Auditors' Report . . . . . . . . . . . . . . . . 79

Consolidated Balance Sheets,
August 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . 80

Consolidated Statements of Operations
for each of the years in
the three-year period ended August 31, 1994 . . . . . . . . 82

Consolidated Statements of Cash Flows
for each of the years in
the three-year period ended August 31, 1994 . . . . . . . . 83

Consolidated Statements of
Capital Shares and Equities for
each of the years in the
three-year period ended August 31, 1994 . . . . . . . . . . 85

Notes to Consolidated Financial Statements . . . . . . . . . 86

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

ASSETS

<TABLE>
<CAPTION>
May 31
1995
(Amounts in Thousands)
<S> <C>
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . $ 0
Accounts receivable . . . . . . . . . . . . . . . 428,516
Inventories (Note 2) . . . . . . . . . . . . . . 673,052
Prepaid expenses . . . . . . . . . . . . . . . . 17,234
Other current assets . . . . . . . . . . . . . . 70,397

Total Current Assets . . . . . . . . . . . . . . . . . $ 1.189,199

Investments and Long-Term Receivables . . . . . . . . $ 178,145

Property, Plant and Equipment:
Property, plant and equipment, at cost . . . . . $ 1,312,640
Less accumulated depreciation and amortization . . 737,049

Net Property, Plant and Equipment . . . . . . . . . . . $ 575,591

Other Assets . . . . . . . . . . . . . . . . . . . $ 135,569

Total Assets . . . . . . . . . . . . . . . . . . . $ 2,078,504

<FN>
See Accompanying Notes to Unaudited Interim Condensed Consolidated Financial
Statements.
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

LIABILITIES AND EQUITIES

<TABLE>

<CAPTION>
May 31
1995
(Amounts in Thousands)
<S> <C>
Current Liabilities:
Accounts and notes payable . . . . . . . . . . $ 516,964
Current maturities of long-term debt . . . . . 41,719
Customers' advances on product purchases . . . 61,597
Other current liabilities . . . . . . . . . . . 236,372

Total Current Liabilities . . . . . . . . . . . . . $ 856,652

Long-Term Debt (excluding current maturities) . . . $ 481,547

Deferred Income Taxes (Note 1) . . . . . . . . . . $ 12,487

Minority Owners' Equity in Subsidiaries . . . . . . $ 14,048

Net Income (Note 1) . . . . . . . . . . . . . . . . $ 129,043

Capital Shares and Equities:
Common shares, $25 par value - Authorized
50,000,000 shares . . . . . . . . . . . . . $ 398,619
Other equities . . . . . . . . . . . . . . . . 186,108

Total Capital Shares and Equities . . . . . . . . . $ 584,727

Total Liabilities and Equities . . . . . . . . . . $ 2,078,504
. . . . . . . . . . . . . . . . . . . . ==========
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
May 31
May 31 1994
1995 Restated
(Amounts in Thousands)
<S> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,325,044 $ 4,981,747

Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . 4,930,754 4,700,939

Gross income . . . . . . . . . . . . . . . . . . . . . . . . $ 394,290 $ 280,808

Selling, general & administrative expenses . . . . . . . . . $ 238,539 $ 218,372

Other income (deductions):
Interest expense . . . . . . . . . . . . . . . . . . . $ (39,431) $ (38,310)

Other, net . . . . . . . . . . . . . . . . . . . . . . 14,249 10,037
Total other income (deductions) . . . . . . . . . . . . . . . $ (25,182) $ (28,273)

Income before income taxes and equity in net income
of investees and minority owners' interest in
net (income) loss of subsidiaries . . . . . . . . . . . $ 130,569 $ 34,163

Income tax (expense) (Note 1) . . . . . . . . . . . . . . . . (21,439) (2,255)

Income before equity in net income of investees
and minority owners' interest in
net (income) loss of subsidiaries . . . . . . . . . . . $ 109,130 $ 31,908

Equity in net income of investees (Note 4) . . . . . . . . . 22,410 6,242

Minority owners' interest in net (income)
loss of subsidiaries . . . . . . . . . . . . . . . . . (2,497) 5,158

Net income (Note 1) . . . . . . . . . . . . . . . . . . . . . $ 129,043 $ 43,308

<FN>
See Accompanying Notes to Unaudited Interim Condensed Consolidated Financial
Statements.
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
May 31
May 31 1994
1995 Restated
(Amounts in Thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 129,043 $ 43,308
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 49,437 49,591
Equity in net income of investees . . . . . . . . . . . . . . (22,410) (6,242)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . 7,346 (3,734)
Changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . (15,031) (54,617)
Inventories . . . . . . . . . . . . . . . . . . . . . . . (121,440) 23,380
Other current assets . . . . . . . . . . . . . . . . . . 12,046 (39,007)
Accounts payable . . . . . . . . . . . . . . . . . . . . (29,039) 54,916
Advances on product purchases . . . . . . . . . . . . . . 37,159 5,448
Other current liabilities . . . . . . . . . . . . . . . . 39,890 48,420
Net cash provided by operating activities . . . . . . . . . . . . . . . . $ 87,001 $ 121,463

Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . $ (86,527) $ (47,782)
Proceeds from disposal of investments

and notes receivable . . . . . . . . . . . . . . . . . . . . . 37,626 27,056
Acquisition of investments and notes receivable . . . . . . . . . . (18,968) (14,935)
Acquisition of businesses . . . . . . . . . . . . . . . . . . . . (2,200) (33,251)
Proceeds from sale of fixed assets . . . . . . . . . . . . . . . . 2,321 14,399
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 -0-
Net cash used in investing activities . . . . . . . . . . . . . . . . . . $ (67,453) $ (54,513)

Cash flows from financing activities:
Net decrease of demand loan certificates . . . . . . . . . . . . . $ (7,137) $ (1,484)
Proceeds from bank loans and notes payable . . . . . . . . . . . . 370,686 1,183,819
Payments on bank loans and notes payable . . . . . . . . . . . . . (460,762) (1,287,651)
Proceeds from issuance of subordinated debt certificates . . . . . 34,461 43,868
Payments for redemption of subordinated debt certificates . . . . . (18,632) (29,026)
Increase of checks and drafts outstanding . . . . . . . . . . . . . 56,306 -0-
Payments for redemption of equities . . . . . . . . . . . . . . . . (12,335) (158)
Payments of patronage refunds and dividends . . . . . . . . . . . . (26,308) -0-
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 2.309
Net cash used in financing activities . . . . . . . . . . . . . . . . . . $ (63,632) $ (88,323)

Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . $ (44,084) $ (21,373)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . 44,084 28,373

Cash and cash equivalents at end of period . . . . . . . . . . . . . . . $ -0- $ 7,000
FN>

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial
Statements

</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) INTERIM FINANCIAL STATEMENTS

Unless the context requires otherwise, (i) "Farmland" or the "Company"
herein refers to Farmland Industries, Inc. and its consolidated subsidiaries,
and (ii) all references herein to "year" or "years" are to fiscal years ended
August 31.

The information included in these Condensed Consolidated Financial
Statements of Farmland reflects all adjustments (consisting only of normal
recurring accruals) which, in the opinion of management, are necessary for a
fair statement of the results for the interim periods presented.

In accordance with the bylaws of Farmland and its cooperative subsidiaries,
the member-sourced portion of income is determined annually and distributed to
members of Farmland as patronage refunds. The member-sourced portion of such
income is determined on the basis of the quantity or value of business done by
Farmland during the year with or for patrons entitled to receive patronage
refunds. As this determination is made only after the end of the fiscal year,
and since the appropriation of earned surplus is dependent on the determination
of the amount of patronage refunds, and in view of the fact that the portion of
the annual patronage refund to be paid in cash and Farmland equity (common
stock, associate member common stock or capital credits) is determined (by the
Farmland Board of Directors at its discretion) after the amount of the annual
patronage refund has been determined, Farmland makes no provision for patronage
refunds in its interim financial statements. Therefore, the amount of net
income has been reflected as a separate item in the accompanying May 31, 1995
condensed consolidated balance sheet.

As patronage refunds are an integral part of the computation of income
taxes, the Company historically has not provided for income taxes in its interim
period financial statements. However, in accordance with generally accepted
accounting principles, the Company commenced (effective with the 1995 fiscal
year) including a provision for estimated income taxes in its interim financial
statements. For the nine months ended May 31, 1995, the Company estimated an
effective tax rate based on historic effective rates. The actual effective rate
for 1995 may be subject to revision. Based on the effective tax rate for the
1994 fiscal year, the Condensed Consolidated Financial Statements for the nine
months ended May 31, 1994 has been restated to include an interim income tax
expense of $379,000.

(2) INVENTORIES

Major components of inventories at May 31, 1995 are as follows:
<TABLE>
<CAPTION>
May 31
1995
(Amounts in Thousands)
<S> <C>
Finished and in-process products . . . . . $ 362,923
Materials . . . . . . . . . . . . . . . . 62,498
Supplies . . . . . . . . . . . . . . . . . 44,988
Beef . . . . . . . . . . . . . . . . . . 36,194
Grain . . . . . . . . . . . . . . . . . . 166,449

$ 673,052
</TABLE>

Grain inventories are valued at market adjusted for the net unrealized
gains or losses on open grain contracts. Crude oil, refined petroleum products,
cattle and beef by-products are valued at the lower of last-in, first-out (LIFO)
cost or market. Other inventories are valued at the lower of first-in,
first-out (FIFO) cost or market. Supplies are valued at cost.

In applying the lower of cost or market valuation method in the case of
petroleum LIFO inventory, the general practice is modified to conform to the
integral view of interim financial statements. Accordingly, a seasonal market
value decline below cost of LIFO inventories, at an interim date, which is
reasonably expected to be restored by year-end, is not recognized in interim
results of operations since no loss is expected to be incurred in the annual
period. At May 31, 1995, the carrying value of petroleum inventories stated
under the LIFO method was $113,345,000. This exceeded the market value of such
inventory by $1,936,000. However, based on historical prices of energy products
and seasonal market price variations, the market value decline below cost is
expected to be a temporary seasonal price fluctuation.

Had the lower of first-in, first-out (FIFO) cost or market been used to
value these petroleum products, inventories at May 31, 1995 would have been
lower by $3,276,000.

The carrying value of beef inventories stated under the LIFO method was
$28,612,000 at May 31, 1995. The LIFO method of accounting for beef inventories
had no effect on the carrying value of inventories or on the income reported for
the nine months ended May 31, 1995 because market value of these inventories was
lower than LIFO or FIFO cost.

(3) CONTINGENCIES

In July 1983, Farmland sold the stock of Terra Resources, Inc. ("Terra"), a
wholly owned subsidiary engaged in oil and gas exploration and production
operations, and exited its oil and gas exploration and production activities.
The gain from the sale of Terra amounted to $237,200,000 for tax reporting
purposes.

On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
notice to Farmland asserting deficiencies in federal income taxes (exclusive of
statutory interest thereon) in the aggregate amount of $70,800,000. The
asserted deficiencies relate primarily to the Company's tax treatment of a
$237,200,000 gain resulting from its sale, in July 1983, of the stock of Terra
and the IRS's contention that Farmland incorrectly treated the Terra sale gain
as income against which certain patronage-sourced operating losses could be
offset. The statutory notice further asserts that Farmland incorrectly
characterized for tax purposes gains aggregating approximately $14,600,000, and
a loss of approximately $2,300,000, from dispositions of certain other assets
and that Farmland was not entitled to a claimed intercorporate dividends-
received deduction with respect to a $24,800,000 distribution received in 1983
from Terra.

If the United States Tax Court decides in favor of the IRS on all
unresolved issues raised in the statutory notice, Farmland would have additional
federal and state income tax liabilities aggregating approximately $85,800,000
plus accumulating statutory interest thereon (approximately $178,300,000,
before tax benefits of the interest deduction, through August 31, 1995), or
$264,100,000 in the aggregate at August 31, 1995. In addition, such a decision
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $5,000,000 plus applicable statutory interest
thereon. Finally, the additional federal and state income taxes and accrued
interest thereon, which would be owed based on an adverse decision, would become
immediately due and payable unless the Company appealed the decision and posted
the requisite bond to stay assessment and collection.

The liability resulting from an adverse decision would be charged to
current operations and would have a material adverse effect on the Company and
may affect its ability to pay, when due, principal and interest on the
Subordinated Debt Certificates, Demand Loan Certificates and the Company's other
indebtedness. In order to pay any such tax claim, the Company would have to
consider new financing arrangements, including the incurrence of indebtedness
and the sale of assets. Moreover, the Company would be required to renegotiate
the Credit Agreement with its bank lenders, as well as other existing financing
agreements with certain other parties, not only to permit such new financing
arrangements, but also to cure events of default under the Credit Agreement and
certain of such other existing agreements and to maintain compliance with
various requirements of the Credit Agreement and such other existing financing
agreements, including working capital and funded indebtedness provisions, in
order to avoid default thereunder. No assurance can be given that such
financing arrangements or such renegotiation would be successfully concluded.

No provision has been made in the consolidated financial statements for
federal or state income taxes (or interest thereon) in respect of the IRS claims
described above. Farmland believes that it has meritorious positions with
respect to all of these claims.

The Company currently is aware of probable obligations for environmental
matters at 20 properties. As of May 31, 1995, the Company has made an
environmental accrual of $8,439,000. The Company periodically reviews and, as
appropriate, revises its environmental accruals. Based on current information
and regulatory requirements, the Company believes that the accruals established
for environmental expenditures are adequate.

The Company is currently involved in three administrative proceedings
brought by Region VII of the Environmental Protection Agency ("EPA") with
respect to alleged violations under the Clean Air Act, the Emergency Planning
and Community Right-to-Know Act and RCRA at the Coffeyville refinery. The
Company is currently negotiating with the EPA concerning these matters and
believes that such negotiations may result in compromise settlements, including
the possible implementation of a Supplemental Environmental Project in
connection with the Clean Air Act proceeding. Absent such settlements, the
Company may contest the EPA's allegations. Accordingly, no provision has been
made in the Company's financial statements for these proposed penalties.

Specifically, the three administrative proceedings are described as
follows:

(1) The Company is a party to an administrative enforcement action
brought by Region VII of the EPA which alleges violations of the
Emergency Planning and Community Right-to-Know Act and the release
reporting requirements of CERCLA at its Coffeyville, Kansas
refinery. This proceeding involves alleged violations of release
reporting requirements and seeks a civil penalty in the amount of
$350,000.

(2) The Company is a party to an administrative enforcement action
brought by Region VII of the EPA which alleges violations of RCRA at
its Coffeyville, Kansas refinery. In this proceeding, the EPA has
proposed a civil penalty in the amount of approximately $1.4
million.

(3) The Company has been informed by the U.S. Department of Justice of
its intent to bring an enforcement action alleging certain
violations of the Clean Air Act at its Coffeyville, Kansas refinery.
The U.S. Department of Justice has informed the Company that it
will seek a civil penalty of at least $1.6 million.

(4) SUMMARIZED FINANCIAL INFORMATION OF INVESTEES ACCOUNTED FOR BY THE EQUITY
METHOD

Summarized financial information of investees accounted for by the equity
method for nine months ended May 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
May 31 May 31
1995 1994
(Amounts in Thousands)
<S> <C> <C>
Net sales . . . . . . . . . . . . $ 888,028 $ 585,263
Net Income . . . . . . . . . . . $ 44,512 $ 14,053
Farmland's equity in net income . $ 22,410 $ 6,242
</TABLE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Farmland Industries, Inc.:

We have audited the accompanying consolidated balance sheets of Farmland
Industries, Inc. and subsidiaries as of August 31, 1994 and 1993, and the
related consolidated statements of operations, cash flows and capital shares and
equities for each of the years in the three-year period ended August 31, 1994.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Farmland
Industries, Inc. and subsidiaries as of August 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended August 31, 1994, in conformity with generally accepted
accounting principles.

As discussed in Note 7.a. to the Consolidated Financial Statements, the Internal
Revenue Service (IRS) has examined the Company's tax returns for the years ended
August 31, 1984 and 1983, and has proposed certain adjustments. Should the IRS
ultimately prevail, the federal and state income taxes and statutory interest
thereon could be significant. Farmland believes it has meritorious positions
with respect to such claims and, based upon the opinion of special tax counsel,
management believes it is more likely than not that the courts will ultimately
conclude that Farmland's treatment of such items was substantially, if not
entirely, correct. The ultimate outcome of this matter can not presently be
determined. Therefore, no provision for such income taxes and interest has been
made in the accompanying Consolidated Financial Statements.

KPMG PEAT MARWICK LLP

Kansas City, Missouri
October 21, 1994 except as to Note 7.a.,
which is as of September 5, 1995

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
August 31
1994 1993
Amounts in Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 44,084 $ 28,373
Accounts receivable - trade . . . . . . . . . . . . . . . . . . . . 394,906 320,980
Inventories (note 3) . . . . . . . . . . . . . . . . . . . . . . . 538,314 496,690
Other current assets . . . . . . . . . . . . . . . . . . . . . . . 119,139 69,357

Total Current Assets . . . . . . . . . . . . . . . . . . . . . $ 1,096,443 $ 915,400

Investments and Long-Term Receivables (note 4) . . . . . . . . . . . . . $ 189,601 $ 183,312
Property, Plant and Equipment (notes 5 and 6):
Property, plant and equipment, at cost . . . . . . . . . . . . . . $ 1,202,159 $ 1,154,343
Less accumulated depreciation and amortization . . . . . . . . . . 700,869 649,965

Net Property, Plant and Equipment . . . . . . . . . . . . . . . . . $ 501,290 $ 504,378

Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 139,297 $ 116,891

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.926,631 $ 1,719,981

<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND EQUITIES
<TABLE>
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Current Liabilities:
Demand loan certificates . . . . . . . . . . . . . . . . . . . . . . $ 23,158 $ 29,860
Short-term notes payable (note 6) . . . . . . . . . . . . . . . . . . 279,137 256,655
Current maturities of long-term debt (note 6) . . . . . . . . . . . . 27,840 31,947
Accounts payable - trade . . . . . . . . . . . . . . . . . . . . . . 246,181 217,982
Other current liabilities (note 9) . . . . . . . . . . . . . . . . . 229,423 118,437

Total Current Liabilities . . . . . . . . . . . . . . . . $ 805,739 $ 654,881

Long-Term Debt (excluding current maturities) (note 6) . . . . . . . . . $ 517,806 $ 485,861

Deferred Income Taxes (note 7) . . . . . . . . . . . . . . . . . . . . . $ 6,340 $ 2,169

Minority Owners' Equity in Subsidiaries (note 8) . . . . . . . . . . . . $ 11,733 $ 15,363

Capital Shares and Equities (note 9):
Preferred shares, $25 par value--Authorized 8,000,000 shares,
148,069 shares issued and outstanding (148,325 shares in 1993) . . . $ 3,702 $ 3,708
Common shares, $25 par value -- Authorized 50,000,000 shares,
14,542,478 shares issued and outstanding
(15,199,833 shares in 1993) . . . . . . . . . . . . . . . . . . . 363,562 379,996
Associate member common shares (nonvoting), $25 par value --
Authorized 2,000,000 shares, 370,707 shares issued and
outstanding (327,828 shares in 1993) . . . . . . . . . . . . . . . 9,268 8,196
Earned surplus and other equities . . . . . . . . . . . . . . . . . . 208,481 169,807

Total Capital Shares and Equities . . . . . . . . . . . . $ 585,013 $ 561,707

Contingent Liabilities and Commitments (notes 4, 6, 7, 10 and 11)

Total Liabilities and Equities . . . . . . . . . . . . . . . . . . . . . $ 1,926,631 $ 1,719,981
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended August 31
1994 1993 1992
(Amounts in Thousands)
<S> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . $ 6,677,933 $ 4,722,940 $ 3,429,307
Cost of sales . . . . . . . . . . . . . . . . . . . 6,284,084 4,470,290 3,099,316

Gross income . . . . . . . . . . . . . . . . . . . $ 393,849 $ 252,650 $ 329,991

Selling, general and administrative expenses . . . . . $ 305,279 $ 223,792 $ 236,065

Other income (deductions):
Interest expense . . . . . . . . . . . . . . . . $ (51,485) $ (36,764) $ (27,965)
Interest income . . . . . . . . . . . . . . . . . 6,170 4,189 2,667
Equity in income (loss) of investees (note 4) . . 10,878 (12,394) (2,341)
Provision for loss on disposition of assets
(note 17) . . . . . . . . . . . . . . . . . -0- (29,430) -0-
Other, net (note 16) . . . . . . . . . . . . . . 20,111 9,536 4,217
$ (14,326) $ (64,863) $ (23,422)

Income (loss) before income taxes, minority
owners' interest and extraordinary item . . . . . $ 74,244 $ (36,005) $ 70,504
Income tax (expense) benefit (note 7) . . . . . . . . . (4,890) 6,433 (9,458)
Minority owners' interest in loss (income)
of subsidiaries . . . . . . . . . . . . . . . . . 4,522 (828) -0-
Income (loss) before extraordinary item . . . . . . . . $ 73,876 $ (30,400) $ 61,046
Extraordinary item - Utilization of loss
carryforward (note 7) . . . . . . . . . . . . . . -0- -0- 1,267
Net income (loss) . . . . . . . . . . . . . $ 73,876 $ (30,400) $ 62,313

Distribution of net income (note 9):
Patronage refunds:

Farm supply patrons . . . . . . . . . . . . $ 59,685 $ -0- $ 16,229
Pork marketing patrons . . . . . . . . . . . 10,927 -0- 1,245
The Cooperative Finance
Association's patrons . . . . . . . . . -0- 1,650 1,482
$ 70,612 $ 1,650 $ 18,956
Earned surplus and other equities . . . . . . . . . . . 3,264 (32,050) 43,357
$ 73,876 $ (30,400) $ 62,313
<FN>
See Notes to Consolidated Financial Statements
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended August 31
1994 1993 1992
(Amounts in Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . $ 73,876 $ (30,400) $ 62,313
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . 62,960 57,730 50,784
Provision for loss on disposition of assets . . . -0- 29,430 -0-
(Gain) on disposition of fixed assets . . . . . . (1,794) (385) (1,181)
Patronage refunds received in equities . . . . . (2,171) (2,241) (2,320)
Proceeds from redemption of patronage equities . 573 1,731 7,727
Equity in (income) loss of investees . . . . . . (10,878) 12,394 2,341
Deferred income tax (benefit) expense . . . . . . (5,034) (3,463) 1,752
Other . . . . . . . . . . . . . . . . . . . 770 7,604 3,786
Changes in assets and liabilities (exclusive
of assets and liabilities of businesses acquired):
Accounts receivable . . . . . . . . . . . . (12,079) (92,024) 9,095
Inventories . . . . . . . . . . . . . . . . (4,692) (65,402) (27,483)
Other assets . . . . . . . . . . . . . . . . (45,990) (30,154) 11,490
Accounts payable . . . . . . . . . . . . . . 17,884 19,630 (48,425)
Other liabilities . . . . . . . . . . . . . 32,617 (17,981) 10,722

Net cash provided by (used in) operating activities . . $ 106,042 $ (113,531) $ 80,601

CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to borrowers by finance companies . . . . . . $ -0- $ (624,618) $ (733,403)
Collections from borrowers by finance companies . . . . -0- 631,668 685,383
Acquisition of businesses . . . . . . . . . . . . . . . (35,790) (10,500) -0-
Proceeds from disposal of investments and
notes receivable . . . . . . . . . . . . . . . . 34,577 12,115 71,582
Acquisition of investments and notes receivable . . . . (22,117) (50,378) (58,979)
Capital expenditures . . . . . . . . . . . . . . . . . (69,776) (98,238) (79,954)
Proceeds from sale of fixed assets . . . . . . . . . . 14,785 10,900 8,191
Distribution from joint venture, net . . . . . . . . . -0- -0- 29,324
Proceeds from sale of assets to
joint venture partner . . . . . . . . . . . . . . 2,310 -0- 62,104
Proceeds from disposition of subsidiary (note 2) . . . -0- 87,227 -0-
Other . . . . . . . . . . . . . . . . . . . 5,547 (2,140) -0-

Net cash used in investing activities . . . . . . . . . $ (70,464) $ (43,964) $ (15,752)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease of demand loan certificates . . . . . . . $ (6,702) $ (13,224) $ (13,712)
Proceeds from bank loans and notes payable . . . . . . 888,088 916,799 669,608
Payments of bank loans and notes payable . . . . . . . (924,731) (777,268) (711,101)
Proceeds from issuance of subordinated
debt certificates . . . . . . . . . . . . . . . 57,636 72,423 57,780
Payments for redemption of subordinated
debt certificates . . . . . . . . . . . . . . . (33,034) (16,490) (22,557)
Payments for redemption of equities . . . . . . . . . . (3,244) (13,505) (8,046)
Payments of patronage refunds and dividends . . . . . . -0- (17,946) (12,204)
Other . . . . . . . . . . . . . . . . . . . 2,120 340 (3,853)

Net cash provided by (used in) financing activities . . $ (19,867) $ 151,129 $ (44,085)

Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . $ 15,711 $ (6,366) $ 20,764
Cash and cash equivalents at beginning of year . . . . 28,373 34,739 13,975
Cash and cash equivalents at end of year . . . . . . . $ 44,084 $ 28,373 $ 34,739

SUPPLEMENTAL SCHEDULE OF CASH PAID
FOR INTEREST AND INCOME TAXES:

Interest . . . . . . . . . . . . . . . . . . . $ 38,425 $ 41,136 $ 35,626

Income taxes (net of refunds) . . . . . . . . . . . . . $ 9,746 $ 1,479 $ 12,181

SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:

Equities and minority owners' interest
called for redemption . . . . . . . . . . . . . . $ 12,935 $ -0- $ 13,365
Transfer of assets in exchange for
investment in joint ventures . . . . . . . . . . $ 309 $ -0- $ 63,911
Issuance of Farmland equities to minority owners'
of Foods . . . . . . . . . . . . . . . . . . . $ -0- $ -0- $ 16,680
Appropriation of current year's net income
as patronage refunds . . . . . . . . . . . . . . $ 70,612 $ -0- $ 18,956
Acquisition of businesses:
Fair value of net assets acquired . . . . . . . . $ 35,539 $ 1,414 $ 30,321
Goodwill . . . . . . . . . . . . . . . . . . . 1,094 16,086 20,976
Minority owners' investment . . . . . . . . . . . (843) (7,000) -0-

. . . . . . . . . . . . . . . . . . . $ 35,790 $ 10,500 $ 51,297
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CAPITAL SHARES AND EQUITIES

<TABLE>
<CAPTION>
Years Ended August 31, 1994, 1993 and 1992
Earned Total
Associate Surplus Capital
Member And Shares
Preferred Common Common Other And
Shares Shares Shares Equities Equities
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
BALANCE AT AUGUST 31, 1991 . . . . . . . . . $ 3,733 $ 330,646 $ 7,680 $155,305 $ 497,364
Issue, redemption and cancellation of equities (20) 44,297 (15) 13 44,275
Appropriation of current year's net income . -0- -0- -0- 62,313 62,313
Transfers to current liabilities . . . . . . -0- (12,045) (6) (19,329) (31,380)
Transfers from minority owners' equity . . . -0- 5,570 -0- 10,072 15,642
Dividends on preferred stock . . . . . . . . -0- -0- -0- (5) (5)
Distribution to farm supply patrons in common
stock, associate member common stock
and other equities . . . . . . . . . . -0- 15,807 873 (16,760) (80)
Exchange of common stock, associate member
common stock and other equities . . . . -0- (7,892) (356) 8,248 -0-

BALANCE AT AUGUST 31, 1992 . . . . . . . . . $ 3,713 $ 376,383 $ 8,176 $ 199,857 $ 588,129
Issue, redemption and cancellation of equities (5) 6,740 (49) (1,058) 5,628
Appropriation of current year's net loss . . -0- -0- -0- (30,400) (30,400)
Transfers to current liabilities . . . . . . -0- -0- -0- (1,650) (1,650)
Exchange of common stock, associate member
common stock and other equities . . . . -0- (3,127) 69 3,058 -0-

BALANCE AT AUGUST 31, 1993 . . . . . . . . . $ 3,708 $ 379,996 $ 8,196 $ 169,807 $ 561,707
Issue, redemption and cancellation of equities (6) (364) 17 (3,475) (3,828)
Appropriation of current year's net income . -0- -0- -0- 73,876 73,876
Patronage refund payable in cash transferred
to current liabilities . . . . . . . . -0- -0- -0- (26,552) (26,552)
Base capital redemptions transferred
to current liabilities . . . . . . . . -0- (8,628) (112) -0- (8,740)
Other equity redemptions transferred
to current liabilities . . . . . . . . -0- -0- -0- (3,362) (3,362)
Transferred to liabilities . . . . . . . . . -0- -0- -0- (8,084) (8,084)
Dividends on preferred stock . . . . . . . . -0- -0- -0- (4) (4)
Exchange of common stock, associate member
common stock and other equities . . . . -0- (7,442) 1,167 6,275 -0-

BALANCE AT AUGUST 31, 1994 . . . . . . . . . $ 3,702 $ 363,562 $ 9,268 $ 208,481 $ 585,013
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Farmland Industries, Inc. ("Farmland"), a Kansas corporation, is organized
and operated as a cooperative and its mission is to be a producer-driven and
profitable agricultural supply to consumer foods cooperative system.

Principles of Consolidation -- The consolidated financial statements
include the accounts of Farmland and all its majority-owned subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated.

Cash and Cash Equivalents -- Investments with maturities of less than three
months are included in "Cash and cash equivalents."

Investments -- Investments in companies 20% to 50% owned are accounted for
by the equity method. Other investments are stated at cost.

Accounts Receivable -- The Company uses the allowance method to account for
doubtful accounts and notes. Uncollectible accounts and notes receivable from
members are written off against the Farmland common stock held by members before
such uncollectible accounts are charged to operations.

Inventories -- Grain inventories are valued at market adjusted for net
unrealized gains or losses on open commodity contracts. Crude oil, refined
petroleum products, cattle and beef inventories are valued at the lower of
last-in, first-out cost or market. Other inventories are valued at the lower of
first-in, first-out cost or market. Supplies are valued at cost.

Property, Plant and Equipment -- These assets are stated at cost and
depreciated principally on a straight-line basis over the estimated useful life
of the individual assets (3 to 40 years). Leasehold improvements are amortized
on a straight-line basis over the terms of the individual leases (15 to 21
years).

Goodwill -- The excess of cost over the fair market value of assets of
businesses purchased is amortized on a straight-line basis over a period of 15
to 25 years.

Sales -- The Company's policy is to recognize sales at the time product is
shipped. Net margins on international grain merchandised and sales commissions
on brokered agricultural chemicals, rather than the value of such products, are
included in net sales. The gross amount of international grain merchandised in
1994 was $590,159,000. See Note 2 of the Notes to Consolidated Financial
Statements. The gross amount of agricultural chemicals brokered in the years
ended August 31, 1994, 1993 and 1992 was $172,650,000, $156,067,000 and
$143,314,000, respectively.

Environmental Costs -- Liabilities related to remediation of contaminated
properties are recognized when the related costs are considered probable and can
be reasonably estimated. Estimates of these costs are based upon currently
available facts, existing technology, undiscounted site specific costs, and
currently enacted laws and regulations. In reporting environmental liabilities,
no offset is made for potential recoveries. All liabilities are monitored and
adjusted regularly as new facts or changes in law or technology occur.
Environmental expenditures are capitalized when such costs provide future
economic benefits.

Research and Development Costs -- Total research and development costs for
the Company for the years ended August 31, 1994, 1993 and 1992 were $2,702,000,
$3,303,000 and $3,338,000, respectively.

Federal Income Taxes -- Farmland and its cooperative subsidiaries are
subject to income taxes on all income not distributed to patrons as patronage
refunds. Farmland and all its subsidiaries file consolidated federal and state
income tax returns. Effective September 1, 1993, the Company adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The
Company accounted for income taxes using the deferred method under APB Opinion
11 for the year ended August 31, 1993 and 1992.

(2) ACQUISITIONS AND DISPOSITIONS

Effective June 30, 1992, Farmland acquired substantially all the business
and assets of Union Equity Co-Operative Exchange ("Union Equity") in exchange
for 2,051,880 shares of Farmland common stock with a par value of $51,297,000
and Farmland's assumption of substantially all of Union Equity's liabilities.
The acquisition has been accounted for as a purchase and, accordingly, the
results of operations of Union Equity have been included in the Company's
consolidated financial statements from June 30, 1992. The excess of the
purchase price over the fair value of the net identifiable assets acquired
($20,976,000) has been recorded as goodwill and is being amortized on a
straight-line basis over 25 years.

During 1993, Farmland and partners organized NBPC. Farmland retained a 58%
ownership interest in NBPC by investing $10,500,000 in cash. On April 15, 1993,
NBPC acquired the business of Idle Wild Foods, Inc. ("Idle Wild"), a beef
packing plant and feedlot located in Liberal, Kansas. NBPC acquired the assets
by assuming liabilities of Idle Wild with a fair value of approximately
$130,605,000 (including bank loans which are nonrecourse to NBPC's partners).
The acquisition has been accounted for as a purchase and, accordingly, the
results of operations of NBPC have been included in the Company's consolidated
financial statements from April 15, 1993. The liabilities assumed over the fair
value of the net identifiable assets acquired has been recorded as goodwill.

To establish The Cooperative Finance Association ("CFA") as an independent
finance association for its members, on August 30, 1993 CFA purchased 10,113,000
shares of its voting common stock from Farmland for a purchase price comprised
of $1,541,000 in cash, equities of Farmland (with a par value of $2,406,000)
held by CFA and a $6,166,000 subordinated promissory note payable to Farmland
bearing interest of 5.3%. In addition, during 1993, CFA: 1) repaid its
operating loan from Farmland ($25,181,000); and, 2) purchased the lending
operations and assets of Farmland Financial Services Company for a cash payment
of $60,505,000 and a $2,128,000, 5.3% subordinated note payable to Farmland.
Farmland repaid $87,227,000 of its borrowings from the National Bank for
Cooperatives with the proceeds received from CFA. As a result of CFA's stock
purchase and amendments to CFA's bylaws, Farmland's voting control in CFA
decreased to 25%. Accordingly, effective August 31, 1993, CFA is not included
in the consolidated balance sheet of the Company.

The following unaudited financial information, for the years ended August
31, 1993 and 1992, presents pro forma results of operations of the Company as if
the disposition of CFA and the acquisitions of Union Equity and NBPC had
occurred at the beginning of each period presented. The pro forma financial
information includes adjustments for amortization of goodwill, additional
depreciation expense and increased interest expense on debt assumed in the
acquisitions. The pro forma financial information does not necessarily reflect
the results of operations that would have occurred had the Company been a single
entity which excluded CFA and included Union Equity and NBPC for the full years
1993 and 1992.
<TABLE>
<CAPTION>
August 31 (Unaudited)
1993 1992
(Amounts in Thousands)
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . $ 5,357,867 $ 5,441,303

Income (loss) before extraordinary item . . $ (44,040) $ 47,225
</TABLE>

In October 1993, the Company acquired approximately 53% of the common stock
of National Carriers, Inc. ("NCI") and increased its ownership of NCI to 79% in
August 1994. NCI is a trucking company located in Liberal, Kansas. NCI
provides substantially all the trucking service needs of NBPC. The purchase
price of NCI ($4,423,000) was paid in cash.

In December 1993, the Company acquired all the common stock of seven
international grain trading companies (collectively referred to as
"Tradigrain"). The purchase price for Tradigrain ($31,367,000) was paid in
cash.

The acquisitions of NCI and Tradigrain have been accounted for by the
purchase method of accounting and, accordingly, the operating results of each
enterprise have been included in the Company's consolidated financial statements
from the respective dates of acquisition. The excess of the cash paid over the
fair value of the net assets acquired has been recorded as goodwill. The pro
forma effects of acquisitions of NCI and Tradigrain on the consolidated
financial statements are not significant.

(3) INVENTORIES
<TABLE>
Major components of inventories are as follows:
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Grain . . . . . . . . . . . . . . . . . . $ 136,353 $ 91,990
Beef . . . . . . . . . . . . . . . . . . 24,267 27,754
Materials . . . . . . . . . . . . . . . . . 51,428 43,857
Supplies . . . . . . . . . . . . . . . . . 39,885 41,388
Finished and in-process products . . . . . 286,381 291,701
$ 538,314 $ 496,690
</TABLE>
The carrying values of crude oil and refined petroleum inventories stated
under the lower of last-in, first-out ("LIFO") cost or market at August 31, 1994
and 1993 were $86,179,000 and $84,088,000, respectively. Had the lower of
first-in, first-out ("FIFO") cost or market been used to value these products,
the carrying values of inventories at August 31, 1994 and 1993 would have been
lower by $4,145,000 and $5,754,000, respectively.

Net income for 1994, 1993 and 1992 was $1,609,000 lower, $4,119,000 higher
and $1,935,000 lower, respectively, as a result of using LIFO as compared with
FIFO, including a $3,164,000 recovery in 1994 of an $8,346,000 lower of cost or
market adjustment in 1993. Liquidation of prior year inventory layers in 1992
reduced income before income taxes and patronage refunds by $3,302,000.

The carrying values of beef inventories stated under LIFO at August 31,
1994 and 1993 were $24,267,000 and $27,754,000, respectively. The LIFO method
of accounting for beef inventories had no effect on the carrying value of
inventories or on the results reported in 1994 and 1993, as market value of
these inventories was lower than LIFO or FIFO cost.

(4) INVESTMENTS AND LONG-TERM RECEIVABLES
<TABLE>
Investments and long-term receivables are as follows:
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> . . . . . . . . . . . . . . . . . . <C> <C>
Investments accounted for by the equity method $ 52,478 $ 37,456
Notes receivable from ventures, 20% to 50% owned 48,955 60,204
National Bank for Cooperatives . . . . . . . . 28,786 31,824
Investments in and advances to other cooperatives 42,662 37,690
Other investments and long-term receivables . . 16,720 16,138
$ 189,601 $ 183,312
</TABLE>

National Bank for Cooperatives ("CoBank") requires borrowers from the bank
to maintain an investment in stock of the bank. The amount of investment
required is based on the average amount borrowed from CoBank during the previous
five years. At August 31, 1994, Farmland's investment in CoBank approximated
its requirement. This investment has been pledged to secure borrowings from
CoBank under the syndicated loan agreement.

<TABLE>
Summarized financial information of investees accounted for by the equity
method is as follows:
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Current Assets . . . . . . . . . . . . $ 105,981 $ 66,532
Long-Term Assets . . . . . . . . . . . 252,704 223,937
Total Assets . . . . . . . . . . . . $ 358,685 $ 290,469

Current Liabilities . . . . . . . . . . $ 111,077 $ 79,224
Long-Term Liabilities . . . . . . . . . 144,255 141,991
Total Liabilities . . . . . . . . . $ 255,332 $ 221,215

Net Assets . . . . . . . . . . . . . . $ 103,353 $ 69,254
</TABLE>
<TABLE>
<CAPTION>
Year Ended August 31
1994 1993 1992
(Amounts in Thousands)
<S> <C> <C> <C>
Net sales $ 803,516 $ 601,194 $ 218,913
Net income (loss) $ 24,285 $ (22,755) $ (5,046)
Farmland's equity in
net income (loss) $ 10,878 $ (12,394) $ (2,341)
</TABLE>

The Company's investments accounted for by the equity method consist
principally of 50% equity interests in Hyplains Beef, L.L.C. and in two
phosphate fertilizer manufacturing ventures (Farmland Hydro, L.P. and
SF Phosphates Limited Company).

On November 15, 1991, Farmland and Norsk Hydro a.s. ("Hydro") formed a
joint venture company, Farmland Hydro, to manufacture phosphate fertilizer
products for distribution to international markets. As part of the joint
venture agreement, Farmland sold a 50% interest in its Green Bay, Florida
phosphate fertilizer plant and certain phosphate rock reserves located in Hardee
County, Florida to Hydro for an amount approximately equal to Farmland's
carrying value of the assets. Subsequently, Farmland and Hydro contributed the
assets to the joint venture. Farmland operates the plant under a management
agreement with the joint venture and Hydro provides international marketing
services. See note 15 of the notes to consolidated financial statements.

Farmland and J. R. Simplot formed a joint venture (SF Phosphates, Limited
Company) to operate a phosphate mine located in Vernal, Utah, a fertilizer plant
located in Rock Springs, Wyoming, and a 96-mile pipeline that connects the mine
with the fertilizer plant. The purchase of the mine, plant and pipeline from
Chevron Corporation was completed in April 1992.

Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," was issued by the Financial
Accounting Standards Board ("FASB") in May 1993 and is effective for fiscal
years beginning after December 15, 1993 (the Company's 1995 fiscal year).
Statement 115 expands the use of fair value accounting and the reporting for
certain investments in debt and equity securities. In the opinion of
management, the adoption of Statement 115 will not have a significant impact on
the Company's consolidated financial statements.

(5) PROPERTY, PLANT AND EQUIPMENT
<TABLE>
A summary of cost for property, plant and equipment is as follows:
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Land and improvements . . . . . $ 13,614 $ 11,825
Site improvements . . . . . . . 28,647 26,877
Buildings . . . . . . . . . . . 224,767 215,420
Machinery and equipment . . . . 716,683 678,784
Automotive equipment . . . . . 65,986 46,807
Furniture and fixtures . . . . 48,613 45,405
Livestock . . . . . . . . . . . 3,926 4,373
Mining properties . . . . . . . 3,119 3,119
Leasehold improvements . . . . 15,085 12,149
Capital lease . . . . . . . . . 50,956 52,342
Construction in progress . . . 30,763 57,242
. . . . . . . . . . . . $ 1,202,159 $ 1,154,343
</TABLE>
For the years ended August 31, 1994, 1993 and 1992, the Company capitalized
construction period interest of $357,000, $1,611,000 and $330,000, respectively.

(6) BANK LOANS, SUBORDINATED DEBT CERTIFICATES AND NOTES PAYABLE
<TABLE>
Bank loans, subordinated debt certificates and notes payable are as
follows:
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
National Bank for Cooperatives
--5.61% to 9.2%, maturing 1995 through 2001 . . . . $ 74,278 $ 66,098
Other bank notes--5.74% to 7.75%,
maturing 1995 through 2001 . . . . . . . . . . . . 117,813 138,244
Subordinated certificates of investment
and capital investment certificates
--7.25% to 10.5%, maturing 1995 through 2014 . . . 210,054 192,857
Subordinated monthly interest certificates
--6.25% to 12%, maturing 1995 through 2014 . . . . 70,057 62,913
Industrial revenue bonds--5.75% to 8.0%,
maturing 1995 through 2007 . . . . . . . . . . . . 25,055 27,880
Promissory notes--7% to 10%,
maturing 1995 through 2001 . . . . . . . . . . . . 18,684 13,805
Other--5% to 13% . . . . . . . . . . . . . . . . . . . . 29,705 16,011
$ 545,646 $ 517,808
Less current maturities . . . . . . . . . . . . . . . . . 27,840 31,947
$ 517,806 $ 485,861
</TABLE>

In 1994, Farmland entered into a $650,000,000 syndicated credit facility
provided by eight domestic and international banking institutions. This
agreement provides short-term credit of up to $450,000,000 to finance seasonal
operations and inventory, and revolving term credit of up to $200,000,000. At
August 31, 1994, short-term borrowings under this facility were $217,399,000,
revolving term borrowings were $95,000,000 and $62,600,000 was being utilized to
support letters of credit issued on behalf of Farmland by participating banks.

Farmland pays commitment fees of 1/8 of 1% annually on the unused portion
of the short-term commitment and 1/4 of 1% annually on the unused portion of the
revolving term commitment. In addition, Farmland must maintain consolidated
working capital of not less than $150,000,000, consolidated net worth of not
less than $475,000,000 and funded indebtedness and senior funded indebtedness of
not more than 52% and 43% of capitalization, respectively. All computations are
based on consolidated financial data adjusted to exclude nonrecourse
subsidiaries (as defined in the credit agreement). Computed in accordance with
the agreement, at August 31, 1994, working capital was $207,383,000, net worth
was $585,013,000 and funded indebtedness and senior funded indebtedness were
47.03% and 23.34% of capitalization, respectively.

Farmland and subsidiaries maintain other borrowing arrangements with banks
and financial institutions. Under such agreements, at August 31, 1994,
$35,495,000 was borrowed from banks and letters of credit issued by banks
amounted to $2,200,000. Financial covenants of these arrangements are not more
restrictive than the Company's syndicated credit facility.

NBPC, 58%-owned by Farmland, maintains borrowing agreements with a bank
which provides financing support for its beef packing operations. Borrowings
under this credit agreement are nonrecourse to Farmland or Farmland's other
affiliates. At August 31, 1994, NBPC's available bank credit of $61,596,000 had
been borrowed. All assets of NBPC (carried at $150,409,000) are pledged to
support its borrowings. At August 31, 1994, Farmland had issued letters of
credit in the amount of $15,000,000 to support NBPC's bank credit agreements.

Tradigrain has borrowing agreements with various international banks which
provide financing and letters of credit to support current international grain
trading transactions. Obligations of Tradigrain under these loan agreements are
nonrecourse to the Company.

The subordinated debt certificates have been issued under several different
indentures. Farmland may redeem subordinated certificates of investments and
capital investment certificates in advance of scheduled maturities. Farmland
may redeem subordinated certificates of investments, capital investment
certificates and subordinated monthly interest certificates upon death of the
holder.

The outstanding subordinated debt certificates are subordinated to senior
indebtedness. At August 31, 1994, senior indebtedness included $450,827,000 for
money borrowed, and other instruments (principally long-term operating leases)
provide for aggregate payments over nine years of approximately $126,505,000.

Under industrial revenue bonds and other agreements, property, plant and
equipment with a carrying value of $29,267,000 have been pledged.

Bank loans, subordinated debt certificates and notes payable mature during
the fiscal years ending August 31 in the following amounts:

(Amounts in Thousands)
1995 . . . . . . . . . . . . . . . . . . $ 27,840
1996 . . . . . . . . . . . . . . . . . . 44,884
1997 . . . . . . . . . . . . . . . . . . 182,996
1998 . . . . . . . . . . . . . . . . . . 54,057
1999 . . . . . . . . . . . . . . . . . . 32,921
2000 and after . . . . . . . . . . . . . 202,948
$ 545,646

(7) INCOME TAXES

A. TERRA RESOURCES, INC.

If the United States Tax Court decides in favor of the IRS on all unresolved
issues raised in the statutory notice, Farmland would have additional federal
and state income tax liabilities aggregating approximately $85.8 million plus
accumulating statutory interest thereon (approximately $178.3 million, before
tax benefits of the interest deduction, through August 31, 1995), or $264.1
million in the aggregate at August 31, 1995. In addition, such a decision would
affect the computation of Farmland's taxable income for its 1989 tax year and,
as a result, could increase Farmland's federal and state income taxes for that
year by approximately $5.0 million plus applicable statutory interest thereon.
Finally, the additional federal and state income taxes and accrued interest
thereon, which would be owed based on an adverse decision, would become
immediately due and payable unless the Company appealed the decision and posted
the requisite bond to stay assessment and collection.

The liability resulting from an adverse decision would be charged to current
operations and would have a material adverse effect on the Company and may
affect its ability to pay, when due, principal and interest on the Subordinated
Debt Certificates, Demand Loan Certificates and the Company's other
indebtedness. In order to pay any such tax claim, the Company would have to
consider new financing arrangements, including the incurrence of indebtedness
and the sale of assets. Moreover, the Company would be required to renegotiate
the Credit Agreement with its bank lenders, as well as other existing financing
agreements with certain other parties, not only to permit such new financing
arrangements, but also to cure events of default under the Credit Agreement and
certain of such other existing financing agreements and to maintain compliance
with various requirements of the Credit Agreement and such other existing
financing agreements, including working capital and funded indebtedness
provisions, in order to avoid default thereunder. No assurance can be given
that such financing arrangements or such renegotiation would be successfully
concluded.

B. OTHER INCOME TAX MATTERS

The Company adopted FASB Statement 109 effective September 1, 1993. The
cumulative effect of this change in accounting for income taxes was immaterial.
Prior years' financial statements have not been restated to apply the provisions
of Statement 109.

<TABLE>
Income tax expense (benefit) attributable to income from continuing
operations is comprised of the following:
<CAPTION>
Year Ended August 31
1994 1993 1992
(Amounts in Thousands)
<S> <C> <C> <C>
Federal:
Current . . . . . . . . . . $ 10,076 $ (2,502) $ 6,600
Deferred . . . . . . . . . (3,217) (2,944) 1,490

$ 6,859 $ (5,446) $ 8,090
State:
Current . . . . . . . . . . $ 1,965 $ (468) $ 1,106
Deferred . . . . . . . . . (755) (519) 262
$ 1,210 $ (987) $ 1,368
Foreign:
Current . . . . . . . . . . $ (2,117) $ -0- $ -0-
Deferred . . . . . . . . . (1,062) -0- -0-
$ (3,179) $ -0- $ -0-

$ 4,890 $ (6,433) $ 9,458
</TABLE>

<TABLE>
Income tax expense (benefit) attributable to income from continuing
operations differs from the "expected" income tax expense (benefit) using
statutory rate of 35% (34% for 1993 and 1992), as follows:

<CAPTION>
Year Ended August 31
1994 1993 1992
<S> <C> <C> <C>
Computed "expected" income tax expense (benefit)
on income (loss) before income taxes . . . . . . . . . 35.0 % (34.0) % 34.0 %

Increase (reduction) in income tax expense (benefit)
attributable to:
Patronage refunds . . . . . . . . . . . . . . . . . . . (33.3) (4.0) (9.2)
Utilization of member-sourced losses . . . . . . . . . -0- -0- (11.4)
Patronage-sourced items for
which no benefit is available . . . . . . . . . . -0- 26.5 -0-
State income tax expense (benefit) net of
federal income tax effect . . . . . . . . . . . . 1.1 (2.2) 1.2
Benefit associated with exempt income of
foreign sales corporation . . . . . . . . . . . . -0- (1.4) (1.5)
Other, net . . . . . . . . . . . . . . . . . . . . . . 3.8 (2.7) .3
Income tax expense (benefit) . . . . . . . . . . . . . . . . 6.6 % (17.8) % 13.4 %
</TABLE>

The tax effect of temporary differences that give rise to significant
portions of deferred tax liabilities and deferred tax assets at August 31, 1994
is as follows:
August 31, 1994
(Amounts in Thousands)
Deferred tax liabilities:
Property, plant and equipment principally
due to differences in depreciation . . . $ 20,242
Prepaid pension cost . . . . . . . . . . . 21,124
Other . . . . . . . . . . . . . . . . . . . 14,021
Total gross deferred liabilities . . . . $ 55,387

Deferred tax assets:
Safe harbor leases . . . . . . . . . . . . $ 5,391
Accrued expenses . . . . . . . . . . . . . 27,017
Accounts receivable, principally due to
allowance for doubtful accounts . . . . 4,394
Other . . . . . . . . . . . . . . . . . . . 12,245
Total gross deferred assets . . . . . . $ 49,047

Net deferred tax liability . . . . . . . . . . $ 6,340

A valuation allowance for deferred tax assets was not necessary at August
31, 1994.

The significant components of deferred income tax benefit attributable to
income from continuing operations for the year ended August 31, 1994 are as
follows:
August 31, 1994
(Amounts in Thousands)
Deferred tax benefit . . . . . . . . . . . . . $ (8,044)

Charge in lieu of taxes resulting
from initial recognition
of acquired tax benefits that
are allocated to reduce
goodwill related to the
acquired entity . . . . . . . . . . . . . . 3,010
$ (5,034)

<TABLE>

Deferred income taxes for the year ended August 31, 1993 and 1992 result
from timing differences in the recognition of income and expenses for financial
reporting and income tax reporting purposes. The sources of these timing
differences and their tax effect are as follows:
<CAPTION>
Year Ended August 31
1993 1992
(Amounts in Thousands)
<S> <C> <C>
Depreciation . . . . . . . . . . . . . . . . . . . . . . . $ 473 $ 1,562
Safe harbor lease rentals . . . . . . . . . . . . . . . . . (378) (478)
Provision for loss on proposed sale of assets . . . . . . . (3,454) -0-
Unfunded pension expense . . . . . . . . . . . . . . . . . (355) (129)
Reinstatement of deferred income taxes previously
offset by net operating loss carryforward
for financial reporting purposes . . . . . . . . . . . -0- 1,294
Other, net . . . . . . . . . . . . . . . . . . . . . . . . 251 (497)
$ (3,463) $ 1,752
</TABLE>

At August 31, 1994, Farmland and its consolidated subsidiaries have
alternative minimum tax credit carryforwards of approximately $7,025,000.

The tax benefit for the year ended August 31, 1993 results from the
carryback of nonpatronage-sourced losses to reduce the amount of federal and
state income taxes paid during prior years.

During the year ended August 31, 1994, Farmland utilized nonmember-sourced
loss carryforwards amounting to $7,525,000 to reduce goodwill for financial
reporting purposes by $3,010,000.

During the year ended August 31, 1992, all of Foods' nonmember-sourced loss
carryforwards were utilized and deferred income taxes amounting to $1,294,000
were reinstated. During the year ended August 31, 1992, Farmland utilized
nonmember-sourced loss carryforwards amounting to $3,168,000 to reduce income
tax expense for financial reporting purposes by $1,267,000. Utilization of
these loss carryforwards has been presented as an extraordinary item in the
accompanying consolidated statement of operations for the year ended August 31,
1992.

In connection with the acquisition of Union Equity, Farmland acquired
member-sourced and nonmember-sourced loss carryforwards from Union Equity
amounting to approximately $18,600,000 and $10,600,000, respectively. For the
year ended August 31, 1992, Farmland was able to utilize member-sourced and
nonmember-sourced loss carryforwards amounting to $18,600,000 and $2,800,000,
respectively. The benefit of the utilization of the nonmember-sourced loss
carryforward amounting to $1,134,000 was recorded as a reduction of goodwill.
See note 2 of the notes to consolidated financial statements.

(8) MINORITY OWNERS' EQUITY IN SUBSIDIARIES
<TABLE>
A summary of the equity of subsidiaries owned by others is as follows:
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Farmland Foods, Inc. . . . . . . . . . . $ 5,618 $ 6,401
National Beef Packing Company, L.P. and G.P. 2,925 7,865
Heartland Wheat Growers, L.P. and G.P. . 2,100 -0-
Other subsidiaries . . . . . . . . . . . 1,090 1,097
. . . . . . . . . . . . . . . . . $ 11,733 $ 15,363
</TABLE>

(9) PREFERRED STOCK, EARNED SURPLUS AND OTHER EQUITIES

<TABLE>
A summary of preferred stock is as follows:
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Preferred shares, $25 par value - Authorized 8,000,000 shares:
6% - 608 shares issued and outstanding
(624 shares in 1993) . . . . . . . . . . . . . . . . . . . . $ 15 $ 15
5-1/2% - 2,592 shares issued and outstanding
(2,832 shares in 1993) . . . . . . . . . . . . . . . . . . . 65 71
Series F - 144,869 shares issued and outstanding
(144,869 shares in 1993) . . . . . . . . . . . . . . . . . . 3,622 3,622
$ 3,702 $ 3,708
</TABLE>

The 5-1/2% and 6% preferred stocks have preferential liquidation rights
over the Series F preferred stock. Dividends on the 5-1/2% and 6% preferred
stock are cumulative if declared by the Farmland Board of Directors and only to
the extent earned each year. Series F preferred stock is nondividend bearing.
Upon liquidation, holders of all preferred stock are entitled to the par value
thereof and, with respect to the 5-1/2% and 6% preferred stock, any declared or
unpaid earned dividends.
<TABLE>
A summary of earned surplus and other equities is as follows:
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Earned surplus . . . . . . . . . . . . .. . $ 130,250 $ 123,974
Patronage refund payable in equities . .. . 44,032 -0-
Nonmember capital . . . . . . . . . . . .. . 103 104
Capital credits . . . . . . . . . . . . .. . 32,547 38,105
Unallocated equity . . . . . . . . . . .. . -0- 6,021
Additional paid-in surplus . . . . . . .. . 1,603 1,603
Currency translation adjustment . . . . .. . (54) -0-
$ 208,481 $ 169,807
</TABLE>

In accordance with the bylaws of Farmland, the member-sourced portion of
its net income or loss and the resulting patronage refund payable to members and
patrons are determined annually. The bylaws provide that the amount of the
patronage refund payable be reduced if immediately after the payment of such
patronage refund, the amount of earned surplus would be less than 30% of the
previous year-end balance of members' equity accounts (defined for this purpose
as the sum of common stock, associate member common stock, capital credits,
nonmember capital and patronage refunds payable in equities). The reduction of
patronage refunds is limited to the lesser of 15% or the amount required to
increase the balance of the earned surplus account to the required 30%. As of
August 31, 1994 and 1993, earned surplus exceeded the required amount by
approximately $2,329,000 and $3,874,000, respectively. The patronage refund
payable for 1994 is $70,584,000. The cash portion is $26,552,000 and is
included in "Other current liabilities" in the consolidated balance sheet at
August 31, 1994. The balance ($44,032,000) of the patronage refund is payable
in equities of Farmland and is included in the consolidated balance sheet as
"Earned surplus and other equities." No patronage refunds were paid by Farmland
for 1993. The patronage refund for 1992 was $17,449,000, all of which was paid
in cash.

Farmland maintains a base capital plan. The plan's objectives are as
follows: 1) to achieve proportionality between the dollar amount of business a
member or associate member of Farmland ("Participant") transacts with Farmland
and the par value of Farmland equity which the Participant should hold
(hereinafter referred to as the Participants' "Base Capital Requirement"); and,
2) provide a method for the Board of Directors, in its discretion, to redeem
equities held by a Participant when the par value of the Participant's
investment exceeds the Participant's Base Capital Requirement. This plan
provides that the relationship between the par value of a Participant's
investment in Farmland equity and the Participant's Base Capital Requirement
shall influence the cash portion of any patronage refund paid to the
Participant.

The Base Capital Requirement shall be determined annually by the Farmland
Board of Directors at its sole discretion. At August 31, 1994, common stock and
associate member common stock with a par value of $8,740,000 have been approved
for redemption by the Board of Directors under the base capital plan and such
amounts have been included in "Other current liabilities" in the consolidated
balance sheet at August 31, 1994.

Farmland maintains an estate settlement plan for redemption of equities
held by estates of deceased individuals (except equities purchased and held less
than five years) and a special equity redemption plan to redeem equities of
holders who do not participate in the Farmland base capital plan. Under these
plans, the Board of Directors, in its discretion, may redeem equities based on
certain factors, including the financial position and consolidated net income of
the Company. A priority for redeeming equities under these plans has been
established.

At August 31, 1994, certain equities of Farmland with a face amount of
$3,448,000 and capital equity fund certificates held by certain members of
Farmland Foods, Inc. in the amount of $747,000 have been approved by the Board
of Directors for redemption under the estate settlement and special equity
redemption plan. Accordingly, such amounts have been included in "Other current
liabilities" in the consolidated balance sheet at August 31, 1994.

Nonmember capital represents patronage refunds distributed in the form of
book credits.

Capital credits are issued: 1) for payment of patronage refunds to patrons
who do not satisfy requirements for membership or associate membership; and,
2) upon conversion of common stock or associate member common stock held by
persons who do not meet qualifications for membership or associate membership in
Farmland.

Unallocated equity represents the cumulative difference between the amount
of member-sourced income for financial reporting and income tax reporting
purposes.

Additional paid-in surplus results from members donating Farmland equity to
Farmland.

None of the aforementioned equities are held by or for the account of
Farmland or in any sinking or other special fund of Farmland and none have been
pledged by Farmland.

(10) CONTINGENT LIABILITIES AND COMMITMENTS

The Company leases various equipment and real properties under long-term
operating leases. For the years ended August 31, 1994, 1993 and 1992, rental
expenses totaled $41,794,000, $41,104,000 and $43,300,000, respectively. Rental
expense is reduced for mileage credits received on leased railroad cars
($1,866,000 in 1994, $1,939,000 in 1993 and $663,000 in 1992).

The leases have various remaining terms ranging from one year to fifteen
years. Some leases are renewable, at Farmland's option, for additional periods.
The minimum amount Farmland must pay for these leases during the fiscal years
ending August 31 are as follows:

(Amounts in Thousands)
1995 . . . . . . . . . . . . $ 49,883
1996 . . . . . . . . . . . . 40,275
1997 . . . . . . . . . . . . 36,154
1998 . . . . . . . . . . . . 29,440
1999 . . . . . . . . . . . . 22,209
2000 and after . . . . . . . 69,008
$ 246,969

Farmland and its subsidiaries are involved in various lawsuits incidental
to the businesses. In the opinion of management, the ultimate resolution of
these litigation issues will not have a material adverse effect on the Company's
consolidated financial statements.

The Company has certain throughput agreements, take-or-pay agreements,
minimum quantity agreements, and minimum charge agreements for various raw
material supplies and services through 1996. The Company's minimum obligations
under such agreements are $1,248,000 in 1995 and $924,000 in 1996.

The Company has been designated by the Environmental Protection Agency as a
potentially responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), at various National
Priority List ("NPL") sites. In addition, the Company is aware of possible
obligations associated with environmental matters at other sites, including
sites where no claim or assessment has been made. The Company's probable and
reasonably determinable obligations for resolution of environmental matters at
NPL and other sites are estimated to be $7,164,000 and such amount has been
accrued.

The ultimate costs of resolving environmental matters are not quantifiable
because many such matters are in preliminary stages and the timing and extent of
actions which governmental authorities may ultimately require are unknown. It
is possible that the costs of such resolution may be greater than the
liabilities which, in the opinion of management, are probable and reasonably
determinable at August 31, 1994. In the opinion of management, it is reasonably
possible for such costs to approximate an additional $32,000,000.

CFA has loans receivable from customers engaged in pork production
operations and from cooperative associations which are guaranteed by Farmland.
At August 31, 1994, such guarantees amounted to $5,868,000. In addition,
Farmland has issued letters of credit to support borrowing arrangements of a
subsidiary as described in note 6.

At August 31, 1994, the Company was committed to expenditures for
acquisition and completion of construction of plant and equipment aggregating
approximately $19,000,000.

(11) EMPLOYEE BENEFIT PLANS

The Farmland Industries, Inc. Employee Retirement Plan ("the Plan") is a
defined benefit plan covering substantially all employees of Farmland and its
subsidiaries who meet minimum age and length-of-service requirements. Benefits
payable under the Plan are based on years of service and the employee's average
compensation during the highest four of the employee's last ten years of
employment.

The assets of the Plan are maintained in a trust fund. The majority of the
Plan's assets are invested in common stocks, corporate bonds, United States
Government securities and short-term investment funds.

The Company's funding policy is to make the maximum annual contribution to
the Plan's trust fund that can be deducted for federal income tax purposes.

<TABLE>
The Company charges pension cost as accrued based on actuarial valuation of
the Plan.

Components of the Company's pension cost are as follows:
<CAPTION>
August 31
1994 1993 1992
(Amounts in Thousands)
<S> <C> <C> <C>
Service cost - benefits earned during the period . . . $ 8,663 $ 7,449 $ 6,519
Interest cost on projected benefit obligation . . . . 15,292 12,134 11,332
Actual return on Plan assets . . . . . . . . . . . . . (10,949) (15,842) (20,591)
Net amortization and deferral . . . . . . . . . . . . (7,860) (374) 4,027
Pension expense . . . . . . . . . . . . . . . . . . $ 5,146 $ 3,367 $ 1,287
</TABLE>

The discount rate and the rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligations at August 31, 1994 were 8.0% and 4.5%, respectively (8.5% and 5% at
August 31, 1993, and 9% and 5% at August 31, 1992, respectively). The expected
long-term rate of return on assets at August 31, 1994, 1993 and 1992 were 8.5%,
8.5% and 9%, respectively.

<TABLE>
The following table sets forth the Plan's funded status and amounts
recognized in the Company's consolidated balance sheet at August 31, 1994 and
1993. Such prepaid pension cost is based on the Plan's funded status as of May
31, 1994 and 1993.
<CAPTION>
August 31
1994 1993
(Amounts in Thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits . . . . . . . . . . . . . . . . . . . . . . . . . . $ 148,648 $ 123,061
Nonvested benefits . . . . . . . . . . . . . . . . . . . . . . . . 9,163 7,102
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . $ 157,811 $ 130,163
Increase in benefits due to future compensation increases . . . . . 53,533 51,633
Projected benefit obligation . . . . . . . . . . . . . . . . . . . $ 211,344 $ 181,796
Estimated fair value of Plan assets . . . . . . . . . . . . . . . . 226,681 212,647
Plan assets in excess of projected benefit obligation . . . . . . . $ 15,337 $ 30,851
Unrecognized net loss from past experience different
from that assumed and effects of changes
in assumptions . . . . . . . . . . . . . . . . . . . . . . . . 37,332 21,754
Unrecognized net transition asset being
recognized over 10 years . . . . . . . . . . . . . . . . . . . (933) (1,866)
Unrecognized prior service cost . . . . . . . . . . . . . . . . . . 1,308 2,590
Prepaid pension cost at end of year . . . . . . . . . . . . . . . . . . . $ 53,044 $ 53,329
</TABLE>

The Company provides group life insurance benefits for retired employees
who were hired before January 1, 1988 and reach normal retirement age while
working for the Company. Prior to 1994, the Company charged operations for the
amount of an annual insurance premium paid for group life insurance covering
both retired and active employees. In 1994, the cost of providing group life
insurance for retired employees was not separable from the cost of providing
group life insurance for active employees. For the years ended August 31, 1993
and 1992, such insurance premium were $1,178,000 and $783,000, respectively.

In fiscal year 1994, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and the effect was insignificant.

Statement of Financial Accounting Standards No. 112, "Employer's Accounting
for Postemployment Benefits," was issued by the FASB in November 1992 and is
effective for fiscal years beginning after December 15, 1993 (the Company's 1995
fiscal year). Statement 112 establishes standards of accounting and reporting
for the estimated cost of benefits provided to former or inactive employees.
Management expects that the adoption of Statement 112 will not have a
significant impact on the Company's consolidated financial statements.

(12) INDUSTRY SEGMENT INFORMATION

The Company's business is conducted within three general operating areas:
cooperative farm supply operations, cooperative marketing operations and other
operations. As a farm supply cooperative, the Company engages in manufacturing
and wholesale distribution of input products of agricultural production. The
Company's principal farm supply products are petroleum, crop production and
feed.

Petroleum products include gasoline, distillate, diesel fuel, propane, lube
oils, grease and automotive parts and accessories. Products in the crop
production area include nitrogen, phosphate and potash fertilizers, herbicides,
insecticides and other farm chemicals. Feed products include a complete line of
formulated feeds. Supply products are sold primarily at wholesale to local farm
cooperatives.

Marketing operations include pork and beef processing, marketing and the
distribution of fresh meat products, ham, bacon, sausage, deli meats, Italian
specialty meats and boxed beef, and the marketing and storage of grain.

Other operations include convenience fuel and food stores, farm supply
stores, finance company operations and services such as accounting, financial,
management, environmental and safety, and transportation. See Note 2 of the
Notes to Consolidated Financial Statements.

The operating income (loss) of each industry segment includes the revenue
generated on transactions involving products within that industry segment less
identifiable and allocated expenses. In computing operating income (loss) of
industry segments none of the following items has been added or deducted:
interest expense, interest income, other income (deductions) or corporate
expenses (included in the statements of operations as selling, general and
administrative expenses), which cannot practicably be identified or allocated by
industry segment. Operating income (loss) of industry segments for the years
ended August 31, 1993 and 1992 have been restated for comparative purposes to
exclude certain costs which were not identified to business segments in 1994 but
which were identified to business segments in 1993 and 1992. Corporate assets
include cash, investments in other cooperatives, the corporate headquarters of
Farmland and certain other assets.

<TABLE>
Following is a summary of industry segment information as of and for the
years ended August 31, 1994, 1993 and 1992. Export sales to unaffiliated
customers from U.S. operations for the years ended August 31, 1994, 1993 and
1992 were $842,476,000, $690,215,000 and $188,710,000, respectively.

<CAPTION>
Unallocated
Cooperative Corporate
Cooperative Farm Supply Marketing and Items and
Crop Processing Other Inter-Segment
Petroleum Production Feed Foods Grain Operations Eliminations Consolidated

(Amounts in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>

1994
Sales to unaffiliated
customers . . . . . $855,479 $1,163,357 $527,864 $2,355,599 $1,627,156 $148,478 $ -0- $6,677,933
Transfers between
segments . . . . . . 4,843 9,513 2,072 3,007 -0- -0- (19,435) -0-
Total sales and
transfers . . . . . . $860,322 $1,172,870 $529,936 $2,358,606 $1,627,156 $148,478 $ (19,435) $6,677,933
Operating income
(loss) of
industry segments . . $ 27,172 $ 126,047 $ 17,019 $ 20,634 $ (33,455) $ (2,368) $ 155,049
Equity in income (loss)
of investees (note 4) $ (41) $ 15,466 $ 155 $ (4,404) $ -0- $ (298) $ 10,878
General corporate expenses (66,479)
Other corporate income 26,281
Interest expense . . . (51,485)
Minority interest . . . 4,522
Income before income taxes and
extraordinary item $ 78,766
Identifiable assets at
August 31, 1994 . . $306,366 $ 357,178 $ 92,767 $ 395,159 $ 341,367 $ 62,301 $1,555,138
Investment in and advances to
investees . . . . . $ 746 $ 76,439 $ 1,761 $ 13,927 $ -0- $ 8,560 $ -0- $ 101,433
Corporate assets . . . 270,060
Total assets . . . . . $1,926,631
Provision for depreciation and
amortization . . . $ 9,911 $ 14,700 $ 3,815 $ 16,776 $ 4,011 $ 7,982 $ 5,765 $ 62,960
Capital expenditures (including
$16,888,000 of capital assets
of business
acquired) . . . . . $ 14,399 $ 14,136 $ 4,508 $ 19,040 $ 6,256 $ 26,051 $ 2,274 $ 86,664

1993
Sales to unaffiliated
customers . . . . . $887,389 $ 884,811 $479,205 $1,412,634 $ 953,521 $105,380 $ -0- $4,722,940
Transfers between
segments . . . . . 5,591 7,970 2,330 3,496 -0- -0- (19,387) -0-
Total sales
and transfers . . . $892,980 $ 892,781 $481,535 $1,416,130 $ 953,521 $105,380 $ (19,387) $4,722,940
Operating income (loss) of
industry segments . $ (4,602) $ 51,654 $ 20,676 $ 16,485 $ 104 $ 2,262 $ 86,579
Equity in income (loss)
of investees
(note 4) . . . . . $ 2 $ (8,223) $ (35) $ (3,306) $ -0- $ (832) $ (12,394)
Provision for
loss on disposition
of assets (note 17) (20,022) (6,155) (3,253) (29,430)
General corporate expenses (57,721)
Other corporate income 13,725
Interest expense . . . (36,764)

Minority interest . . . (828)
(Loss) before income taxes and
extraordinary item $ (36,833)
Identifiable assets at
August 31, 1993. . $308,731 $ 324,956 $ 94,948 $ 391,152 $ 254,734 $ 35,986 $1,410,507

Investment in and advances to
investees . . . . . $ 526 $ 72,166 $ 1,572 $ 18,686 - $ 3,553 $ 1,606 $ 98,109
Corporate assets . . . 211,365
Total assets . . . . . $1,719,981
Provision for depreciation and
amortization . . . $ 13,546 $ 13,843 $ 4,487 $ 10,807 $ 2,637 $ 3,369 $ 9,041 $ 57,730
Capital expenditures (including
$48,362,000 of capital assets
of business
acquired) . . . . . $ 35,629 $ 17,972 $ 6,590 $ 73,561 $ 1,894 $ 3,613 $ 7,341 $ 146,600

1992
Sales to unaffiliated
customers . . . . . $979,542 $ 897,820 $445,338 $ 850,103 $ 155,169 $101,335 $ -0- $3,429,307
Transfers between
segments . . . . . 5,727 9,744 2,531 4,064 -0- -0- (22,066) -0-
Total sales
and transfers . . . $985,269 $ 907,564 $447,869 $ 854,167 $ 155,169 $101,335 $ (22,066) $3,429,307
Operating income (loss)
of industry segments $ 8,241 $ 111,907 $ 21,346$ 25,162 $ (726) $ (5,018) $ 160,912
Equity in loss of investees
(note 4) . . . . . $ (31) $ (1,362) $ 15 $ (963) $ (2,341)
General corporate expenses (66,982)
Other corporate income 6,880
Interest expense . . . (27,965)
Income before income taxes
and extraordinary item $ 70,504
Identifiable assets at
August 31, 1992 . . $289,021 $ 313,943 $ 76,300 $ 201,726 $ 173,376 $207,274 $1,261,640
Investment in and advances
to investees . . . $ 139 $ 66,899 $ 1,143 $ 6,004 $ 1,197 $ 4,408 $ 79,790
Corporate assets . . . 184,962
Total assets . . . . . $1,526,392
Provision for depreciation
and amortization . $ 12,269 $ 14,888 $ 3,013 $ 9,051 $ 613 $ 4,513 $ 6,437 $ 50,784
Capital expenditures (including
$47,977,000 of capital assets
of business
acquired) . . . . . $ 25,089 $ 17,119 $ 5,115 $ 14,862 $ 48,440 $ 11,141 $ 6,165 $ 127,931
</TABLE>

(13) SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK

Farmland extends credit to its customers on terms no more favorable than
standard terms of the industries it serves. A substantial portion of Farmland's
receivables are concentrated in the agricultural industry. Collections on these
receivables may be dependent upon economic returns from farm crop and livestock
production. The Company's credit risks are continually reviewed and management
believes that adequate provisions have been made for doubtful accounts.

Farmland maintains investments in and advances to cooperatives, cooperative
banks and joint ventures from which it purchases products or services. A
substantial portion of the business of these investees is dependent upon the
agribusiness economic sector. See note 4 of the notes to consolidated financial
statements.

(14) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

<TABLE>
Estimates of fair values are subjective in nature and involve uncertainties
and matters of significant judgment and therefore cannot be determined with
precision. Changes in assumptions could affect the estimates. Except as
follows, the fair market value of the Company's financial instruments
approximates the carrying value:

<CAPTION>
August 31, 1994 August 31, 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
(Amounts in Thousands)
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Investment and long-term receivables:
Notes receivable from investees,
20% to 50% owned . . . . . . . $ 48,955 $ 45,414 $ 60,204 $ 58,111
National Bank for Cooperatives . 28,786 **** 31,824 ****
Other cooperatives:
Equities . . . . . . . . . . 28,132 **** 22,877 ****
Notes receivable . . . . . . 14,530 13,385 14,813 13,408
FINANCIAL LIABILITIES:
Long-term debt:
Subordinated certificates of investment,
capital investment certificates and
subordinated monthly
interest certificates . . . . . $ 280,111 $ 284,523 $ 255,770 $ 287,168
</TABLE>

The estimated fair value of notes receivable has been determined by
discounting future cash flows using a market interest rate.

The estimated fair value of the subordinated debt certificates was
calculated using the discount rate for subordinated debt certificates with
similar maturities currently offered for sale.

****Investments in National Bank for Cooperatives and other cooperatives'
equities which have been purchased are carried at cost and securities received
as patronage refunds are carried at par value, less provisions for other than
temporary impairment. The Company believes it is not practicable to estimate
the fair value of these securities because there is no established market for
these securities and it is inappropriate to estimate future cash flows which are
largely dependent on future patronage earnings of the cooperatives.

(15) RELATED PARTY TRANSACTIONS

Farmland Hydro, L.P., Hyplains Beef, L.C. (50%-owned investees) and
National Beef Packing Company, L.P. (a 58%-owned consolidated limited
partnership) have credit agreements with various banks. Borrowings under these
agreements are nonrecourse to Farmland and its other affiliates. Cash
distributions by these entities to their owners are restricted by these credit
agreements. To support the efforts of these entities to meet compliance
provisions of their credit agreements, Farmland advances funds and provides
management and administrative services to these entities, in certain instances,
on terms less advantageous to Farmland than transactions conducted by Farmland
in the ordinary course of its business. At August 31, 1994, Farmland's equity
investments in and advances to these entities amounted to $132,613,000.

(16) OTHER INCOME

In June 1993, the Company filed a lawsuit against 43 insurance carriers and
other parties (the "Defendants") seeking declaratory judgments regarding
Defendants' insurance coverage obligations for environmental remediation costs.
In fiscal year 1994, the Company negotiated settlements with 20 insurance
companies and as part of the settlements, the Company provided Defendants with
releases of various possible environmental obligations. As a result of these
settlements, the Company received cash payments of $13,566,000 in 1994 and has
included such amount in the caption "Other income" in the consolidated statement
of operations for the year then ended.

(17) PROVISION FOR LOSS ON DISPOSITION OF ASSETS

At August 31, 1993, management was negotiating to sell the Company's
refinery at Coffeyville, Kansas. Based on the progress of negotiation and the
transactions contemplated, operations for the year ended August 31, 1993
included a $20,022,000 provision for loss on the sale of the refinery.
Accordingly, the net carrying value of property, plant and equipment has been
reduced by $20,022,000 in the consolidated balance sheets at August 31, 1993.
The transactions contemplated were subject to certain conditions, including
negotiation of final agreements. During 1994, management determined that final
sale terms anticipated by the potential purchaser were not in the Company's best
interest. Accordingly, negotiations were terminated and the sale was not
consummated.

In 1993, the Company entered discussions with a potential purchaser of a
dragline. Based on these discussions, the Company estimated a loss of
$6,155,000 from the sale. Accordingly, at August 31, 1993, the carrying value
of the dragline was written down by $6,155,000 and a provision for this loss was
included in the Company's consolidated statement of operations for the year then
ended. In 1994, this sale was consummated on terms substantially as expected.

At August 31, 1993, the carrying value of a pork processing plant at Iowa
Falls, Iowa was written down by $3,253,000 to an estimated disposal value.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses (excluding commissions) to be incurred in connection with the
issuance and distribution of the securities to be offered are estimated as
follows and will be borne by the Company:

Estimated
Item Expense
Federal and state registration fees . . . . . . . . $ 64,000
State taxes and fees . . . . . . . . . . . . . . . 1,000
Printing and engraving . . . . . . . . . . . . . . 14,000
Accounting and legal . . . . . . . . . . . . . . . 19,000
Trustee fee . . . . . . . . . . . . . . . . . . . . 14,000
Advertising and administration . . . . . . . . . . 294,000
$ 406,000

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 6002(b) of Chapter 17 of the Kansas Statutes (1987), permits the
following provision to be included in the articles of incorporation of the
Company: a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders, policyholders or members for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (A) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
policyholders or members, (B) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (C) under the
provision of K.S.A. 17-6424 and amendments thereto or (D) for any transaction
from which the director derived an improper personal benefit. No such provision
shall eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective. All
references in this subsection to a director shall be deemed also to refer to a
member of the governing body of a corporation which is not authorized to issue
capital stock. Section 6002(c) provides that "It shall not be necessary to set
forth in the articles of incorporation any of the powers conferred on
corporations by this act."

Article VII of the Articles of Incorporation of Farmland reads as follows:

ARTICLE VII - INDEMNIFICATION

Section 1. Indemnification. The Association may agree to the
terms and conditions upon which any director, officer, employee or
agent accepts his office or position and in its bylaws, by contract or
in any other manner may agree to indemnify and protect any director,
officer, employee or agent of the Association, or any person who
serves at the request of the Association as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, to the fullest extent permitted by the laws
of the State of Kansas.

Section 2. Limitation of Liability. Without limiting the
generality of the foregoing provisions of this ARTICLE VII, to the
fullest extent permitted or authorized by the laws of the State of
Kansas, including, without limitation, the provisions of subsection
(b)(8) of Kan. Stat. Ann. Sec. 17-6002 (1981) as now in effect and as
it may from time to time hereafter be amended, no person who is
currently or shall hereinafter become a director of the Association
shall have personal liability to the Association for monetary damages
for breach of fiduciary duty as a director for any act or omission
occurring subsequent to the date this provision becomes effective. If
the Kansas General Corporation Code is amended after approval of this
provision by the shareholders of the Association, to authorize
corporate action further limiting or eliminating the personal
liability of directors, then the liability of a director of the
Association shall be limited or eliminated to the fullest extent
permitted by the Kansas General Corporation Code, as so amended.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Unregistered equities issued by Farmland during each of the years in the
three-year period ended August 31, 1994 were as follows:

<TABLE>
<CAPTION>
Associate Member
Common Stock Common Stock
(Nondividend Bearing) (Nondividend Bearing) Capital
Year Ended Par Value $25 Par Value $25 Credits
August 31 Shares Amount Shares Amount Amount
<S> <C> <C> <C> <C> <C>
1994 32,202 $ 805,050 83,273 $ 2,081,825 $ 7,740,453
1993 46,993 $ 1,174,825 11,348 $ 283,700 $ 1,947,119
1992 50,614 $ 1,265,350 25,829 $ 645,725 $ 12,967,039

</TABLE>

Farmland issues common stock, associate member common stock and capital
credits: 1) to satisfy one of the requirements of eligible persons for
membership in the cooperative; 2) as the form of payment of the portion of
patronage refunds not paid with cash; and, 3) upon conversion (to common stock,
associate member common stock or capital credits) by holders of other types of
these equities. Such conversions result from a change of membership status.

See "The Company - Membership."

In addition, in 1992, capital credits, exceeding the amount registered by
$4,610,653 were issued in accordance with provisions of an exchange offer to
other owners of Farmland Foods, Inc.

Registration of such common stock, associate member common stock and
capital credits issued to qualify eligible persons for membership in the
cooperative and for payment of patronage refunds is not required under the
Securities Act of 1933 (the "Act") under the provisions of Section 2(3) thereof,
as there is "no sale" or "offer to sell" a security for value as those terms are
used in Section 2(3).

An exemption from registration under the Act of common stock, associate
member common stock and capital credits issued upon conversion of other types of
these equities is claimed under Section 3(a) 9 thereof for an exchange of
securities by an issuer with its own security holders exclusively where no
commission or other remuneration is paid or given directly or indirectly for
soliciting such exchange.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

The following exhibits and financial statement schedules are filed as a part of
this Registration Statement.

Exhibit No. Exhibit

UNDERWRITING AGREEMENT:

1.A Underwriting Agreement between Farmland Industries, Inc. and Farmland
Securities Company, dated December 6, 1989. (Incorporated by Reference
- Form S-1 No. 33-56821 filed December 12, 1994)

1.A(1) Amendment, dated December 5, 1994, to the agreement, dated
December 6, 1989 between Farmland Industries, Inc. and
Farmland Securities Company. (Incorporated by Reference -
Form S-1 No. 33-56821, filed December 12, 1994)

1.B Sales Agency Agreement between Farmland Industries, Inc. and American
Heartland Investment, Inc., dated December 29, 1993. (Incorporated by
Reference - Form S-1 No. 33-56821, filed December 12, 1994)

ARTICLES OF INCORPORATION AND BYLAWS:

3.A Articles of Incorporation and Bylaws of Farmland Industries, Inc.
effective December 1, 1993. (Incorporated by Reference - Form 10-K,
filed November 29, 1994)
INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES:

4.(i)A Trust Indenture dated November 20, 1981, as amended January 4,
1982, including specimen of Demand Loan Certificates.
(Incorporated by Reference - Form S-1, No.2-75071, effective
January 7, 1982)

4.(i)B Trust Indenture dated November 8, 1984, as amended January 3, 1985,
including specimen of 10-year Subordinated Capital Investment
Certificates. (Incorporated by Reference - Form S-1, No. 2-94400,
effective December 31, 1984)

4.(i)B(1) Amendment Number 2, dated December 3, 1991, to Trust
Indenture dated November 8, 1984 as amended January 3,
1985 covering Farmland Industries, Inc.'s 10-Year
Subordinated Capital Investment Certificates.
(Incorporated by Reference - Form SE, dated December 3,
1991)

4.(i)C Trust Indenture dated November 8, 1984, as amended January 3, 1985,
including specimen of 5-year Subordinated Capital Investment
Certificates. (Incorporated by Reference - Form S-1, No. 2-94400,
effective December 31, 1984)
4.(i)C(1) Amendment Number 2, dated December 3, 1991, to Trust
Indenture dated November 8, 1984 as amended January 3,
1985 covering Farmland Industries, Inc.'s 5-Year
Subordinated Capital Investment Certificates.
(Incorporated by Reference - Form SE, dated December 3,
1991)

4.(i)D Trust Indenture dated November 8, 1984, as amended January 3, 1985
and November 20, 1985, including specimen of 10-year Subordinated
Monthly Income Capital Investment Certificates. (Incorporated by
Reference - Form S-1, No. 2-94400, effective December 31, 1984)

4.(i)E Trust Indenture dated November 11, 1985 including specimen of the
5-year Subordinated Monthly Income Capital Investment Certificates.
(Incorporated by Reference - Form S-1, No. 33-1970, effective
December 31, 1985)

INSTRUMENTS DEFINING RIGHTS OF OWNERS OF INDEBTEDNESS NOT REGISTERED:

4.(ii)A Trust Indenture dated November 8, 1984, as amended January 3, 1985,
including specimen of 20-year Subordinated Capital Investment
Certificates. (Incorporated by Reference - Form S-1, No. 2-94400,
effective December 31, 1984)

4.(ii)B Credit Agreement among Farmland Industries, Inc., as Borrower, ABN
Amro Bank N.V., The Bank of Nova Scotia, Boatmen's First National
Bank of Kansas City, The Chase Manhattan Bank, N.A., Commerce Bank
of Kansas City, N.A., NBD Bank, N.A., as Banks and The National
Bank for Cooperatives, Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A. "Rabobank Nederland", New York Branch, as Banks
and as Co-Agents, dated May 19, 1994, (the "Syndicated Credit
Facility"). (Incorporated by Reference - Form 10-Q filed July 14,
1994)

4.(ii)B(1) List identifying contents of all omitted schedules
referenced in and not filed with, the Syndicated Credit
Facility, dated May 19, 1994. (Incorporated by Reference
- Form 10-Q, filed July 14, 1994)

5. Opinion re Legality and Other Matters

MATERIAL CONTRACTS:

LEASE CONTRACTS:

10.(i)A The First National Bank of Chicago, not individually but solely as
Trustee for AT&T Commercial Finance Corporation, The Boatmen's
National Bank of St. Louis, Firstier Bank, N.A. and Norwest Bank
Minnesota, National Association and Farmland Industries, Inc.
consummated a leveraged lease in the amount of $73,153,000 dated
September 6, 1991. (Incorporated by Reference - Form SE, filed
December 3, 1991)

10.(i)B The First National Bank of Commerce as Trustee for General Electric
Credit Corporation as Beneficiary and Farmland Industries, Inc.
consummated a leveraged lease in the amount of $51,909,257.90 dated
March 17, 1977. (Incorporated by Reference - Form S-1, No.2-60372,
effective December 22, 1977)

MANAGEMENT REMUNERATIVE PLANS:

10.(ii)(A)(1) Annual Employee Variable Compensation Plan (September 1, 1994
- August 31, 1995). (Incorporated by Reference - Form 10-K,
filed November 29, 1994)

10.(ii)(A)(2) Farmland Industries, Inc. Management Long-Term Incentive Plan
(Effective September 1993) (Incorporated by Reference - Form
10-K, filed November 29, 1993).

12. Computation of Ratios

21. Subsidiaries of the Registrant

CONSENTS OF EXPERTS AND COUNSEL:

23.A Independent Auditors' Consent and Report on Schedules

23.B Consent of Legal Counsel

23.C Consent of Special Tax Counsel
23.D Consent of Qualified Independent Underwriter

24 Power of Attorney (Incorporated by Reference - Form 10-K, filed
November 29, 1994)

25.A Statement of Eligibility of Trustee and Qualification of UMB Bank,
National Association Trustee, Form T-1. (Incorporated by Reference -
Form S-1 No. 33-56821, filed December 12, 1994)

25.B Statement of Eligibility of Trustee and Qualification of Commerce Bank
of Kansas City, National Association as Trustee, Form T-1.
(Incorporated by Reference - Form S-1 No. 33-56821, filed December 12,
1994)

(B) FINANCIAL STATEMENT SCHEDULES

Farmland Industries, Inc. and Subsidiaries for each of the years in
the three-year period ended August 31, 1994:
Page

II--Amounts Receivable from Related Parties . . II-9

V--Property, Plant and Equipment . . . . . . II-10

VI--Accumulated Depreciation and
Amortization of
Property, Plant and Equipment . . . . . . II-13

IX--Short-term Borrowings . . . . . . . . . . II-16

X--Supplementary Income
Statement Information . . . . . . . . . . II-16

All other schedules are omitted as the required information is inapplicable
or the information is presented in the consolidated financial statements or
related notes.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement;

(iii) To include any material information with respect to
the plan of distribution not previously disclosed
in the registration statement, or any material
change to such information in the registration
statement;

(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.

(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FARMLAND
INDUSTRIES, INC. HAS DULY CAUSED THIS FORM S-1 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY OF KANSAS CITY, STATE OF
MISSOURI ON OCTOBER 2, 1995.

FARMLAND INDUSTRIES, INC.

BY H. D. CLEBERG
H. D. Cleberg
President and Chief Executive Officer

BY JOHN F. BERARDI
John F. Berardi
Executive Vice President and
Chief Financial Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED FOR THE FOLLOWING PERSONS ON THE DATE
INDICATED PURSUANT TO VALID POWER OF ATTORNEY EXECUTED ON OCTOBER 19, 1994.

Signature Title Date

ALBERT J. SHIVLEY Chairman of Board, October 2, 1995
Albert J. Shivley Director

OTIS H. MOLZ Vice Chairman of
Otis H. Molz Board, October 2, 1995
Director

LYMAN ADAMS, JR. Director October 2, 1995
Lyman Adams

RONALD J. AMUNDSON Director October 2, 1995
Ronald J. Amundson

BAXTER ANKERSTJERNE Director October 2, 1995
Baxter Ankerstjerne

JODY BEZNER Director October 2, 1995
Jody Bezner

RICHARD L. DETTEN Director October 2, 1995
Richard L. Detten

STEVEN ERDMAN Director October 2, 1995
Steven Erdman

WARREN GERDES Director October 2, 1995
Warren Gerdes

BEN GRIFFITH Director October 2, 1995

Ben Griffith

GAIL D. HALL Director October 2, 1995
Gail D. Hall

Director October 2, 1995
Jerome Heuertz

BARRY JENSEN Director October 2, 1995
Barry Jensen

GREG PFENNING Director October 2, 1995
Greg Pfenning

VONN RICHARDSON Director October 2, 1995
Vonn Richardson

MONTE ROMOHR Director October 2, 1995
Monte Romohr

JOE ROYSTER Director October 2, 1995
Joe Royster

PAUL RUEDINGER Director October 2, 1995
Paul Ruedinger

RAYMOND J. SCHMITZ Director October 2, 1995
Raymond J. Schmitz

THEODORE J. WEHRBEIN Director October 2, 1995
Theodore J. Wehrbein

ROBERT ZINKULA Director October 2, 1995
Robert Zinkula

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES

FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
Balance at Deductions Balance at
the Beginning Amounts Amounts the End
Name of Debtor of the Period Additions Collected Written Off of the Period
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
AUGUST 31, 1994
S.F. Industries(a) . . . . . . . . . . $ 450 $ 2,000 $ 2,450 $ -0- $ -0-
Hyplains Beef(b) . . . . . . . . . . . $ 6,126 $ 17,744 $ -0- $ -0- $ 23,870

AUGUST 31, 1993
S.F. Industries . . . . . . . . . . . $ 950 $ -0- $ 500 $ -0- $ 450
Hyplains Beef . . . . . . . . . . . . $ 4,348 $ 1,778 $ -0- $ -0- $ 6,126

AUGUST 31, 1992
S.F. Industries . . . . . . . . . . . $ -0- $ 3,950 $ 3,000 $ -0- $ 950
Hyplains Beef . . . . . . . . . . . . $ -0- $ 4,348 $ -0- $ -0- $ 4,348

<FN>

(a) Farmland has a $5,000,000 commitment to S.F. Industries, L.L.C. to
fund working capital requirements, interest on the working capital
loan, calculated at the LIBOR rate plus .50% is payable on the last
day of September, December, March and June.

(b) Farmland purchases cattle for the day-to-day operations of its 50%
owned venture, Hyplains Beef L.C. This receivable is non-interest
bearing.
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

FOR THE YEAR ENDED AUGUST 31, 1994
<TABLE>
<CAPTION>
Other
Charges Balance
September 1, Additions Retirements Add/ August 31,
Classification 1993 at Cost or Sales (Deduct) 1994
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Land and Land Improvements . . . . . . . $ 11,825 $ 2,214 $ 16 $ (409) $ 13,614
Site Improvements . . . . . . . . . . . . 26,877 1,524 129 375 28,647
Buildings . . . . . . . . . . . . 215,420 7,814 1,523 3,056 224,767
Machinery and Equipment . . . . . . . . . 678,784 61,997 12,976 (11,122) 716,683
Automotive Equipment . . . . . . . . . . 46,807 8,349 8,617 19,447 65,986
Furniture and Fixtures . . . . . . . . . 45,405 7,982 4,236 (538) 48,613
Livestock . . . . . . . . . . . . 4,373 1,968 1,639 (776) 3,926
Mining Properties . . . . . . . . . . . . 3,119 -0- -0- -0- 3,119
Leasehold Improvements . . . . . . . . . 12,149 2,716 -0- 220 15,085
Capital Lease . . . . . . . . . . . . 52,342 1,691 2,955 (122) 50,956
Construction and Acquisitions
in Progress(a) . . . . . . . . . . 57,242 (26,479) -0- -0- 30,763

Total Property, Plant
and Equipment . . . . . . . . $ 1,154,343 $ 69,776 $ 32,091 $ 10,131 $ 1,202,159
<FN>

(a) Construction and acquisitions in progress reflects the net change for the
period after transfers to other classifications.
</TABLE>
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

FOR THE YEAR ENDED AUGUST 31, 1993
<TABLE>
<CAPTION>
Other
Balance Charges Balance
September 1, Additions Retirements Add/ August 31,
Classification 1992 at Cost or Sales (Deduct) 1993
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Land and Land Improvements . . . . . . . $ 11,437 $ 880 $ 1,043 $ 551 $ 11,825
Site Improvements . . . . . . . . . . . . 15,308 10,087 96 1,578 26,877
Buildings . . . . . . . . . . . . 193,215 34,531 9,806 (2,520) 215,420
Machinery and Equipment . . . . . . . . . 593,014 77,998 11,409 19,181 678,784
Automotive Equipment . . . . . . . . . . 46,324 6,459 2,032 (3,944) 46,807
Furniture and Fixtures . . . . . . . . . 37,850 7,251 1,491 1,795 45,405
Livestock . . . . . . . . . . . . -0- -0- -0- 4,373 4,373
Mining Properties. . . . . . . . . . . . 26,569 217 -0- (23,667) 3,119
Leasehold Improvements. . . . . . . . . 10,215 5,745 158 (3,653) 12,149
Fertilizer Properties. . . . . . . . . . 48,695 -0- -0- (48,695) -0-
Capital Lease. . . . . . . . . . . . -0- -0- -0- 52,342 52,342
Construction and Acquisitions
in Progress(a) . . . . . . . . . . 53,812 3,432 -0- (2) 57,242

Total Property, Plant
and Equipment . . . . . . . . $ 1,036,439 $ 146,600 $ 26,035 $ (2,661) $ 1,154,343
<FN>

(a) Construction and acquisitions in progress reflects the net change for
the period after transfers to other classifications.

</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

FOR THE YEAR ENDED AUGUST 31, 1992
<TABLE>
<CAPTION>
Other
Balance Charges Balance
September 1, Additions Retirements Add/ August 31,
Classification 1991 at Cost or Sales (Deduct) 1992
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Land and Land Improvements . . . . . . . $ 12,560 $ 2,618 $ 3,534 $ (207) $ 11,437
Site Improvements . . . . . . . . . . . . 19,751 425 6,146 1,278 15,308
Buildings . . . . . . . . . . . . 154,062 50,132 10,217 (762) 193,215
Machinery and Equipment . . . . . . . . . 711,751 35,653 151,368 (3,022) 593,014
Automotive Equipment . . . . . . . . . . 44,328 8,071 5,852 (223) 46,324
Furniture and Fixtures . . . . . . . . . 37,166 5,462 5,264 486 37,850
Mining Properties . . . . . . . . . . . . 82,672 -0- 54,826 (1,277) 26,569
Leasehold Improvements . . . . . . . . . 9,465 749 -0- 1 10,215
Fertilizer Properties . . . . . . . . . . 49,544 -0- 849 -0- 48,695
Construction and Acquisitions
in Progress(a) . . . . . . . . . . 35,207 24,821 4,574 (1,642) 53,812

Total Property, Plant
and Equipment . . . . . . . . $ 1,156,506 $ 127,931 $ 242,630 $ (5,368) $ 1,036,439
<FN>

(a) Construction and acquisitions in progress reflects the net change for
the period after transfers to other classifications.
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT

FOR THE YEAR ENDED AUGUST 31, 1994
<TABLE>
<CAPTION> Additions
Charged to Other
Balance Profit and Retirements, Charges Balance
September 1, Loss of Renewals and Add/ August 31,
Classification 1993 Income Replacements (Deduct) 1994
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Land Improvements . . . . . . . . . . . . $ 154 $ 1 $ -0- $ -0- $ 155
Site Improvements . . . . . . . . . . . . 12,707 1,337 91 (7) 13,946
Buildings . . . . . . . . . . . . 76,426 8,950 820 2,740 87,296
Machinery and Equipment . . . . . . . . . 453,705 28,449 4,472 (2,215) 475,467
Automotive Equipment . . . . . . . . . . 36,062 4,356 3,623 9,626 46,421
Furniture and Fixtures . . . . . . . . . 27,855 7,361 3,227 162 32,151
Livestock . . . . . . . . . . . . 1,768 1,396 1,013 (362) 1,789
Mining Properties . . . . . . . . . . . . 192 19 -0- -0- 211
Leasehold Improvements . . . . . . . . . 3,847 1,323 -0- 213 5,383
Capital Lease . . . . . . . . . . . . 37,249 3,350 2,429 (120) 38,050
Construction and Acquisitions
in Progress(a) . . . . . . . . . . -0- -0- -0- -0- -0-

Totals . . . . . . . . . . . . $ 649,965 $ 56,542 $ 15,675 $ 10,037 $ 700,869
<FN>

(a) Construction and acquisitions in progress reflects the net change for
the period after transfers to other classifications.

</TABLE>

NOTE: The following percentages are used for computing depreciation:

Land Improvements . . . . . . 6 to 10%
Site Improvements . . . . . . 3 to 30%
Buildings . . . . . . . . . . 2 to 10%
Machinery and Equipment . . . 3 to 20%
Automotive Equipment . . . . 10 to 33%
Furniture and Fixtures . . . 10 to 20%
Livestock . . . . . . . . . 25 to 50%
Mining Properties . . . . . . 4 to 21%
Leasehold Improvements . . . . 4 to 6%
Capital Lease . . . . . . . . 6 to 7%

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT

FOR THE YEAR ENDED AUGUST 31, 1993
<TABLE>
<CAPTION> Additions
Charged to Other
Balance Profit and Retirements, Charges Balance
September 1, Loss of Renewals and Add/ August 31,
Classification 1992 Income Replacements (Deduct) 1993
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Land Improvements . . . . . . . . . . . . $ 153 $ 1 $ -0- $ -0- $ 154
Site Improvements . . . . . . . . . . . . 10,377 2,439 94 (15) 12,707
Buildings . . . . . . . . . . . . 69,907 7,832 875 (438) 76,426
Machinery and Equipment(a) . . . . . . . 418,331 28,720 10,499 17,153 453,705
Automotive Equipment . . . . . . . . . . 32,827 4,366 1,474 343 36,062
Furniture and Fixtures . . . . . . . . . 21,537 6,398 1,333 1,253 27,855
Livestock . . . . . . . . . . . . 1,768 1,768
Mining Property . . . . . . . . . . . . . 192 192
Leasehold Improvements . . . . . . . . . 3,211 872 11 (225) 3,847
Fertilizer Properties . . . . . . . . . . 34,094 3,199 78 (37,215) -0-
Capital Lease . . . . . . . . . . . . 37,249 37,249
Construction and Acquisitions
in Progress(b) . . . . . . . . . . -0- -0- -0- -0- -0-

Totals . . . . . . . . . . . . $ 590,437 $ 53,827 $ 14,364 $ 20,065 $ 649,965
<FN>

(a) Based on negotiations with potential purchasers, the carrying values of
the Coffeyville, Kansas refinery and a dragline were reduced by
adjusting accumulated depreciation by $17,622,000 and $6,155,000,
respectively.

(b) Construction and acquisitions in progress reflects the net change for
the period after transfers to other classifications.
</TABLE>

NOTE: The following percentages are used for computing depreciation:

Land Improvements . . . . . . 6 to 10%
Site Improvements . . . . . . 3 to 30%
Buildings . . . . . . . . . . 2 to 10%
Machinery and Equipment. . .3 to 20%
Automotive Equipment. . . .10 to 33%
Furniture and Fixtures. . .10 to 20%
Livestock. . . . . . . . .25 to 50%
Mining Properties . . . . . . 4 to 21%
Leasehold Improvements . . . . 4 to 6%
Fertilizer Properties . . . . 6 to 7%
Capital Lease . . . . . . . . 6 to 7%

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT
AND EQUIPMENT

FOR THE YEAR ENDED AUGUST 31, 1992
<TABLE>
<CAPTION> Additions
Charged to Other
Balance Profit and Retirements, Charges Balance
September 1, Loss of Renewals and Add/ August 31,
Classification 1991 Income Replacements (Deduct) 1992
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Land Improvements . . . . . . . . . . . . $ 153 $ 1 $ -0- $ (1) $ 153
Site Improvements . . . . . . . . . . . . 13,666 676 3,968 3 10,377
Buildings . . . . . . . . . . . . 72,369 5,810 8,261 (11) 69,907
Machinery and Equipment . . . . . . . . . 488,684 29,592 98,262 (1,683) 418,331
Automotive Equipment . . . . . . . . . . 32,293 3,149 2,626 11 32,827
Furniture and Fixtures . . . . . . . . . 22,075 3,738 5,486 1,210 21,537
Leasehold Improvements . . . . . . . . . 2,375 836 -0- -0- 3,211
Fertilizer Properties . . . . . . . . . . 34,066 3,591 3,563 -0- 34,094
Construction and Acquisitions in
Progress(a) . . . . . . . . . . . . 113 -0- -0- (113) -0-

Totals . . . . . . . . . . . . $ 665,794 $ 47,393 $ 122,166 $ (584) $ 590,437
<FN>

(a) Construction and acquisitions in progress reflects the net change for
the period after transfers to other classifications.
</TABLE>

NOTE: The following percentages are used for computing depreciation:

Land Improvements . . . . . . 6 to 10%
Site Improvements . . . . . . 3 to 30%
Buildings . . . . . . . . . . 2 to 10%
Machinery and Equipment. . . 3 to 20%
Automotive Equipment. . . .10 to 33%
Furniture and Fixtures. ..10 to 20%
Leasehold Improvements. . . .4 to 6%
Fertilizer Properties . . . . 6 to 7%

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE IX--SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
Weighted
Maximum Average Average
Amount Amount Interest
Balance Weighted Outstanding Outstanding Rate
Category of Aggregate End of Average During During During the
Short-Term Borrowings Period Interest Rate the Period the Period Period (1)
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
August 31, 1994:
Demand Loan Certificates . . . . . . . . $ 23,158 4.3% $ 39,873 $ 28,299 3.9%
Bank Debt . . . . . . . . . . . . $ 281,886 5.2% $ 417,446 $ 302,500 4.2%

August 31, 1993:
Demand Loan Certificates . . . . . . . . $ 29,860 3.8% $ 46,403 $ 35,002 4.3%
Bank Debt . . . . . . . . . . . . $ 268,783 4.1% $ 370,726 $ 348,230 4.2%

August 31, 1992:
Demand Loan Certificates . . . . . . . . $ 43,084 5.5% $ 58,684 $ 50,516 6.3%
Bank Debt . . . . . . . . . . . . $ 200,072 4.5% $ 200,822 $ 174,397 5.3%
<FN>
(1) The weighted average interest rate was calculated by dividing an
interest amount on short-term borrowings by the average daily balance
of short-term borrowings during the period.

</TABLE>

SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
Charged to Costs and Expenses
For the Year Ended August 31

1994 1993 1992
(Amounts in Thousands)
<S> <C> <C> <C>
1.Maintenance and repairs. . $58,730 $61,273 $50,252
<FN>
NOTE: All other items required by Schedule X are excluded as such items
are less than one (1) percent of total sales for each of the years
presented.
</TABLE>

EXHIBIT 23.C

CONSENT OF SPECIAL TAX COUNSEL

Farmland Industries, Inc.:

We consent to the references to our firm in the Prospectus filed as part of this
Post-Effective Amendment No. 1 to this Registration Statement No. 33-56821.

BRYAN CAVE

October 2, 1995

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

________________

EXHIBITS

POST-EFFECTIVE AMENDMENT NO. 1
to
Form S-1
Registration Statement No. 33-56821
Under
The Securities Act of 1933

___________________

Farmland Industries, Inc.

Exhibit 99

EXHIBIT INDEX

The following exhibits and financial statement schedules are filed as a part
of this Post-Effective Amendment No. 1 to Form S-1 Registration Statement.
Certain of these exhibits are incorporated by reference as indicated. Items
marked with an asterisk (*) are filed herein.

Exhibit No. Document Description

UNDERWRITING AGREEMENT:

1.A Underwriting Agreement between Farmland Industries, Inc. and Farmland
Securities Company, dated December 6, 1989. (Incorporated by Reference
- Form S-1 No. 33-56821 filed December 12, 1994)

ARTICLES OF INCORPORATION AND BYLAWS:

3.A Articles of Incorporation and Bylaws of Farmland Industries, Inc.
effective December 1, 1993. (Incorporated by Reference - Form
10-K,filed November 29, 1994)

INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES:

4.(i)C(1) Amendment Number 2, dated December 3, 1991, to Trust
Indenture dated November 8, 1984 as amended January 3,
1985 covering Farmland Industries, Inc.'s 5-Year
Subordinated Capital Investment Certificates.
(Incorporated by Reference - Form SE, dated December 3,
1991)

INSTRUMENTS DEFINING RIGHTS OF OWNERS OF INDEBTEDNESS NOT REGISTERED:

4.(ii)A(1) Amendment Number 2, dated December 3, 1991, to Trust
Indenture dated November 8, 1984 as amended January 3,
1985 covering Farmland Industries, Inc.'s 20-Year
Subordinated Capital Investment Certificates.
(Incorporated by Reference - Form SE, dated December 3,
1991)
4.(ii)B Credit Agreement among Farmland Industries, Inc., as Borrower, ABN
Amro Bank N.V., The Bank of Nova Scotia, Boatmen's First National
Bank of Kansas City, The Chase Manhattan Bank, N.A., Commerce Bank
of Kansas City, N.A., NBD Bank, N.A., as Banks and The National
Bank for Cooperatives, Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A. "Rabobank Nederland", New York Branch, as Banks
and as Co-Agents, dated May 19, 1994, (the "Syndicated Credit
Facility"). (Incorporated by Reference - Form 10-Q filed July 14,
1994)

* 5. Opinion re Legality and Other Matters

MATERIAL CONTRACTS:

LEASE CONTRACTS:

MANAGEMENT REMUNERATIVE PLANS:

10.(ii)(A)(1) Annual Employee Variable Compensation Plan (September 1, 1994
- August 31, 1995). (Incorporated by Reference - Form 10-K,
filed November 29, 1994)

10.(ii)(A)(2) Farmland Industries, Inc. Management Long-Term Incentive Plan
(Effective September 1993) (Incorporated by Reference - Form
10-K, filed November 29, 1993).

* 12. Computation of Ratios

* 21. Subsidiaries of the Registrant

CONSENTS OF EXPERTS AND COUNSEL:

* 23.A Independent Auditors' Consent and Report on Schedules

* 23.B Consent of Legal Counsel
* 23.C Consent of Special Tax Counsel

* 23.D Consent of Qualified Independent Underwriter

24 Power of Attorney (Incorporated by Reference - Form 10-K, filed
November 29, 1994)

25.A Statement of Eligibility of Trustee and Qualification of UMB Bank,
National Association Trustee, Form T-1. (Incorporated by Reference -
Form S-1 No. 33-56821, filed December 12, 1994)

EXHIBIT 5

Farmland Industries, Inc.
3315 North Oak Trafficway
Kansas City, Missouri 64116

Gentlemen:

I am acting as the General Counsel for Farmland Industries, Inc., a Kansas
corporation (the "Company"), in connection with the Registration Statement on
Form S-1 (Registration No. 33-56821) (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
contemplated issuance by the Company from time to time of Demand Loan
Certificates, 10-year Subordinated Capital Investment Certificates, 5-year
Subordinated Capital Investment Certificates, 10-year Subordinated Monthly
Income Capital Investment Certificates, and 5-year Subordinated Monthly Income
Capital Investment Certificates of the Company, which with respect to Demand
Loan Certificates may be issued pursuant to an Indenture entered into between
the Company and UMB Bank, National Association, as successor trustee to Commerce
Bank of Kansas City, National Association and with respect to Subordinated
Capital Investment Certificates and Subordinated Monthly Income Capital
Investment Certificates may be issued under indentures entered into between the
Company and Commerce Bank of Kansas City, National Association, as trustee.
Capitalized terms used herein have the meanings set forth in the Registration
Statement, unless otherwise defined herein.

I have examined the originals, or certified, conformed or reproduction
copies of all records, agreements, instruments and documents as I have deemed
relevant or necessary as the basis for the opinions hereinafter expressed. In
all such examinations, I have assumed the genuineness of all signatures on
original or certified copies and the conformity to original or certified copies
of all copies submitted to me as conformed or reproduction copies. As to
various questions of fact relevant to such opinions, I have relied upon, and
assumed the accuracy of, certificates and statements and other information of
public officials, officers or representatives of the Company and others.

Based upon the foregoing, and subject to the limitations set forth herein,
I hereby confirm the opinions attributed to me in the Registration Statement.

I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to me under the captions "Legal
Matters" in the Prospectus and "Legal Matters" in any Prospectus Supplement
forming a part of the Registration Statement. In giving these consents, I do
not hereby admit that I am in the category of persons whose consent is required
under Section 7 of the Securities Act.

The opinions expressed herein are solely for the benefit of the Company and
Trustees (who may rely on this letter as though it were an addressee) and may
not be relied upon in any manner or for any purpose by any other person and may
not be quoted in whole or in part without my prior written consent.

Very truly yours,

Robert B. Terry

October 2, 1995

EXHIBIT 12

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

Nine Months Ended
Year Ended August 31 May 31 May 31
1990 1991 1992 1993 1994 1994 1995
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income (Loss) . . . . . $ 48,580 $ 42,693 $ 61,046 $ (30,400) $ 73,876 $ 43,308 $ 129,043

Income Tax Expense (Benefit) $ 9,604 $ 7,473 $ 9,458 $ (6,433) $ 4,890 $ 2,255 $ 21,439

Minority Interest in Income of
Consolidated Subsidiary
that has Fixed Charges . . -0- -0- -0- 865 333 395 2,489

Minority Interest in
Loss of Consolidated
Subsidiary . . . . . . -0- -0- -0- (37) (4,855) (5,352) -0-

Equity Interest in Loss
(Earnings less distributions)
of Less-than-fifty
Percent Owned
Investees . . . . . . 113 856 2,341 1,007 603 211 (488)

Total Fixed Charges
(excluding interest
capitalized) . . . . . . 47,000 54,443 47,719 55,268 64,383 47,061 48,882

Earnings . . . . . . $ 105,297 $ 105,465 $ 120,564 $ 20,270 $ 139,230 $ 87,878 $ 201,365

Fixed Charges:
Interest (including
amounts
capitalized) . . . . . $ 37,226 $ 42,481 $ 34,426 $ 43,873 $ 51,842 $ 38,390 $ 39,986
Estimated Interest
Component
of Rentals . . . . . . 11,652 12,290 13,293 13,006 12,898 8,752 9,451

Total Fixed Charges . . $ 48,878 $ 54,771 $ 47,719 $ 56,879 $ 64,740 $ 47,141 $ 49,437

Ratio of Earnings to Fixed Charges. . . 2.2 1.9 2.5 0.4 2.2 1.9 4.1

Earnings Inadequate to Cover
Fixed Charges . . . . . . $ 36,609
</TABLE>

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

Farmland Foods, Inc., a 99%-owned subsidiary, was incorporated under the laws of
the State of Kansas. Farmland Foods, Inc. has been included in the consolidated
financial statements filed in this registration.

Farmland Insurance Agency, a wholly-owned subsidiary, was incorporated under the
laws of the State of Missouri. Farmland Insurance Agency has been included in
the consolidated financial statements filed in this registration.

Farmers Chemical Company, a wholly-owned subsidiary, was incorporated under the
laws of the State of Kansas. Farmers Chemical Company has been included in the
consolidated financial statements filed in this registration.

Farmland Securities Company, a wholly-owned subsidiary, was incorporated under
the laws of the State of Delaware. Farmland Securities Company has been
included in the consolidated financial statements filed in this registration.

Cooperative Service Company, a wholly-owned subsidiary, was incorporated under
the laws of the State of Nebraska. Cooperative Service Company has been
included in the consolidated financial statements filed in this registration.

Double Circle Farm Supply Company, a wholly-owned subsidiary, was incorporated
under the laws of the State of Nevada. Double Circle Farm Supply Company has
been included in the consolidated financial statements filed in this
registration.

National Beef Packing Company, L.P., a 58%-owned subsidiary (68%-owned effective
March 1, 1995), was formed under the laws of the State of Delaware. National
Beef Packing Company has been included in the consolidated financial statements
filed in this registration.

NBPCo, L.L.C., a wholly-owned subsidiary, was formed under the laws of the State
of Kansas. NBPCo has been included in the consolidated financial statements
filed in this registration.

Farmland Financial Services Company, a wholly-owned subsidiary, was incorporated
under the laws of the State of Kansas. Farmland Financial Services Company has
been included in the consolidated financial statements filed in this
registration.

Farmland Transportation, Inc., a wholly-owned subsidiary, was incorporated under
the laws of the State of Missouri. Farmland Transportation, Inc. has been
included in the consolidated financial statements filed in this registration.

Environmental and Safety Services, Inc., a wholly-owned subsidiary, was
incorporated under the laws of the State of Missouri. Environmental and Safety
Services, Inc. has been filed in the consolidated financial statements included
in this registration.

Penterra, Inc., a 81%-owned subsidiary, was incorporated under the laws of the
State of Kansas. Penterra, Inc. has been included in the consolidated financial
statements filed in this registration.

Farmland Industries, Ltd., a wholly-owned subsidiary, was incorporated under the
laws of the United States Virgin Islands. Farmland Industries, Ltd. has been
included in the consolidated financial statements filed in this registration.

Heartland Data Services, Inc., a wholly-owned subsidiary, was incorporated under
the laws of the State of Kansas. Heartland Data Services, Inc. has been
included in the consolidated financial statements filed in this registration.

Yuma Feeder Pig, Inc., a 72%-owned subsidiary, was incorporated under the laws
of the state of Colorado. Yuma Feeder Pig, Inc. has been included in the
consolidated financial statements filed in this registration.

Equity Country, Inc., a wholly-owned subsidiary, was incorporated under the laws
of the State of Delaware. Equity Country, Inc. has been included in the
consolidated financial statements filed in this registration.

Equity Export Oil and Gas Company, Inc., a wholly-owned subsidiary, was
incorporated under the laws of the State of Oklahoma. Equity Export Oil and Gas
Company, Inc. has been included in the consolidated financial statements filed
in this registration.

Ceres Realty Corporation, a wholly-owned subsidiary, was incorporated under the
laws of the State of Missouri. Ceres Realty Corporation has been included in
the consolidated financial statements filed in this registration.

Heartland Wheat Growers, L.P., a 79%-owned subsidiary, was formed under the laws
of the State of Kansas. Heartland Wheat Growers has been included in the
consolidated financial statements filed in this registration.

Heartland Wheat Growers, Inc., a 79%-owned subsidiary, was incorporated under
the laws of the State of Kansas. Heartland Wheat Growers has been included in
the consolidated financial statements filed in this registration.

Farmland Industrias S.A. de C.V., a wholly-owned subsidiary, was formed under
the laws of Mexico. Farmland Industrias has been included in the consolidated
financial statements filed in this registration.

National Carriers, Inc., a 79%-owned subsidiary, was incorporated under the laws
of the State of Kansas. National Carriers has been included in the consolidated
financial statements filed in this registration.

Supreme Land, Inc., a wholly-owned subsidiary, was incorporated under the laws
of the State of Kansas. Supreme Land has been included in the consolidated
financial statements filed in this registration.

Tradigrain, Inc., a wholly-owned subsidiary, was incorporated under the laws of
the State of Tennessee. Tradigrain, Inc. has been included in the consolidated
financial statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of
Switzerland. Tradigrain S.A. of Switzerland has been included in the
consolidated financial statements filed in this registration.

Tradigrain Shipping S.A., a wholly-owned subsidiary, was formed under the laws
of Switzerland. Tradigrain Shipping S.A. has been included in the consolidated
financial statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of France.
Tradigrain S.A. of France has been included in the consolidated financial
statements filed in this registration.

Tradigrain GmbH, a wholly-owned subsidiary, was formed under the laws of
Germany. Tradigrain GmbH has been included in the consolidated financial
statements filed in this registration.

Tradigrain LTD., a wholly-owned subsidiary, was formed under the laws of Great
Britain. Tradigrain LTD. has been included in the consolidated financial
statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of
Argentina. Tradigrain S.A. of Argentina has been included in the consolidated
financial statements filed in this registration.

EXHIBIT 23.A

INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES

The Board of Directors
Farmland Industries, Inc.:

The audits referred to in our report dated October 21, 1994,
except as to note 7.a., which is as of September 5, 1995, included the related
financial statement schedules as of August 31, 1994, and for each of the years
in the three-year period ended August 31, 1994, included in the Registration
Statement in the accompanying index. These financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly
in all material respects the information set forth therein.

Our report dated October 21, 1994, except as to note 7.a., which
is as of September 5, 1995, contains an explanatory paragraph concerning income
tax adjustments proposed by the Internal Revenue Service on the gain on sale of
Terra Resources, Inc.

We consent to the use of our reports included herein and to the
references to our firm under the headings "Selected Consolidated Financial
Data", and "Experts" in the Prospectus.

KPMG PEAT MARWICK LLP

Kansas City, Missouri
October 2, 1995

EXHIBIT 23.B

CONSENT OF LEGAL COUNSEL

Farmland Industries, Inc.:

The undersigned consents to the use herein of his opinion, dated December
12, 1994, relating to the legality of Subordinated Capital Investment
Certificates, Subordinated Monthly Income Capital Investment Certificates, and
Demand Loan Certificates being registered, and of all other statements and
opinions attributed to him appearing in this Registration Statement No. 033-
56821.

Robert B. Terry
Vice President,
and General Counsel

Kansas City, Missouri
October 2, 1995

EXHIBIT 23.C

CONSENT OF SPECIAL TAX COUNSEL

Farmland Industries, Inc.:

We consent to the references to our firm in the Prospectus filed as part of this
Post-Effective Amendment No. 1 to this Registration Statement No. 33-56821.

BRYAN CAVE

October 2, 1995

EXHIBIT 23.D

CONSENT OF QUALIFIED INDEPENDENT UNDERWRITER

Farmland Industries, Inc.:

We consent to the references to our firm under the caption "Qualified
Independent Underwriter" in the Prospectus.

James H. Glen, Jr.
INTERSTATE/JOHNSON LANE CORPORATION

October 2, 1995