FARMLAND INDUSTRIES INC, S-1, 2000-01-19

FARMLAND INDUSTRIES INC
S-1, 2000-01-19
MEAT PACKING PLANTS

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Registration Statement No.
_____________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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 NORTH 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)

TERRY M. CAMPBELL
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FARMLAND INDUSTRIES, INC.
3315 NORTH OAK TRAFFICWAY, KANSAS CITY, MISSOURI 64116-0005
816-459-6348
(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 THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(D) 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 [ ]

CALCULATION OF REGISTRATION FEE

PROPOSED MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITY BEING OFFERING OR REGISTRATION FEE
REGISTERED EXCHANGE PRICE

[S] [C] [C]
DEMAND LOAN CERTIFICATES $ 100,000,000
SUBORDINATED DEBENTURE BONDS $ 236,000,000

TOTAL $ 336,000,000 $ 90,216
THE FEE IS CALCULATED PURSUANT TO RULE 457(O). PURSUANT TO RULE 429, THE
COMBINED PROSPECTUS FILED AS A PART OF THIS REGISTRATION STATEMENT WILL RELATE
AS WELL TO THE REGISTRANT'S FORM S-1 REGISTRATION STATEMENT NO. 333-68225. THE
AMOUNT OF SECURITIES REGISTERED IN REGISTRATION STATEMENT NO. 333-68225 WHICH
WERE NOT SOLD AND WHICH ARE CARRIED FORWARD IN THIS COMBINED REGISTRATION
STATEMENT AND THE RELATED FEE CALCULATED AT A RATE OF .000278 ARE: AMOUNT OF
SECURITIES - $123,376,000, AMOUNT OF FEE - $34,298. AS A RESULT, THE FEE PAID
HEREWITH RELATES TO $212,624,000 OF SECURITIES AND AMOUNTS TO $56,133.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

PROSPECTUS
Farmland Industries' Logo is positioned in the upper right-hand corner under the
text "Prospectus".

FARMLAND INDUSTRIES, INC.

$100,00,000 DEMAND LOAN CERTIFICATES

$236,000,000 SUBORDINATED DEBENTURE BONDS
MINIMUM
INITIAL INVESTMENT

Demand Loan Certificates $ 1,000

Subordinated Debenture Bonds
Ten-Year, Series A.........................$ 1,000
Ten-Year, Series B ........................$ 100,000
Five-Year, Series C........................$ 1,000
Five-Year, Series D........................$ 100,000
Ten-Year Monthly Income, Series E..........$ 5,000
Ten-Year Monthly Income, Series F..........$ 100,000
Five-Year Monthly Income, Series G.........$ 5,000
Five-Year Monthly Income, Series H.........$ 100,000

For interest rate information, call 1-800-821-8000, ext. 6360.

TERMS OF SALE

If all the securities offered are sold, we will receive $100.0 million from the
sale of demand loan certificates and $196.0 million from the sale of
subordinated debenture bonds. Also, we will exchange subordinated debenture
bonds with a face amount of up to $40.0 million for other subordinated debt
securities. If more than $196.0 million is sold for cash a lesser amount will
be available for exchange. We will pay approximately $8.4 million in
commissions and $1.6 million in other expenses. The agent is not required to
sell any specific number or dollar amount of securities but will use their best
efforts to sell the securities offered.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DESCRIPTION OF CERTAIN RISK
FACTORS THAT YOU SHOULD CONSIDER BEFORE YOU INVEST IN THESE SECURITIES.

FARMLAND SECURITIES COMPANY
Agent
January 19, 2000

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ANY
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR
IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED. FURTHERMORE, YOU SHOULD NOT ASSUME
THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.

TABLE OF CONTENTS
Page

Information Available About Farmland.........................................3
Prospectus Summary...........................................................4
The Offering.................................................................5
Risk Factors.................................................................8
Recent Events...............................................................10
Determination Of Interest Rates.............................................11
Use Of Proceeds.............................................................12
Plan Of Distribution........................................................12
Exchange Offer..............................................................13
How To Accept Exchange Offer................................................14
How To Transfer Ownership...................................................14
Description Of Debt Securities..............................................15
Business And Properties.....................................................31
Legal Proceedings...........................................................40
Selected Consolidated Financial Data........................................41
Management's Discussion And Analysis Of Financial Condition And
Results Of Operations...................................................42
Quantitative And Qualitative Disclosures About Market Risk..................58
Index To Farmland Consolidated Financial Statements.........................59
Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure...................................................105
Directors And Executive Officers Of Farmland...............................106
Executive Compensation.....................................................111
Equity Ownership Of Certain Beneficial Owners And Management...............115
Certain Relationships And Related Transactions.............................116
Legal Matters..............................................................116
Experts....................................................................116
Qualified Independent Underwriter..........................................116

INFORMATION AVAILABLE ABOUT FARMLAND

INFORMATION AVAILABLE FROM THE SEC

The Securities Exchange Act of 1934, as amended (the "Exchange Act") requires
our company to file annual and quarterly reports, as well as certain other
information, with the Securities and Exchange Commission ("SEC"). These reports
may be read and copied at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. You can request copies of these
documents, upon payment of a duplication fee, by writing to the Public Reference
Section of the SEC, 450 Fifth Street N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC
Internet site (http://www.sec.gov).

INFORMATION AVAILABLE FROM FARMLAND

You also may request a copy of our latest annual report as filed with the SEC,
at no cost, by writing or telephoning us at the address shown on page 4.

INFORMATION AVAILABLE FROM NASD

The National Association of Securities Dealers, Inc. ("NASD") has a program
which provides information regarding the disciplinary history of NASD members
and their associated persons. You may obtain an investor brochure which
includes information describing this program by contacting the NASD. The NASD
hotline number is 1-800-289-9999. The NASD website is
http://www.nasdr.com/2000.htm.

PROSPECTUS SUMMARY

This summary does not contain all the information that may be important to you.
You should read the entire prospectus before making an investment decision.

Kansas City, Missouri is the location of our world headquarters. Our mailing
address and telephone number are as follows:

Farmland Industries, Inc.
P.O. Box 7305
Kansas City, Missouri 64116-0005
816-459-6000

FARMLAND'S BUSINESS

Farmland Industries, Inc., founded in 1929 and formally incorporated in Kansas
in 1931, is a farm supply cooperative and a processing and marketing
cooperative. In this prospectus, "Farmland", "we", "us", or "our" refers to
Farmland Industries, Inc. and its subsidiaries, unless the context suggests
differently. Farmland operates on a cooperative basis and is primarily owned by
its members. Members are entitled to receive patronage refunds distributed by
Farmland from the member-sourced portion of its annual net earnings.

As of August 31, 1999, Farmland's membership, associate membership and patrons
eligible for patronage refunds consisted of approximately 1,400 cooperative
associations of farmers and ranchers and 5,700 pork or beef producers or
associations of such producers

Based on sales, we are one of the largest cooperatives in the United States. In
1999, we had sales of $10.7 billion, including international sales of
approximately $3.2 billion.

Farmland competes with many companies, including other cooperatives. These
competitors are of various sizes and have various levels of vertical
integration. We sell to a large number of customers and no single customer is
material to our business.

Our business is focused on two areas: Agricultural inputs and outputs.

AGRICULTURAL INPUTS

In this area, we operate as a farm supply cooperative. Our four main farm
supply product divisions are as follows:

. Plant Foods
. Crop Protection
. Petroleum
. Feed

In 1999, our sales of farm supply products were $2.8 billion. Approximately 59%
of these farm supply products were manufactured in plants owned or operated by
Farmland. Member cooperative associations purchased approximately 68% of the
farm supply products we sold in 1999. These cooperatives distribute products
primarily to farmers and ranchers who are the end users of the farm supply
products we sell.

AGRICULTURAL OUTPUTS

In this area, we operate as a processing and marketing cooperative. Our
agricultural outputs operations are as follows:

. The processing and marketing of pork
. The raising of hogs for processing
. The processing and marketing of beef
. The domestic storage and marketing of grain
. The international storage and marketing of grain

In 1999, our members supplied about 70% of the hogs we processed, 38% of the
cattle we processed and 60% of the grain that we marketed domestically.
Substantially all of the pork and beef products we sold in 1999 was processed in
plants owned by Farmland.

THE OFFERING

DESCRIPTION OF SECURITIES

We are offering $100.0 million of Demand Loan Certificates. We are offering
$236.0 million of Subordinated Debenture Bonds for sale or to exchange for
certain Farmland subordinated debt securities. The terms and conditions of the
debt securities which we are offering for sale or exchange are more fully
described in the section "Description of Debt Securities" which begins on page
15.

The Subordinated Debenture Bonds are available in several series.
Minimum
Series Initial Investment

Ten-Year, Series A.........................$ 1,000
Ten-Year, Series B ........................$ 100,000
Five-Year, Series C........................$ 1,000
Five-Year, Series D........................$ 100,000
Ten-Year Monthly Income, Series E..........$ 5,000
Ten-Year Monthly Income, Series F..........$ 100,000
Five-Year Monthly Income, Series G.........$ 5,000
Five-Year Monthly Income, Series H.........$ 100,000

MATURITY

. Demand Loan Certificates are payable upon demand.
. Subordinated Debenture Bonds of Series A and Series B mature 10 years from
the date of original issuance.
. Subordinated Debenture Bonds of Series C and Series D mature 5 years from
the date of original issuance.
. Monthly Income Subordinated Debenture Bonds of Series E and Series F mature
10 years from the date of original issuance.
. Monthly Income Subordinated Debenture Bonds of Series G and Series H mature 5
years from the date of original issuance.

INTEREST RATES

The interest rates we pay on the various Debt Securities we are selling can be
found under the heading "Determination of Interest Rates" on page 11. Also, you
may obtain information about the interest rates we pay by calling Farmland
Securities Company, 1-800-821-8000, Extension 6360.

INTEREST PAYMENT

Interest on the Demand Loan Certificates is payable in one of the following ways
at the option of the purchaser. The option is selected by the purchaser at the
time of purchase and is irrevocable:

a)six months after the Date of Original Issuance, and at the end of each and
every six month period thereafter until the Demand Loan Certificate is
surrendered for redemption, or
b)only at the date of redemption, with interest compounded semi-annually at the
effective Certificate Interest Rate.
Interest on the Subordinated Debenture Bonds (Series A, Series B, Series C and
Series D) is paid semi-annually on January 1 and July 1 or at the holder's
election may be left to accumulate semi-annually.

Interest on Monthly Income Subordinated Debenture Bonds (Series E, Series F,
Series G and Series H) is paid on the first day of each month.

PROVISIONS FOR EARLY REDEMPTION BY HOLDERS

1.We will redeem the Ten-Year Series A and Series B and Five-Year Series C and
Series D Subordinated Debenture Bonds held by a trustee or custodian in an
individual retirement account ("IRA") as necessary to satisfy mandatory
withdrawals from the IRA.
2.We will redeem the Ten-Year Series A and Series B, and Five-Year Series C and
Series D Subordinated Debenture Bonds upon notice of the death of the holder.
3.We will redeem limited additional amounts of Subordinated Debenture Bonds of
Series A, Series B, Series C and Series D before they mature if certain
restrictive conditions are satisfied. The limited amount of Subordinated
Debenture Bonds that we will redeem before maturity is explained under the
caption "Limited Redemption Prior to Maturity of Subordinated Debenture
Bonds" beginning on page 38 of this prospectus. A summary of the other
limitations on the redemption before maturity of Subordinated Debenture Bonds
of Series A, Series B, Series C and Series D follows:
. Except when held by a trustee or custodian in an IRA as stated in (1)
above, the Ten-Year Subordinated Debenture Bonds (Series A and Series
B) must have been held for at least 3 years.
. Except when held by a trustee or custodian in an IRA as stated in (1)
above, the Five-Year Subordinated Debenture Bonds (Series C and Series
D) must have been held for at least 2 years.
4.We will redeem the Ten-Year Monthly Income Subordinated Debenture Bonds
(Series E and Series F), and Five-Year Monthly Income Subordinated Debenture
Bonds (Series G and Series H) before maturity only after notice of the death
of the holder.

PROVISIONS FOR EARLY REDEMPTION AT THE OPTION OF FARMLAND

Subordinated Debenture Bonds of Ten-Year Series A and Series B, and Five-Year
Series C and Series D may be called at the option of Farmland 2 years after the
date of issue.

Monthly Income Subordinated Debenture Bonds of Ten-Year Series E and Series F
and Five-Year Series G and Series H, cannot be called by Farmland.

SUBORDINATION

The rights of holders of the Subordinated Debenture Bonds to receive payments of
principal and interest are subordinated in right of payment to all existing and
future holders of Senior Indebtedness. Senior Indebtedness includes Demand Loan
Certificates, obligations of Farmland created before the Subordinated Indenture
and outstanding to banks or trust companies, insurance companies or pension
trust and indebtedness created after the date of the Subordinated Indenture
under instruments which state that such indebtedness is Senior Indebtedness.

The Subordinated Debenture Bonds are also effectively subordinated to all
obligations of Farmland's subsidiaries.

UNDERWRITING DISCOUNTS AND COMMISSIONS

We will pay Farmland Securities Company a commission not to exceed 4% of the
aggregate sales price of the Subordinated Debenture Bonds and Demand Loan
Certificates offered. We also pay Farmland Securities Company for all expenses
it incurs related to the sale of these securities. However, this additional
payment is limited to no more than 3% of the aggregate sales price of the
securities being offered.

PURPOSE OF THE EXCHANGE OFFER

The purpose of the exchange offer is to extend the period of time we utilize
funds borrowed from an investor in our Subordinated Debenture Bonds. For
additional information regarding the exchange offer, including how to accept an
exchange offer, please see "Exchange Offer" on page 13.

SELLING PRICE

The debt securities, if sold for cash, will be sold for 100% of the face amount.

USE OF PROCEEDS

Proceeds received from the sale of the debt securities will be used for general
corporate purposes, including repayment of long-term debt and the funding of
capital expenditures.

RISK FACTORS

You should consider carefully the following risk factors in addition to the
other information contained in this prospectus.

SENIOR INDEBTEDNESS HOLDERS WILL BE PAID BEFORE HOLDERS OF SUBORDINATED
DEBENTURE BONDS.

The Demand Loan Certificates are unsecured and non-subordinated obligations of
Farmland and have the same right of payment as all other unsecured and non-
subordinated indebtedness of Farmland.

The Subordinated Debenture Bonds offered by this Prospectus for sale and for
exchange are unsecured obligations of Farmland and are subordinated in right of
payment to all existing and future Senior Indebtedness. Senior Indebtedness
includes Demand Loan Certificates, obligations of Farmland created before the
Subordinated Indenture and outstanding to banks or trust companies, insurance
companies or pension trust and indebtedness created after the date of the
Subordinated Indenture under instruments which state that such indebtedness is
Senior Indebtedness.

In addition, the Subordinated Debenture Bonds will be effectively subordinated
to all obligations of Farmland's subsidiaries. Any right of Farmland to receive
assets from any subsidiary which liquidates or re-capitalizes will be subject to
the claims of such subsidiary's creditors. As a result, the right of holders of
the Subordinated Debenture Bonds to participate in those assets is also subject
to the claims of such subsidiary's creditors. Accordingly, the Subordinated
Debenture Bonds will be effectively subordinated to all indebtedness and other
liabilities, including trade accounts payable, of our subsidiaries.

As of November 30, 1999:

1.Farmland had $646.5 million of Senior Indebtedness outstanding; in addition,
Senior Indebtedness includes certain obligations with a present value of
approximately $330.3 million for future payments over seven years under long-
term leases;

2. Farmland had outstanding $504.6 million aggregate principal amount of
subordinated indebtedness; and

3. Certain Farmland subsidiaries had outstanding $224.8 million aggregate
principal amount of indebtedness, of which $202.2 million was nonrecourse to
Farmland.

The indentures under which the debt securities are issued do not contain any
provision that would limit the ability of Farmland or any of its affiliates to
incur indebtedness of any type or that would provide holders of the debt
securities protection in the event of a highly leveraged transaction,
restructuring, change in control, merger, sale of substantially all of our
assets or similar transaction involving Farmland. In the event of these
transactions, we cannot assure you that Farmland or any successor would be able
to repay holders of our debt securities either from continuing operations or
from proceeds of any such transaction.

CREDIT FACILITY RESTRICTIONS COULD AFFECT OUR ABILITY TO REPAY OUR SUBORDINATED
DEBT. OUR FAILURE TO COMPLY WITH THESE RESTRICTIONS WOULD RESULT IN A DEFAULT
UNDER OUR CREDIT FACILITY.
The Credit Facility relating to our Senior Indebtedness contains financial
covenants. Violation of these financial covenants or any other breach relating
to Senior Indebtedness, including payment defaults, would create a default on
our Senior Indebtedness. If default occurs, we will not make payments of
principal and interest on the Subordinated Debenture Bonds, as well as our other
subordinated debt. Payments may begin again when the breach or violation is
resolved.

RESTRICTED REDEMPTION RIGHTS OF HOLDERS OF SUBORDINATED DEBENTURE BONDS MAY MAKE
THESE BONDS AN UNSUITABLE INVESTMENT FOR YOU.
Holders of Subordinated Debenture Bonds may redeem their investments prior to
maturity only under restricted conditions. These restricted conditions are more
fully described under the caption "Limited Redemption Prior to Maturity of
Subordinated Debenture Bonds" starting on page 21 of this prospectus. Depending
on your investment objectives, these restricted redemption rights may make these
Subordinated Debenture Bonds an unsuitable investment for you.

YOU MAY BE UNABLE TO SELL YOUR DEBT SECURITY BECAUSE THERE IS NO TRADING MARKET
FOR OUR DEBT SECURITIES.
A trading market does not exist for our debt securities. Also, it is highly
unlikely that a secondary market for these securities will develop. We do not
plan to list any of the debt securities on any securities exchange.

THESE SECURITIES ARE OFFERED THROUGH OUR WHOLLY-OWNED SUBSIDIARY, WHICH HAS
RECEIVED A PARTIAL EXEMPTION FROM REGULATORY REQUIREMENTS.
Farmland Securities Company ("FSC") is our wholly owned subsidiary. FSC's
business is limited to the offer and sale of securities issued by us. Because
FSC is wholly owned by Farmland, the offering requires a partial exemption from
requirements of Rule 2720 of the NASD. This partial exemption requires, among
other things, that a minimum of 80 percent of the dollar amount of sales be to a
defined group as approved by the NASD. Only persons associated with us or FSC
participated in determining the terms, including price, of the securities
offered in this prospectus.

WE CANNOT ASSURE YOU THAT WE WILL HAVE SUFFICIENT FUNDS AVAILABLE TO PAY
INTEREST AND PRINCIPAL.
We have not and do not intend to establish special cash reserves, escrow
accounts or trusts for payment of principal or interest on the debt securities
offered in this prospectus. We have relied on, and plan to continue to rely on,
general corporate funds provided through operations, sale of assets and other
borrowings to make all principal and interest payments when due.

POTENTIAL ENVIRONMENTAL LIABILITIES RELATED TO BOTH CURRENT AND FORMER
OPERATIONS MAY ADVERSELY IMPACT OUR FINANCIAL RESULTS.
Farmland 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, which may impose liability for cleanup of
environmental contamination. Farmland uses hazardous materials and generates
hazardous wastes in the ordinary course of our manufacturing processes. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Financial Conditions, Liquidity and Capital Resources - Matters
Involving the Environment," which begins on page 55.

OUR BUSINESS IS SUBJECT TO UNPREDICTABLE CHANGES IN AGRICULTURAL CONDITIONS.
Our financial success depends largely on factors which affect agricultural
production and marketing conditions. These factors, which are outside of
Farmland's control, often change agricultural conditions in an unpredictable
manner. Therefore, we cannot determine the future impact on our operations from
changes in these external factors. We expect demand for our products to
continue to be volatile as agricultural conditions change.
AS A COOPERATIVE, WE HAVE LIMITED ABILITY TO RAISE EQUITY IN THE CAPITAL
MARKETS.
As a cooperative, we raise equity primarily through the reinvestment of a
portion of patronage refunds as stock or capital credits and through retention
of net income (retained earnings) generated from transactions with non-members.

RECENT EVENTS

AGRONOMY VENTURE
Farmland, Cenex Harvest States, and Land O'Lakes have announced their intent to
form an agronomy marketing joint venture, with the venture beginning operations
during early 2000. We anticipate the venture will enable the partners to
achieve enhanced economies of scale and to generate critical mass in our
marketing and distribution. Farmland will retain the ownership of our
manufacturing facilities.

INCOME TAX MATTERS
In late November, 1999, the United States Tax Court issued an opinion holding
that the gains and losses we realized in 1983 and 1984 on the sale of the stock
of Terra Resources, Inc. and certain other assets were patronage-sourced, and
that we had reported these gains and losses correctly. By ruling in our favor,
the Tax Court rejected claims of the Internal Revenue Service that would have
resulted in material additional federal income taxes plus accumulated interest.
This ruling also means that we do not owe additional state income tax and
accumulated interest related to these transactions.

The IRS may decide to appeal the Tax Court decision to the United States Court
of Appeals for the Eighth Circuit. In the event of an appeal, Farmland's
management believes there is a high probability that Farmland would ultimately
prevail.

DETERMINATION OF INTEREST RATES

The Certificate Interest Rate is the interest rate per year for Demand Loan
Certificates as determined, from time to time, by Farmland. Each Demand Loan
Certificate shall earn interest at the Certificate Interest Rate 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
Certificate Interest Rate 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 will 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 after the
issuance date, such Demand Loan Certificate will, if not redeemed, earn interest
at the Certificate Interest Rate 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 Certificate Interest Rate for Demand Loan Certificates will have no effect
on the Certificate Interest Rate 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. 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 Original Issuance, the Demand Loan Certificates will bear
interest from Date of Original Issuance to date of redemption at a rate 2% below
the Certificate Interest Rate (the "Demand Rate"). Thus, if the Certificate
Interest Rate were 6% per year, the Demand Rate would be 4% per year.

The Bond Interest Rate, with respect to any series of Subordinated Debenture
Bonds, is the interest rate per year for such Series, 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. Any change
in the Bond Interest Rate will not affect the Bond Interest Rate on any
Subordinated Debenture Bonds for which the full purchase price was received
prior to the change.

On the date of this prospectus, the Certificate Interest Rate on Demand Loan
Certificates and the Bond Interest Rate on Subordinated Debenture Bonds is as
follows:

Minimum Certificate
Initial InvestmentInterest Rate

Demand Loan Certificates.............$ 1,000 6.50

Bond
Subordinated Debenture Bonds: Interest Rates

Ten-Year, Series A .................$ 1,000 8.75
Ten-Year, Series B ................$100,000 9.00
Five-Year, Series C ................$ 1,000 8.00
Five-Year, Series D ................$100,000 8.15
Ten-Year Monthly Income, Series E ..$ 5,000 8.75
Ten-Year Monthly Income, Series F ..$100,000 9.00
Five-Year Monthly Income, Series G .$ 5,000 8.00
Five-Year Monthly Income, Series H .$100,000 8.15

Whenever the Certificate Interest Rate or Bond Interest Rate is changed, we will
amend this prospectus to specify the interest rate in effect, after the date of
the change. Whenever the Certificate Interest Rate or the Bond Interest Rate
is changed, Farmland will notify holders of Demand Loan Certificate and
Subordinated Debenture Bond of the change. Information concerning the
Certificate Interest Rate and Bond Interest Rate 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).

USE OF PROCEEDS

The offering is made on a best efforts basis with no established minimum amount
of Subordinated Debenture Bonds and Demand Loan Certificates (collectively, the
"Offered Debt Securities") that must be sold. No assurance can be provided as
to the amount of net proceeds Farmland may receive as a result of this offering.
Assuming that all of the Subordinated Debenture Bonds and Demand Loan
Certificates offered for cash are sold, net proceeds to Farmland will be
approximately $326.0 million after deducting estimated commissions and expenses.
To the extent Subordinated Debenture Bonds are exchanged pursuant to the
exchange offer, net cash proceeds will be reduced by the face amount of
Subordinated Debenture Bonds exchanged, up to $40 million. Any proceeds to
Farmland from this offering may be used:

. to fund portions of Farmland's capital expenditures and investments in
ventures which are estimated to be approximately $221.9 million through the
two-year period ending August 31, 2001. See "Business and Properties -
Capital Expenditures and Investments in Ventures" beginning on page 37 of
this prospectus.
. to refinance approximately $42.9 million of subordinated debt with interest
rates of 7% to 9.25% which mature at various times prior to August 31,
2001; or
. to redeem subordinated debt prior to maturity at owners' requests, as
permitted by the respective trust indenture pursuant to which such
subordinated debt was issued. See the subcaption "Redemption by Farmland"
and "Redemption by the Holder" within the description of each type of
Subordinated Debenture Bond, beginning on page 18 of this prospectus.

If proceeds from the sale of these securities are less than amounts required for
these purposes, additional funds 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", beginning on page 42.

PLAN OF DISTRIBUTION

The securities offered by this prospectus for cash and for exchange are offered
by Farmland Securities Company ("FSC") and may be offered by other
broker-dealers selected by Farmland. FSC's commitment is to use its best efforts
to solicit orders for the securities being offered. FSC has not made a firm
commitment and is not obligated to solicit offers for any specified amount of
debt securities. There is no requirement that any minimum amount of securities
must be sold. The offering is 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 Certificates and Subordinated Debenture Bonds for sale to
the general public and/or for exchange and to solicit offers 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 Rule 2720
of the NASD because no persons, other than persons associated with Farmland or
FSC, participated in determining the price and other terms of the securities
offered by this prospectus. Farmland will pay commissions to FSC not to exceed
4% of the aggregate price of the Offered Debt Securities. Farmland will pay all
expenses and liabilities incurred by FSC, limited to an amount not to exceed 3%
of the aggregate sales price of the Offered Debt Securities. FSC is a
registered broker-dealer under the Exchange Act 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").

FSC and other brokers-dealers, if any, selected by Farmland have or will agree
to deliver a current prospectus relating to the Offered Debt Securities to
prospective investors at the time of or prior to any offering of such
certificates for sale or for exchange.

Farmland may engage other broker-dealers that are qualified to offer and sell
Offered Debt Securities in a particular state and that are members of the NASD.
Each broker-dealer participating in this offering will be held responsible for
complying with all statutes, rules and regulations of all jurisdictions in which
each participating broker-dealer offers the Offered Debt Securities for sale.
Farmland will pay to other selected broker-dealers, for their services, a sales
commission of not more than 4% of the face amount of Subordinated Debenture
Bonds sold and not more than 1/2 of 1% of the face amount of Demand Loan
Certificates sold. In addition, Farmland may pay to selected broker-dealers an
unallocated due diligence and marketing fee of not more than 1/2 of 1% of the
face amount of the Subordinated Debt Securities sold. Farmland may indemnify
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 $50,000 for such
participation. 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, its
Ten-Year Bonds and its Five-Year Bonds the right to exchange such
certificates for an equivalent principal amount of any Monthly Income
Bond ($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, Ten-Year Bond or Five-Year Bond into a
Monthly Income Bond is not affected by the period of time the
Subordinated Capital Investment Certificate, Ten-Year Bond or Five-Year
Bond has been held. Farmland will not redeem Monthly Income Bonds prior
to maturity except upon death of the owner.

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 Ten-Year Bond or Five-Year Bond
which, at the time of the exchange, is being offered by this Prospectus.
This option to exchange into Ten-Year Bonds or Five-Year Bonds is
affected by the period of time the outstanding certificate has been
held. The required holding period is as follows:

If, at the time of Then, to be eligible
issuance the maturity for exchange, the
period of the certificate must have
certificate held was: been held for:

(In Years) (In Years)
5 2
10 3
15 5
20 5

An exchange will be made effective on the day certificates or bonds eligible for
exchange are received at Farmland's office in Kansas City, Missouri,. However,
for any certificates received within a fifteen (15) day period preceding the
record date of such certificates or bonds, the exchange will 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" included in this Prospectus) or
by telephone to (816) 459-6360. This exchange offer will expire at 12:00 P.M.
Eastern Standard Time on December 31, 2000, unless terminated prior to such
date. We will notify holders of certificates or bonds eligible for exchange at
least 30 days prior to the effective date of Farmland's termination of this
exchange offer.

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

The following discussion is a brief summary of the principal United States
Federal income tax consequences under current Federal income tax laws relating
to exchanges of certificates or bonds. This summary is the opinion of Robert B.
Terry, General Counsel for Farmland, is not intended to be exhaustive and,
among other things, does not describe any state, local or foreign income and
other tax consequences. Generally, the exchange of certificates or bonds
would be considered as taxable exchanges, although it is possible that certain
exchanges should be considered as non-taxable exchanges. The basis for
determining a taxable gain or loss on a taxable exchange for an owner to take
into account as gain or loss is 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 certificates and bonds were sold at 100% of face amount and
the fair market value of the bonds received in the exchange should be
considered 100% of the face amount of the certificates or bonds exchanged.
However, since it is possible for a prior owner to have sold his certificate
or bond 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 generally 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 except that, if an owner purchased
a certificate or bond at a "market discount" (i.e., at a price less than its
face amount), all or a portion of the owner's gain may be treated as ordinary
income, rather than capital gain, for federal income tax purposes.
Characterization of any capital gain or loss as short-term or long-term will
depend on the length of time the certificate or bond had been held by the owner
as of the date of the exchange. Owners of these certificates or bonds
should seek advice from their tax advisor before accepting the exchange offer.

HOW TO ACCEPT EXCHANGE OFFER

Registered holders may accept the exchange offer by delivering any of the
certificates or bonds which are eligible for exchange (see "Exchange Offer"
immediately above), to Farmland Securities Company, P.O. Box 7305, Kansas City,
Missouri 64116. 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 FSC. 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 the Offered Debt Securities, 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. However, for any
certificates received within a fifteen (15) day period preceding the record date
of such certificates, the transfer will be made effective as of the first day
following such record date.

DESCRIPTION OF DEBT SECURITIES

Under this prospectus, Farmland is offering the following Offered Debt
Securities, namely:

Demand Loan Certificates
Subordinated Debenture Bonds issuable in series, as follows:
Minimum
Series Initial Investment

The Demand Loan Certificates are called the "Demand Loan Certificates" and the
various series of Subordinated Debenture Bonds referred to above are
collectively called the "Subordinated Debenture Bonds".

The Demand Loan Certificates will rank equally with all other unsecured and
unsubordinated debt of Farmland and will be issued under the Senior Indenture.
The Demand Loan Certificates are direct obligations of Farmland. As described
below, the Senior Indenture permits the issuance of unsubordinated debt in
series, of which the Demand Loan Certificates are a series.

Each series of Subordinated Debenture Bonds will be subordinate and junior in
right of payment to all Senior Indebtedness (as defined below) of Farmland and
will be issued under the Subordinated Indenture. As described below, the
Subordinated Indenture permits the issuance of subordinated debt in series, of
which each series of Subordinated Debenture Bonds offered by this prospectus is
a series.

The unsubordinated debt issuable under the Senior Indenture and the subordinated
debt issuable under the Subordinated Indenture are referred to collectively as
the "Debt Securities".

Each series of Debt Securities issued pursuant to an Indenture will be issued
pursuant to an amendment or supplemental indenture or pursuant to an Officers'
Certificate, in each case delivered pursuant to resolutions of the Board of
Directors of Farmland and in accordance with the provisions of Section 3.01 of
the applicable Indenture. The terms of the Debt Securities include those stated
in the applicable Indenture and those made part of the applicable Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "TIA"). The Debt
Securities are subject to all such terms and the Holders of Debt Securities are
referred to the Indentures and the TIA for a statement of such terms.

The following summaries of certain provisions of each Indenture, and the Debt
Securities and the Offered Debt Securities are not complete and are qualified in
their entirety by reference to the provisions of the applicable Indenture,
including the definitions of capitalized terms used in this prospectus without
definition. Numerical references in parentheses are to sections in the
applicable Indenture and unless otherwise indicated capitalized terms have the
meanings given them in the Indentures.

GENERAL

Neither Indenture limits the amount of Debt Securities, debentures, notes or
other evidences of indebtedness that may be issued by Farmland or any of its
subsidiaries. Furthermore, neither Indenture affords Holders of Debt Securities
protection in the event of a highly leveraged transaction, restructuring, change
in control, merger or similar transaction involving the Company that may
adversely affect Holders of Debt Securities.

Each Indenture provides that Debt Securities may be issued from time to time in
one or more series. Under each Indenture, Farmland has the authority to
establish as to each series:

1)the title of the Debt Securities of the series;

2)any limit upon the aggregate principal amount of the Debt Securities of the
series;

3)the date or dates on which the principal of or premium, if any, on the Debt
Securities of the series shall be payable or the methods for the
determination of principal or premium;

4)the rate or rates at which such Debt Securities will bear interest, if any,
or the method or methods of calculating such rate or rates of interest, the
date or dates from which such interest shall accrue or the method or methods
by which such date or dates shall be determined, the interest payment dates
on which any such interest shall be payable, the right, if any, of Farmland
to defer or extend an interest payment date, the record date, if any, for the
interest payable on any Interest Payment Date, and the basis upon which
interest shall be calculated if other than that of a 365-day year;

5)the place or places where such Debt Securities shall be payable or
surrendered for registration of transfer or exchange;

6)the period or periods within which, the price or prices at which, and the
other terms and conditions upon which, such Debt Securities may be redeemed,
in whole or in part, at the option of Farmland;

7)the obligation, if any, of Farmland to redeem or purchase such Debt
Securities pursuant to any sinking fund or analogous provisions or upon the
happening of a specified event or at the option of a Holder and the period or
periods within which, the price or prices at which and the other terms and
conditions upon which, such Debt Securities shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;

8)the denominations in which such Debt Securities shall be issuable;

9)if other than the entire principal amount of the Debt Security, the portion
of the principal amount of Debt Securities of the series which shall be
payable upon declaration of acceleration upon an event of default;

10)provisions, if any, granting special rights to the holders of Debt Securities
of the series upon the occurrence of specified events;

11)any deletions from, modifications of or additions to the events of default
specified in the applicable Indenture or covenants of Farmland specified in
the applicable Indenture;

12)the forms of such Debt Securities and interest coupons, if any, of the
series;

13)the applicability, if any, to the Debt Securities and interest coupons, if
any, of the series of defeasance provisions;

14)if other than Farmland, the identity of the Registrar and any Paying Agent;

15)any restrictions on the registration, transfer or exchange of such Debt
Securities; and
16)any other terms of the series including any terms which may be required by or
advisable under United States laws or regulations or advisable (as determined
by Farmland) in connection with the marketing of Debt Securities of the
series. (Section 3.01)

Unless otherwise indicated as to a series of Debt Securities, the Debt
Securities will be issued only in fully registered form without coupons and Debt
Securities denominated in U.S. dollars will be issued in denominations of not
less than $1,000. (Section 3.02)

Unless otherwise indicated as to a series of Debt Securities, the principal of,
and any premium or interest on, any series of Debt Securities will be payable at
the principal executive offices of Farmland in Kansas City, Missouri, provided
that, at the option of Farmland, payment of interest may be made by check mailed
to the address of the Holder entitled thereto as it appears in the related
security register or by electronic funds transfer or similar means to an account
maintained by the Holder entitled thereto as it appears in the related security
register (Sections 3.05, 3.07, 6.02). The office address of Farmland is 3315
North Oak Trafficway, Kansas City, Missouri, 64116-0005).

Farmland will issue the Offered Debt Securities on the day (the "Date of
Original Issuance") on which it receives (or is deemed to receive) and has
accepted payment of the full purchase price. Any payments (other than by
electronic funds transfer or similar means) received after noon shall be deemed
received by Farmland on the next business day. Electronic funds transfers are
effective when funds are received. No Offered Debt Security shall be valid or
obligatory for any purpose unless there appears on such Offered Debt Security a
certificate of authentication substantially in the form provided for in the
applicable Indenture duly executed by the applicable Trustee by manual signature
of one of its authorized officers. (Sections 2.02, 3.03)

DEMAND LOAN CERTIFICATES

INTEREST

If purchased and held by a Farmland member cooperative for a one (1) month
period or by any other purchaser for a six (6) month period immediately
following the Date of Original Issuance of the Demand Loan Certificates, the
principal amount of the Demand Loan Certificates will bear interest at the
interest rate as determined by Farmland, from time to time (the "Certificate
Interest Rate"). Each Demand Loan Certificate will earn interest at the
Certificate Interest Rate in effect on the Date of Original 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 Certificate Interest Rate is
increased to a rate higher than that currently in effect for the Demand Loan
Certificates, then each such Demand Loan Certificate will 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. Commencing six (6) months
from the Date of Original Issuance of each Demand Loan Certificate and on each
six (6) month anniversary date thereafter, such Demand Loan Certificate will, if
not redeemed, earn interest at the Certificate Interest Rate 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 Certificate Interest Rate 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
Certificate Interest Rate which affects the Demand Loan Certificates held. 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 Original Issuance, the Demand Loan Certificates shall bear interest from Date
of Original Issuance to date of redemption at a rate 2% below the Certificate
Interest Rate (the "Demand Rate"). Thus, if the Certificate Interest Rate is 6%
per year, the Demand Rate would be 4% per year. Interest on the principal
amount of any Demand Loan Certificates held longer than six (6) months will be
computed at the effective Certificate Interest Rate and is payable in one of the
following ways at the option of the Holder, made at the time of purchase and
irrevocable as to the purchaser: (i) six (6) months after the Date of Original
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 Certificate
Interest Rate.

Any interest not punctually paid or duly provided for ("Defaulted Interest") on
any Demand Loan Certificate will not be payable to the Holder thereof on the
applicable payment date but instead may either be paid to the person in whose
name such Demand Loan Certificate is registered at the close of business on a
special record date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice of which shall be given to the Holder of such Demand Loan
Certificate not less than ten (10) days prior to such special record date, or
may be paid at any time in any other lawful manner, all as more completely
provided in the Senior Indenture. (Section 3.07)

REDEMPTION

The Demand Loan Certificates cannot be called for redemption by Farmland at any
time prior to maturity.

Farmland will redeem the Demand Loan Certificates at any time upon
written request of the Holder. No partial redemptions will be permitted. If
the Demand Loan Certificate is surrendered for redemption by a Farmland member
cooperative during a one (1) month period or by any other Holder during a six
(6) month period immediately following the Date of Original Issuance, interest
computed at the applicable Demand Rate from Date of Original 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 Original Issuance, interest from the last
previous date on which interest was paid to the date of redemption computed at
the applicable Certificate Interest Rate 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.

SUBORDINATED DEBENTURE BONDS

To ensure accuracy, much of the language in this section has been taken directly
from the indentures. This language may be legalistic and complex. To help you
understand the provisions, we have provided a summary, immediately following
this paragraph, of critical characteristics of the subordinated debt securities.
The summaries are not meant to be complete. If you have questions regarding the
meaning or intent of any section, please contact your selling agent or Farmland
Securities Company. Farmland Securities Company may be contacted by calling
(816) 459-6360 or writing to:

Farmland Securities Company
P.O. Box 7305
Kansas City, Missouri 64116

TEN-YEAR, SERIES A AND B

MATURITY DATE
The maturity date for Subordinated Debenture Bonds, Ten-Year, Series A and Ten-
Year, Series B (referred to in this prospectus individually as "Series A Bonds"
and "Series B Bonds" and collectively as the "Ten-Year Bonds") is ten (10) years
from the Date of Original Issuance. The payment of the principal will be made
at maturity upon presentation and surrender of the Subordinated Debenture Bonds,
properly endorsed.

SERIES A BONDS
The Bond Interest Rate for any Series A Bonds issued will be the rate per year
stated on the face of the bond. The Series A Bonds will bear interest at the
applicable Bond Interest Rate as in effect on the Date of Original Issuance, but
any change of the Bond Interest Rate for later issued Series A Bonds will not
affect the Bond Interest Rate on any Series A Bond for which the full purchase
price was received prior to the change. The Series A Bonds require a minimum
initial investment of $1,000.

SERIES B BONDS
The Bond Interest Rate for any Series B Bonds issued will be the rate per year
stated on the face of the bond. The Series B Bonds will bear interest at the
applicable Bond Interest Rate as in effect on the Date of Original Issuance.
Farmland anticipates that the Bond Interest Rate for Series B Bonds on a
particular day may exceed by up to 1/4 of 1% per year the Bond Interest Rate on
such day for Series A Bond. Any change of the Bond Interest Rate for later
issued Series B Bonds will not affect the Bond Interest Rate on any Series B
Bonds for which the full purchase price was received prior to the change. The
Series B Bonds require a minimum initial investment of $100,000.

INTEREST PAYMENTS
Interest is payable on the principal of the Ten-Year Bonds from the Date of
Original Issuance at the election of the purchaser, made at the time of
purchase, in one of the following ways:

1)semiannually on January 1 and July 1, to Holders of record on the last
preceding December 15 and June 15, respectively (or, if originally issued
between the record date and the payment date, to the Holder on the Date of
Original Issuance); or

2)at maturity or at the date of redemption if redeemed prior to maturity,
compounded semiannually, on December 31 and June 30 at the applicable Bond
Interest Rate.

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 Holder, 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 receive payment of the interest semiannually thereafter.
Any interest attributable to periods starting with the Date of Original Issuance
and ending with the effective date of the termination 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 Holder to terminate any obligation to continue
retaining the interest of any Holder. 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 Holder, and the Holder will be paid all the
interest accrued to the Holder's account on the effective date.

Any Defaulted Interest on any Ten-Year Bond will not be payable to the Holder on
the applicable record date but instead may either be paid to the person in whose
name such Ten-Year Bond is registered at the close of business on a special
record date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice of which shall be given to the Holder of such Ten-Year Bond not
less than ten (10) days prior to such special record date, or may be paid at any
time in any other lawful manner, all as more completely provided in the
Subordinated Indenture. (Section 3.07)

REDEMPTION BY FARMLAND
The Ten-Year Bonds may be redeemed, after two (2) years from the Date of
Original Issuance, at the option of Farmland at any time prior to maturity, on
at least fifteen (15) days written notice, at face value plus accrued interest
to the date of redemption. The Subordinated Indenture permits Farmland to
select in any manner at its discretion the bonds to be redeemed. (Section 4.01)

REDEMPTION BY THE HOLDER
Farmland will redeem limited amounts of the Ten-Year, Series A Bonds and Series
B Bonds prior to maturity at the option of the Holder as described under the
caption "Limited Redemption Prior to Maturity of Subordinated Debenture Bonds"
on page 21.

FIVE-YEAR, SERIES C AND D

MATURITY DATE
The maturity date for Subordinated Debenture Bonds, Five-Year, Series C and
Five-Year, Series D (referred to in this prospectus individually as "Series C
Bonds" and "Series D Bonds" and collectively as the "Five-Year Bonds") is five
(5) years from the Date of Original Issuance. The payment of the principal will
be made at maturity upon presentation and surrender of the Subordinated
Debenture Bonds, properly endorsed.

SERIES C BONDS
The Bond Interest Rate for any Series C Bonds issued will be the rate per year
stated on the face of the bond. The Series C Bonds will bear interest at the
applicable Bond Interest Rate as in effect on the Date of Original Issuance, but
any change of the Bond Interest Rate for later issued Series C Bonds will not
affect the Bond Interest Rate on any Series C Bond for which the full purchase
price was received prior to the change. The Series C Bonds require a minimum
initial investment of $1,000.

SERIES D BONDS
The Bond Interest Rate for any Series D Bonds issued will be the rate per year
stated on the face of the bond. The Series D Bonds will bear interest at the
applicable Bond Interest Rate as in effect on the Date of Original Issuance.
Farmland anticipates that the Bond Interest Rate for Series D Bonds on a
particular day may exceed by up to 1/4 of 1% per year the Bond Interest Rate on
such day for any Series C Bond. Any change of the Bond Interest Rate for later
issued Series D Bonds will not affect the Bond Interest Rate on any Series D
Bonds for which the full purchase price was received prior to the change. The
Series D Bonds require a minimum initial investment of $100,000.

INTEREST PAYMENTS
Interest is payable on the principal of the Five-Year Bonds from the Date of
Original Issuance at the election of the purchaser, made at the time of
purchase, in one of the following ways:

2)at maturity or at the date of redemption if redeemed prior to maturity,
compounded semiannually, on December 31 and June 30 at the applicable Bond
Interest Rate.

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 Holder, 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 receive payment of the interest semiannually thereafter.
Any interest attributable to periods starting with the Date of Original Issuance
and ending with the effective date of the termination 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 Holder to terminate any obligation to continue
retaining the interest of any Holder. 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 Holder and the Holder will be paid all the
interest accrued to the Holder's account on the effective date.

Any Defaulted Interest on any Five-Year Bonds will not be payable to the Holder
on the applicable record date but instead may either be paid to the person in
whose name such Five-Year Bond is registered at the close of business on a
special record date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice of which shall be given to the Holder of such Five-Year Bond
not less than ten (10) days prior to such special record date, or may be paid at
any time in any other lawful manner, all as more completely provided in the
Subordinated Indenture. (Section 3.07)

REDEMPTION BY FARMLAND
The Five-Year Bonds may be redeemed, after two (2) years from the Date of
Original Issuance, at the option of Farmland at any time prior to maturity, on
at least fifteen (15) days written notice, at face value plus accrued interest
to the date of redemption only. The Subordinated Indenture permits Farmland to
select in any manner at its discretion the bonds to be redeemed. (Section 4.01)

REDEMPTION BY THE HOLDER
Farmland will redeem, at face amount plus accrued interest to the date of
redemption, limited amounts of the Five-Year Bonds prior to maturity at
the option of the Holder as described under the caption "Limited Redemption
Prior to Maturity of Subordinated Debenture Bonds".

LIMITED REDEMPTION PRIOR TO MATURITY OF SUBORDINATED DEBENTURE BONDS

1. Farmland will redeem each month, on a first come, first serve basis (as
evidenced by the time stamped or otherwise recorded as received by
Farmland), a limited amount of Ten-Year, Series A Bond, Ten-Year, Series B,
Five-Year, Series C Bond and Five-Years, Series D Bond prior to maturity.
To be eligible for redemption, a Ten-Year, Series A Bond or Ten-Year,
Series B Bond must have been held three (3) years from Date of Original
Issuance and a Five-Year, Series C Bond or Five-Year, Series D Bond must
have been held two (2) years from Date of Original Issuance. Subject to
the carryover discussed below, the aggregate maximum amount that Farmland
will redeem of Ten-Year, Series A Bonds, Ten-Year, Series B Bonds, Five-
Year, Series C Bonds, Five-Year, Series D Bonds and other subordinated debt
that Farmland elects to include in this redemption limit and which, in each
case, meets the requirements for redemption prior to maturity, will be the
greater of:

a) $1,500,000 or,

b) 1/2 of 1% of the combined total principal balance outstanding of all
such Ten-Year Bonds, Five-Year Bonds and other bonds included in this
redemption limit as specified above.

If the amount determined pursuant to the above formula in any month
(including any carryover from the prior month) exceeds the total amount
requested for redemption prior to maturity in that month, such excess is
carried over to the next month and added to the amount available for
redemption prior to maturity in that month. Any excess, however, will not
be carried beyond the end of Farmland's fiscal year.

If any series eligible for early redemption under the above provision has a
total balance outstanding less than $5,000,000 at the end of any month,
then the subordinated debt securities of that series will be redeemed at
the request of the Holder without regard to the above dollar limitation.

2. In addition to the amounts made available for redemption prior to maturity
as described in (1) above, redemption will be made in the case of death of
a Holder of Ten-Year Bonds and Five-Year Bonds upon written request and
delivery of satisfactory proof of death and other documentation and in
accordance with applicable laws.

3. IRA Redemption

In addition to the amounts made available for redemption prior to maturity
as described in (1) and (2) above, if Ten-Year Bonds or Five-Year Bonds are
held in an Individual Retirement Account (an "IRA") established under
Section 408 of the Internal Revenue Code of 1986, as amended (the "IRC"),
Farmland will redeem, upon written request, such Ten-Year Bonds and Five-
Year Bonds to the extent necessary to satisfy mandatory withdrawals from
the IRA which are required by the IRC. Such redemption will be made only
upon sufficient proof to Farmland that a mandatory withdrawal from the IRA
is required. In general, as presently in effect, the IRC requires
mandatory withdrawals from an IRA to commence on April 1 following the
calendar year in which the beneficiary reaches the age of seventy and one-
half (701/2) years.

4. The foregoing redemption privileges described in this section are subject
to the conditions, as provided under the subordination provisions
applicable to the Subordinated Debenture Bonds, that Farmland cannot redeem
any of the Subordinated Debenture Bonds if, at the time of or immediately
after giving effect to such redemption, there shall exist under any
indenture or loan or other agreement pursuant to which any Senior
Indebtedness is issued any default or any condition, event or act, which
with notice or lapse of time, or both, would constitute a default.

Redemption prior to maturity will be made upon the surrender of eligible Ten-
Year Bonds and Five-Year Bonds properly endorsed and accompanied by written
requests for early redemption to Farmland. Redemption prior to maturity will be
made at the face value of the bonds plus accrued interest to the date of
redemption. Amounts available for redemption prior to maturity are not set
aside in a separate fund.

TEN-YEAR MONTHLY INCOME, SERIES E AND F

MATURITY DATE
The maturity date for Subordinated Debenture Bonds, Ten-Year Monthly Income,
Series E and Ten-Year Monthly Income, Series F (referred to in this prospectus
individually as the "Series E Bonds" and the "Series F Bonds" and collectively
as the "Ten-Year Monthly Income Bonds") is ten (10) years from the Date of
Original Issuance. The payment of the principal will be made at maturity upon
presentation and surrender of the Subordinated Debenture Bonds, properly
endorsed.

BOND INTEREST RATES
The Bond Interest Rate for the Ten-Year Monthly Income Bonds will be determined
by Farmland, from time to time.

SERIES E BONDS
The Bond Interest Rate for any Series E Bonds issued will be the rate per year
stated on the face of the bond. The Series E Bonds will bear interest at the
applicable Bond Interest Rate as in effect on the Date of Original Issuance, but
any change of the Bond Interest Rate for later issued Series E Bonds will not
affect the Bond Interest Rate on any Series E Bond for which the full purchase
price was received prior to the change. Series E Bonds require an initial
minimum investment of $5,000 and subsequent investments require a minimum
investment of $1,000.

SERIES F BONDS
The Bond Interest Rate for any Series F Bonds issued will be the rate per year
stated on the face of the bond. The Series F Bonds will bear interest at the
applicable Bond Interest Rate as in effect on the Date of Original Issuance.
Farmland anticipates that the Bond Interest Rate for Series F Bonds on a
particular day may exceed by up to 1/4 of 1% per year the Bond Interest Rate on
such day for any Series E Bond. Any change of the Bond Interest Rate for later
issued Series F Bonds will not affect the Bond Interest Rate on any Series F
Bonds for which the full purchase price was received prior to the change.
Series F Bonds require a minimum initial investment of $100,000.

Any Defaulted Interest on any Ten-Year Monthly Income Bonds will not be payable
to the Holder on the applicable record date but instead may either be paid to
the person in whose name such Ten-Year Monthly Income Bond is registered at the
close of business on a special record date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice of which shall be given to the
Holder of such Ten-Year Monthly Income Bond not less than ten (10) days prior to
such special record date, or may be paid at any time in any other lawful manner,
all as more completely provided in the Subordinated Indenture. (Section 3.07)

REDEMPTION BY FARMLAND
The Ten-Year Monthly Income Bonds cannot be called for redemption by Farmland
any time prior to maturity.

REDEMPTION BY THE HOLDER
Except as provided in this paragraph, Farmland will not redeem the Ten-Year
Monthly Income Bonds prior to maturity upon the request of the Holder.
Redemptions will be made in the case of death of a Holder of Ten-Year Monthly
Income Bonds, upon written request and delivery of satisfactory proof of death
and other documentation and in accordance with applicable laws. Redemptions
prior to maturity will be made at the face value of the bonds plus accrued
interest to the date of redemption only. Amounts available for redemption prior
to maturity are not set aside in a separate fund. (Section 5.01)

IRA REDEMPTION
The Ten-Year Monthly Income Bonds will not, under any circumstances, be sold to
an IRA and an IRA trustee or custodian will not be permitted to be the
registered owner of a Ten-Year Monthly Income Bond. Therefore, unlike the Ten-
Year Bonds and the Five-Year Bonds, the Ten-Year Monthly Income Bonds do not
contain any special redemption rights for the benefit of an IRA or its trustee
or custodian.

FIVE-YEAR MONTHLY INCOME, SERIES G AND H

MATURITY DATE
The maturity date for Subordinated Debenture Bonds, Five-Year Monthly Income,
Series G and Five-Year Monthly Income, Series H (referred to individually as the
"Series G Bonds" and the "Series H Bonds" and collectively as the "Five-Year
Monthly Income Bonds") is five (5) years from the Date of Original Issuance.
The payment of the principal will be made at maturity upon presentation and
surrender of the Subordinated Debenture Bonds, properly endorsed.

BOND INTEREST RATES
The interest rates for the Five-Year Monthly Income Bonds will be determined by
Farmland, from time to time.
SERIES G BONDS
The Bond Interest Rate for any Series G Bonds issued will be the rate per year
stated on the face of the bond. The Series G Bonds will bear interest at the
applicable Bond Interest Rate as in effect on the Date of Original Issuance, but
any change of the Bond Interest Rate for later issued Series G Bonds will not
affect the Bond Interest Rate on any Series G Bond for which the full purchase
price was received prior to the change. Series G Bonds require an initial
minimum initial investment of $5,000, and subsequent investments require a
minimum investment of $1,000.

SERIES H BONDS
The Bond Interest Rate for any Series H Bonds issued will be the rate per year
stated on the face of the bond. The Series H Bonds will bear interest at the
applicable Bond Interest Rate as in effect on the Date of Original Issuance.
Farmland anticipates that the Bond Interest Rate for Series H Bonds on a
particular day may exceed by up to 1/4 of 1% per year the Bond Interest Rate on
such day for any Series G Bond. Any change of the Bond Interest Rate for later
issued Series H Bonds will not affect the Bond Interest Rate on any Series H
Bonds for which the full purchase price was received prior to the change.
Series H Bonds require a minimum initial investment of $100,000.

INTEREST PAYMENTS
Interest on the principal sum is payable monthly on the first day of each month
to Holders of record on the last day of the preceding month, commencing on the
first day of the month, following the month in which a Five-Year Monthly Income
Bond is issued. Any Defaulted Interest on any Five-Year Monthly Income Bonds
will not be payable to the Holder on the applicable record date but instead may
either be paid to the person in whose name such Five-Year Monthly Income Bond is
registered at the close of business on a special record date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice of which shall be
given to the Holder of such Five-Year Monthly Income Bond not less than ten (10)
days prior to such special record date, or may be paid at any time in any other
lawful manner, all as more completely provided in the Subordinated Indenture.
(Section 3.07)

REDEMPTION BY FARMLAND
The Five-Year Monthly Income Bonds cannot be called for redemption by Farmland
any time prior to maturity.

REDEMPTION BY THE HOLDER
Except as provided in this paragraph, Farmland will not redeem the Five-Year
Monthly Income Bonds prior to maturity upon the request of the Holder.
Redemptions will be made in the case of death of a Holder of Five-Year Monthly
Income Bonds, upon written request and delivery of satisfactory proof of death
and other documentation and in accordance with applicable laws. Redemptions
prior to maturity will be made at the face value of the bonds plus accrued
interest to the date of redemption only. Amounts available for redemption prior
to maturity are not set aside in a separate fund. (Section 5.01)

IRA REDEMPTION
The Five-Year Monthly Income Bonds will not, under any circumstances, be sold to
an IRA and an IRA trustee or custodian will not be permitted to be the
registered owner of a Five-Year Monthly Income Bond. Therefore, unlike the Ten-
Year Bonds and the Five-Year Bonds, the Five-Year Monthly Income Bonds do not
contain any special redemption rights for the benefit of an IRA or its trustee
or custodian.

SUBORDINATION

The payment of the principal of (and premium, if any) and interest on
Subordinated Debenture Bonds is, to the extent set forth in the Subordinated
Indenture, subordinated in right of payment to the prior payment in full of all
Senior Indebtedness, whether currently outstanding or subsequently incurred.
"Senior Indebtedness" is defined as:

a)the principal of (and premium, if any) and interest on indebtedness of
Farmland (other than the indebtedness of Farmland 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 November 8, 1984; and with respect to
Subordinated Monthly Income Capital Investment Certificates issued 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 8, 1984; and with
respect to its Subordinated Debenture Bonds issued under an indenture dated
December 4, 1997) 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 in
right of payment to the Debt Securities issued under the Subordinated
Indenture;

b)indebtedness created after the date of the Subordinated Indenture, as to
which the instrument creating or evidencing the indebtedness provides that
such indebtedness is superior in right of payment to Debt Securities issued
under the Subordinated Indenture; and

c)the Demand Loan Certificates.

By reason of the subordination provisions of the Subordinated Indenture, no
payment on account of principal of (or premium, if any) or interest on the
Subordinated Debenture Bonds shall be made, and no Subordinated Debenture Bonds
shall be purchased, either directly or indirectly, by Farmland or any of its
subsidiaries, unless full payment of amounts then due for principal of (and
premium, if any) and interest (including interest on overdue principal and
interest, to the extent permitted by law) on Senior Indebtedness has been made
or duly provided for. In addition, no payment on account of principal of (or
premium, if any) or interest on the Subordinated Debenture Bonds shall be made,
and no Subordinated Debenture Bonds shall be purchased, either directly or
indirectly, by Farmland or any of its subsidiaries, if, at the time of such
payment or purchase or immediately after giving effect to such payment or
purchase, there shall exist under any Senior Indebtedness or any indenture or
agreement pursuant to which any Senior Indebtedness is issued any default or any
condition, event or act, which, with notice or lapse of time, or both, would
constitute a default.

In the event that any Subordinated Debenture Bond is declared due and payable
before its stated maturity because of an Event of Default (as herein defined) or
upon any other acceleration of payment of the principal of the Subordinated
Debenture Bonds because of an Event of Default and upon any payment or
distribution of assets of Farmland, whether in cash, property or securities, to
creditors upon any dissolution, winding up, total or partial liquidation,
reorganization, assignment for the benefit of creditors, or other marshaling of
assets, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all principal of (and premium, if any) and
interest (including interest on overdue principal and interest) due or to become
due upon all Senior Indebtedness shall first be paid in full before the Holders
of Subordinated Debenture Bonds, or the Trustee under the Subordinated
Indenture, shall be entitled to retain any assets (other than shares of stock of
Farmland as reorganized or readjusted or securities of Farmland or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the same extent as the
Subordinated Debenture Bonds, to the payment of all Senior Indebtedness which at
the time may be outstanding, provided that the rights of the owners of the
Senior Indebtedness are not altered by such reorganization or readjustment) so
paid or distributed in respect of the Subordinated Debenture Bonds (for
principal, premium, if any, or interest); and upon any such dissolution, winding
up, liquidation, reorganization, assignment or marshaling, any payment or
distribution of assets of Farmland, whether in cash, property or securities
(other than as set forth above), to which the Holders of Subordinated Debenture
Bonds or the Trustee would otherwise be entitled, shall be paid by Farmland or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or by the Holders of Subordinated
Debenture Bonds or the Trustee under the Subordinated Indenture if received by
them or it, directly to the owners of Senior Indebtedness (pro rata to each such
owner on the basis of the respective amounts of Senior Indebtedness held by such
owner) or their representatives, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the owners of Senior Indebtedness, before any payment or
distribution is made to the Holders of Subordinated Debenture Bonds or to the
Trustee under the Subordinated Indenture. By reason of such subordination, in
the event of Farmland's insolvency, holders of Senior Indebtedness may receive
more, ratably, and Holders of Subordinated Debenture Bonds may receive less,
ratably, than other creditors of Farmland.

The Subordinated Indenture does not limit the amount of Senior Indebtedness that
may be issued by Farmland. As of November 30, 1999:

1)Farmland had $646.5 million aggregate principal amount of Senior Indebtedness
outstanding. In addition, Senior Indebtedness includes certain obligations
with a present value of approximately $330.3 million for future payments over
seven years under long-term leases,

2)Farmland had outstanding $504.6 million aggregate principal amount of other
subordinated indebtedness and

3)Certain of Farmland's subsidiaries had outstanding $224.8 million aggregate
principal amount of indebtedness, of which $202.2 million was nonrecourse to
Farmland.
See "Risk Factors -- "Holders of Senior Indebtedness will be paid before
holders of Subordinated Debenture Bonds", beginning on page 8.

EVENTS OF DEFAULT

Each Indenture provides that the following shall constitute "Events of Default"
with respect to any series of Debt Securities issued (including, as applicable,
the Demand Loan Certificates and the Subordinated Debenture Bonds):

a)failure to pay principal of (or any installment of the principal of) or any
premium on any Debt Securities of that series, after such principal shall
have become due and payable;

b)failure to pay interest of any Debt Securities of that series for a period of
60 days after such interest shall have become due or payable;

c)certain events of bankruptcy, insolvency or reorganization;

d)failure to perform any other covenant or agreement contained in the Indenture
or in any supplemental indenture or in any Debt Security of that series for a
period of 90 days following the mailing by the Trustee to Farmland of a
written demand that such failure be cured, such failure not having been cured
in the meantime, and

e)any other Event of Default established for the series as contemplated by
Section 3.01 with respect to Debt Securities of that series (the Offered Debt
Securities have no additional Events of Default of the type permitted by this
clause (e)).

No Event of Default with respect to a particular series of Debt Securities
issued under either Indenture necessarily constitutes an Event of Default with
respect to any other series of Debt Securities issued under either Indenture.
(Section 8.01)

Each Indenture provides that if an Event of Default specified therein shall
occur and be continuing, either the Trustee or the Holders of at least 50% in
aggregate principal amount of the Debt Securities of such series then
outstanding may declare the principal amount of the Debt Securities of such
series and all interest accrued thereon to be due and payable immediately upon
written notice to Farmland. Notwithstanding the above, in the case of an Event
of Default arising from certain events of bankruptcy, insolvency or
reorganization with respect to Farmland, all Debt Securities will become due and
payable without further action or notice. (Section 8.03)

The agreements governing certain of Farmland's outstanding indebtedness contain
provisions to the effect that certain Events of Default under each Indenture
would constitute an event of default under such agreements which, among other
things, could cause an acceleration of the indebtedness under the agreements.

Each Indenture provides that the Trustee shall within 90 days after the
occurrence of a default, not including periods of grace, give the Holders of the
affected series notice of all defaults known to it 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 Debt Securities, 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 interests of such Holders.
(Section 8.02)

Each Indenture provides that the Trustee may sue Farmland in the case of default
in payment of the principal of any Debt Security when the same shall become due
and payable, or in the case of a default in the payment of the interest on any
Debt Security for any period of 60 days after such interest shall become due and
payable. (Section 8.04) Each Indenture further provides that the right of any
Holder to receive payment of the principal of and interest on any Debt Security,
or to institute a suit for the enforcement of such payment, may not be impaired
without the consent of such Holder, unless, with regard to overdue interest
payments, 75% in principal amount of the outstanding Debt Securities of the
affected series consent on behalf of the Holders of all the Debt Securities of
the affected series to the postponement of such overdue interest payment.
(Sections 8.05 and 8.06) Each Indenture also provides that the Holders of not
less than a majority in principal amount of the outstanding Debt Securities of
each series have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or to consent, on behalf
of the Holders of all Debt Securities of such series, to the waiver of any past
default and its consequences, except for a default in the payment of principal
or interest. (Section 8.06)

Each Indenture requires Farmland to file with the Trustee annually an Officers'
Certificate as to the absence of certain defaults under the terms of the
applicable Indenture. (Section 7.05)

CONCERNING THE TRUSTEES

UMB Bank, National Association, Kansas City, Missouri, is the Trustee under the
Senior Indenture and Commerce Bank of Kansas City, National Association, Kansas
City, Missouri, is the Trustee under the Subordinated Indenture. Each Trustee
is to perform only the duties as are specifically set forth in the applicable
Indenture and in the case of an Event of Default (which has not been cured) to
exercise such of the rights and powers vested in it by the applicable Indenture.
Each trustee is also required to use the same degree of care and skill in the
exercise of rights and powers as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.

Each Trustee, before taking any action under the applicable Indenture, may
require that satisfactory indemnity be furnished to it by the Holders of the
Securities or other persons for the reimbursement of all reasonable costs and
expenses to which it may be put and to protect it against all liability which it
may incur in or by reason of such action, except liability which is adjudicated
to have resulted from its negligence or willful misconduct.

CONSOLIDATION OR MERGER OF OR WITH FARMLAND

Nothing contained in either Indenture prevents any consolidation or merger of
Farmland with or into any other corporation or corporations (whether or not
affiliated with Farmland), or successive consolidations or mergers in which
Farmland or its successor or successors shall be a party or parties, or prevents
any sale or conveyance of the property of Farmland as an entirety or
substantially as an entirety to any other corporation (whether or not affiliated
with Farmland) authorized to acquire and operate the same; provided, however,
that upon any such consolidation, merger, sale or conveyance, the due and
punctual payment of the principal of and interest on all the Debt Securities
(including the Demand Loan Certificates and the Subordinated Debenture Bonds)
and the due and punctual performance and observance of all of the covenants and
conditions under each Indenture to be performed or observed by Farmland, shall
be expressly assumed, by supplemental indentures satisfactory in form to the
Trustees and executed and delivered to the Trustees by the corporation formed by
such consolidation, or into which Farmland shall have been merged, or by the
corporation which shall have acquired such property. In case of any such
consolidation, merger, sale or conveyance and upon any such assumption by the
successor corporation, such successor corporation shall succeed to and be
substituted for Farmland, as if it had been the signatory to the Indentures.
(Sections 13.01, 13.02)

MODIFICATION OF THE INDENTURE

Each Indenture contains provisions permitting Farmland and the Trustee to enter
into one or more supplemental indentures without the consent of the Holders of
any of the Debt Securities issued (including, as applicable, the Demand Loan
Certificates and the Subordinated Debenture Bonds) in order:

a)to evidence the succession of another corporation to Farmland and the
assumption by any such successor of the covenants and obligations of
Farmland, including the Debt Securities issued and any related interest;

b)to add to the covenants of Farmland for the benefit of the Holders of all or
any series of Debt Securities issued under the Indenture (and if such
covenants are to be for the benefit of less than all series of Debt
Securities, stating that such covenants are expressly being included solely
for the benefit of such series) or to surrender any right or power conferred
upon Farmland;

c)to add any additional Events of Default with respect to all or any series of
Debt Securities issued under the Indenture;

d)to change or eliminate any of the provisions of the Indentures in respect of
one or more series of Debt Securities issued under the Indenture, provided
that any such change or elimination shall become effective only when there
are no Debt Securities outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision;

e)to establish the form or terms of Debt Securities of any series issued under
the Indenture;

f)to evidence and provide for the acceptance of appointment by a successor
Trustee with respect to the issued Debt Securities and to add to or change
any of the provisions of the Indenture as shall be necessary to provide for
or facilitate the administration of the trusts by more than one Trustee;

g)to cure any ambiguity, to correct or supplement any provision in the
Indenture which may be inconsistent with any other provision in the Indenture
or to make any other provisions with respect to matters or questions arising
under the Indenture which shall not be inconsistent with the provisions of
such Indenture, provided such action does not adversely affect in any
material respect the interests of the Holders of any series issued under the
Indenture;

h)to modify, eliminate or add to the provisions of the Indenture to such extent
as shall be necessary to effect the qualification of the Indenture under the
Trust Indenture Act or under any similar federal statute subsequently
enacted, and to add to the Indenture such other provisions as may be
expressly required under the Trust Indenture Act; or

i)to enable the issuance of uncertificated Debt Securities and to permit
registration, transfer and exchange of Debt Securities by book-entry.
(Section 12.01)

Each Indenture also contains provisions permitting Farmland and the respective
Trustee, with the consent of the Holders of a majority in aggregate principal
amount of the outstanding Debt Securities of each series issued thereunder and
affected by such supplemental indenture, to execute supplemental indentures
adding any provisions to or changing or eliminating any of the provisions of
such Indenture or any supplemental indenture or modifying the rights of the
Holders of such series, except that, without the consent of the each Holder so
affected, no such supplemental indenture may:

a)change the stated maturity of the principal of, or premium, if any, on, or
any installment of principal of or premium, if any, or interest on, any such
Debt Security, or reduce the principal amount of the Debt Security, or the
interest rate or any premium payable upon redemption, or change the manner in
which the amount of principal or premium, if any, or interest is determined,
or impair the right to institute suit for the enforcement of any such payment
on or after the stated maturity (or, in the case of redemption, on or after
the redemption date);

b)reduce the percentage in principal amount of the outstanding Debt Securities
of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of each Indenture or of certain
defaults hereunder and their consequences) provided for in such Indenture;

c)change any obligation of Farmland to maintain an office or agency in the
places at which Debt Securities may be presented for transfer, exchange,
redemption and payment, and where notices and demand to or upon Farmland may
be served; or

d)modify the provisions that set forth the provisions in each Indenture that
may not be changed without the consent of the Holder of each Debt Security
affected.

The Subordinated Indenture also provides that certain provisions with respect to
the subordination of outstanding Debt Securities may not be modified in a manner
adverse to the Holders without the consent of each Holder of affected
outstanding Debt Securities. (Section 12.02)

SATISFACTION, DISCHARGE AND DEFEASANCE

Each Indenture provides that it ceases to be of further effect with respect to
the Debt Securities of, or within, any series (except for certain specified
surviving obligations, including:

a)certain obligations to register the transfer or exchange of Debt Securities;
and

b)the rights of Holders of Debt Securities to receive payments of principal and
interest upon the stated maturity of the Debt Securities) upon the
satisfaction of certain conditions, including that
(1) all Debt Securities of such series not previously delivered to the
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their stated maturity within one year,
or
(iii) are to be called for redemption within one year and
(2) Farmland, has irrevocably deposited or caused to be deposited with the
Trustee money in an amount sufficient to pay and discharge the entire
indebtedness on such Debt Securities for principal, premium, if any, and
interest to the date of such deposit (in the case of Debt Securities which
have become due and payable) or to the stated maturity or redemption date,
as the case may be. (Section 14.01)

Each Indenture also contains defeasance provisions under which, unless otherwise
specified with respect to the Debt Securities of any series issued under the
Indenture, Farmland, at its option:

a)will be discharged from any and all obligations in respect of the Debt
Securities of such series (except with regard to certain specified surviving
obligations, including

(1)certain obligations to register the transfer or exchange of Debt
Securities and

(2)the rights of Holders of Debt Securities to receive payments of principal
and interest upon the stated maturity, or

b)will not be subject to certain covenants and Events of Default, in each case,
upon the compliance with certain conditions, including the deposit with the
relevant Trustee, in trust, of money and/or Government Obligations which
through the payment of interest and principal in accordance with their terms
will provide money in an amount sufficient to pay the principal of, premium,
if any, and each installment of interest on such Debt Securities at the
maturity of such payments and any mandatory sinking fund payments applicable
to such series on the day on which such payments are due and payable in
accordance with the terms of the applicable Indenture and such Debt
Securities.

Such provisions do not apply to the Demand Loan Certificates and the
Subordinated Debenture Bonds. (Sections 14.03, 14.04, 14.05, 14.06)

TAX CONSEQUENCE OF INTEREST ELECTION

Holders of Demand Loan Certificates and Subordinated Debenture Bonds should be
aware that the election to receive interest on the payment date or to have the
interest compounded semi-annually and paid at the date of redemption of the
related security will not affect the reporting of interest for federal income
tax purposes. All interest whether paid on the payment date or left to
accumulate and be paid at the date of redemption of the related security will be
credited to the Holder's account on the payment or compounding date. All
interest credited to the Holder's account will be reported on a Form 1099 INT to
the Holder and the Internal Revenue Service ("IRS") as interest income for the
calendar year in which such interest is credited to the Holder's account
regardless of the Holder's method of accounting for federal income tax purposes.
Therefore, a Holder who elects to have interest paid at the date of redemption
of the related security would have taxable income for a year and not receive
such interest income in cash. However, the Holder could terminate the
election to have interest paid at the date of redemption. On the effective
date of such termination, the Holder would receive payment of all interest
accumulated through the date of termination.

BUSINESS AND PROPERTIES

GENERAL

In terms of revenue, Farmland is one of the largest cooperatives in the United
States. In 1999, we had sales of $10.7 billion, including international sales
of approximately $3.2 billion. Substantially all of our international sales are
invoiced and collected in U.S. Dollars.

We conduct business primarily in two operating areas. First, on the input side
of the agricultural industry, we operate as a farm supply cooperative. Second
on the output side of the agricultural industry, we operate as a processing and
marketing cooperative.

Our farm supply operations consist of four principal product divisions: plant
foods, crop protection, petroleum and feed. Principal products of the plant
foods division are nitrogen and phosphate-based fertilizers ("plant foods").
Principal products of the crop protection division include a complete line of
insecticides, herbicides and mixed chemicals. Crop protection operations are
conducted primarily through our 50% ownership in WILFARM, L.L.C. and Omnium,
LLC. Principal products of the petroleum division are refined fuels, propane
and by-products of petroleum refining. Petroleum operations are conducted
primarily through our equity interest in two ventures. Petroleum refining is
managed by Cooperative Refining Association, and petroleum marketing is managed
by Country Energy. 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. We manufactured
approximately 59% of the dollar value of our sales of farm supply products in
1999. Approximately 68% of the farm supply products we sold in 1999 were at
wholesale to farm cooperative associations which are members of Farmland, and
who, in turn, distribute these products primarily to farmers and ranchers.

The output side of our business includes; processing and marketing of pork,
raising hogs for processing, processing and marketing of beef, domestic storage
and marketing of grain and international storage and marketing of grain. In
1999, approximately 70% of the hogs processed, 38% of the beef cattle processed
and 60% of the grain we marketed domestically were supplied to us by our
members. Substantially all the pork and beef products we sold in 1999 was
processed in plants we own.

No material part of the business of any segment of Farmland is dependent on a
single customer or a few customers. Financial information about our industry
segments is presented in Note 11 of the Notes to Consolidated Financial
Statements.

The principal businesses of Farmland have been highly seasonal. Historically,
the majority of sales of crop production products occur in the spring. Sales in
the beef business and in grain marketing historically have been concentrated in
the summer and summer is the lowest sales period for the pork and feed
businesses.

Farmland competes for market share with numerous participants of various sizes
and with various levels of vertical integration, product and geographical
diversification. 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 (some of
which are cooperatives) of nitrogen- and phosphate-based fertilizers and product
importers and brokers. Competitors in the crop protection industry include
major chemical companies and product brokers. The feed, grain, pork and beef
industries are comprised of a large variety of competitive participants.

PLANT FOODS AND CROP PROTECTION

MARKETING

Farmland's plant foods business includes nitrogen, phosphate and potash based
plant nutrients. Sales of the crop production business segment as a percent of
consolidated sales was 14% for 1997, 13% for 1998, and 9% for 1999. The crop
protection business is conducted primarily through our 50% ownership in WILFARM
and Omnium ventures, and includes sales and distribution of a complete line of
crop protection products such as insecticides, herbicides and mixed chemicals.
Sales of the crop protection business are not included in consolidated sales of
Farmland.

Competition in the plant foods 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. Farmland maintains a significant capital investment in distribution
assets and a seasonal investment in inventory to enhance its manufacturing and
distribution operations. We own or lease plant nutrient custom dry blending,
liquid mixing, storage and distribution facilities at a large number of
locations throughout our trade territory to conform delivery capacity more
closely to customer demands for delivery services.

Domestic competition, mainly from other regional cooperatives and integrated
multinational crop production 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

Farmland manufactures nitrogen-based crop production products. Natural gas is
the major raw material used in production of nitrogen-based fertilizer,
including synthetic anhydrous ammonia, urea, urea ammonium nitrate ("UAN") and
other forms of nitrogen-based fertilizers.

Farmland operates seven anhydrous ammonia production plants (three of which are
leased under long-term lease arrangements) at six locations in Kansas, Iowa,
Nebraska, Oklahoma and Louisiana. Farmland and Mississippi Chemical Company are
each 50% owners of a joint venture, Farmland MissChem, Limited ("Farmland
MissChem"), which owns an anhydrous ammonia production facility located in The
Republic of Trinidad and Tobago. All output from this facility is sold to and
distributed by the owners of the venture. Annual production, including
Farmland's 50% share of the output of Farmland MissChem, totaled approximately
2.8 million tons for 1997, 3.0 million tons for 1998, and 3.1 million tons for
1999.

Five of these synthetic anhydrous ammonia plants have capacity to further
process anhydrous ammonia into urea, UAN solutions and other forms of nitrogen
fertilizer. Due to unfavorable market conditions, during August, 1999 we
temporarily closed production of UAN at our Lawrence, Kansas and Enid, Oklahoma
facilities. Production at the Lawrence facility was resumed during December,
1999. Production of our upgraded products approximated 1.6 million tons for
1997, 1.9 million tons for 1998, and 2.1 million tons for 1999.

Farmland owns a phosphate chemical plant located in Joplin, Missouri, that
produces feed grade phosphate (dicalcium phosphate) and ammonium phosphate,
which is combined in varying ratios with muriate of potash to produce different
fertilizer grade products. Production of feed grade phosphate approximated
163,000 tons in 1997, 167,000 tons in 1998, and 168,000 tons in 1999.
Production of ammonium phosphate approximated 44,000 tons in 1997, 56,000 tons
in 1998, and 29,000 tons in 1999.

Farmland and Norsk Hydro a.s. are each 50% owners of Farmland Hydro, L.P.
("Hydro"), a joint venture which owns a phosphate fertilizer manufacturing plant
at Green Bay, Florida. Hydro's plant produces products such as super phosphoric
acid, diammonium phosphate and monoammonium phosphate. Annual phosphate (P205)
production was 787,000 tons in 1997, 761,000 tons in 1998, and 752,000 tons in
1999. Farmland provides management and administrative services and Norsk Hydro
a.s. provides marketing services to Hydro. Products of this plant are
distributed principally to international markets.

Farmland is a 50% owner of SF Phosphates Limited Liability Company ("SF
Phosphates"), a venture which operates 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 phosphoric acid. Annual phosphate (P205) production was
326,000 tons in 1997, 330,000 tons in 1998, and 326,000 tons in 1999. Under the
venture agreement, the owners purchase the production of the venture in
proportion to their ownership.

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. In addition, Farmland has a hedging
program which utilizes natural gas futures and options to reduce risks of market
price volatility.

Natural gas is delivered to Farmland'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 a delivering
pipeline's capacity was required to serve priority users such as residences,
hospitals and schools. In such cases, production could be curtailed. We have
never lost significant production because of curtailments in pipeline
transportation, and we do not anticipate having a curtailment in the near
future.

Adequate supplies of the phosphate rock and sulfur required to operate Hydro's
plant are presently available from various suppliers. Hydro owns phosphate rock
reserves located in Hardee County, Florida which contain an estimated 80 million
tons of phosphate rock.

During 1998, Hydro began obtaining various permits and licenses necessary for
mining the above properties. This process will take several years to complete
and, therefore, Hydro does not anticipate mining any of the phosphate rock
reserves within the next year.

Based on current recovery methods and the levels of the SF Phosphate plant
production in recent years, we estimate that the phosphate rock reserves owned
by SF Phosphates are adequate to provide the phosphate rock requirements of the
plant for approximately 75 years.

PETROLEUM

MARKETING

The principal products of this business segment are refined fuels, propane and
by-products of the petroleum refinery. Other petroleum products include lube
oil, grease, and car, truck and tractor tires, batteries and accessories. Sales
of petroleum products as a percent of consolidated sales were 15% for 1997, 13%
for 1998, and 9% for 1999.

Competitive methods in the petroleum industry include service, product quality
and price. However, in refined fuel markets, price competition is dominant.
Many participants in the industry engage in one or more of the industry's
processes (oil production, transportation, refining, wholesale distribution and
retailing). Farmland participates in the industry primarily as a mid-continent
refiner and as a wholesale distributor of petroleum products. Effective
September 1, 1998, Country Energy LLC, a joint venture with Cenex Harvest
States, commenced operations. Country Energy LLC provides, on an agency basis,
refined fuel, propane and lubricants marketing and distribution services for
its owners.

PRODUCTION

Farmland owns a refinery, with approximately 100,000 barrel per day capacity, at
Coffeyville, Kansas. Production at the Coffeyville refinery amounted to
approximately 71% of refined fuel sales in 1999. Effective September 1, 1999,
we formed an alliance, Cooperative Refining, LLC, with the owners of National
Cooperative Refinery Association ("NCRA"). Cooperative Refining performs all
activities related to operating NCRA's refinery at McPherson, Kansas and
Farmland's refinery at Coffeyville, Kansas.

RAW MATERIALS

In 1999, Farmland's pipeline/trucking gathering system collected approximately
15% of its crude oil supplies under lease from producers near its refinery.
Additional supplies are acquired from diversified sources, including sour crude
oil from foreign sources.

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 advance sales contracts of refined
products, are hedged utilizing various petroleum futures contracts.

During periods of volatile crude oil price changes, or in extremely short crude
oil supply conditions, our 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. If a crude oil shortage were to develop, there is no assurance as
to what, if any, government action would be taken.

FEED

Feed products include swine, beef, poultry, dairy, pet, mineral and specialty
feeds, feed ingredients and supplements, animal health products and farm and
ranch supplies. The primary components of feed products are grain and grain by-
products, which are generally available in the region in which we operate.

This business segment's sales as a percentage of consolidated sales were
approximately 7% in 1997, 6% in 1998 and 5% in 1999. Approximately 47% of the
feed segment's sales in 1999 was attributable to products manufactured in our
feed mills. Farmland operates feed mixing plants at 20 locations throughout its
territory, an animal protein plant in Maquoketa, Iowa, an animal protein plant
and a premix plant located in Eagle Grove, Iowa, a premix plant in Marion, Ohio
and a pet food plant in Muncie, Kansas.

In June of 1998, we acquired six feed mills with an aggregate capacity of
747,000 tons through the acquisition of SF Services, Inc. In 1998 and 1999,
feed mills with an aggregate capacity of approximately 415,000 tons were either
sold or contributed to ventures. Our partners in these ventures are primarily
local cooperatives.
PORK

PROCESSING

Farmland's pork processing and marketing operations are conducted through
Farmland Foods, Inc. ("Foods"), a 99%-owned subsidiary, which operates 11 food
processing facilities, including leased facilities in Albert Lea, Minnesota and
Omaha, Nebraska.

Facilities in Denison and Dubuque, Iowa, Monmouth, Illinois and Crete, Nebraska
function as pork abattoirs and have additional capabilities for processing pork
into bacon, ham and smoked meats. 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. Meat processing facilities at
Springfield, Massachusetts and New Riegel, Ohio produce Italian-style specialty
meats and ham products. Plants in Wichita and Topeka, Kansas and Albert Lea,
Minnesota process fresh pork into a variety of products including ham, bacon and
sausage. Additionally, the Wichita, Kansas facility processes pork, beef and
chicken into hot dogs, dry sausage and other luncheon meats. The plant located
in Carroll, Iowa is primarily a packaging facility for canned or cook-in-bag
products. The facility located in Omaha, Nebraska, prepares primal beef and
pork products into case-ready cuts of meat which can be shipped directly to
retailers.

MARKETING

Farmland's pork 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 a variety of brand names including:
Farmland, Farmstead, OhSe, Maple River, Carando, Roegelein, Regal and Marco
Polo. Product distribution is through national and regional retail food
chains, food service accounts, distributors and through international marketing
brokers.

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

LIVESTOCK PRODUCTION

PRODUCTION AND MARKETING

Livestock Production's primary focus is to produce market hogs to be processed
by Farmland Foods Inc. We currently have approximately 300 contracts, with
producers in 8 states to finish hogs from our own production or from the
production of Alliance Farms, an affiliate. The risks associated with the
managing of hogs includes disease and genetic changes, as well as the general
market price risk for hogs. Livestock Production sells approximately 92% of its
inventory to Farmland Foods, which is a 99%-owned subsidiary of Farmland. In
1999, Livestock Production provided approximately 7.5% of Farmland Foods total
hog requirements.

BEEF

PROCESSING

Farmland's beef processing and marketing operations are conducted through
Farmland National Beef Packing Company, L.P., which at August 31, 1999, was
71.2%-owned by Farmland. The beef processing facilities are located in Liberal,
Kansas and Dodge City, Kansas. These facilities function as beef abattoirs and
process fresh beef into primal cuts for additional processing into fabricated or
boxed beef. The two plants slaughtered an aggregate of 2.1 million cattle in
1997, 2.4 million cattle in 1998, and 2.6 million cattle in 1999.

MARKETING

Products in our beef processing and marketing operations include fresh and
frozen beef, boxed beef and by-products. Product distribution is through
national and regional retail and food service customers as well as under the
Farmland Black Angus Beef label. In addition, certain beef products are
distributed in international markets.

Beef marketing is a highly competitive industry with many suppliers of fresh and
boxed 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, brand and product differentiation and customer service.

GRAIN MARKETING

Farmland conducts domestic grain marketing operations through its North American
division and international marketing operations through its eight international
grain marketing subsidiaries conducted by a central management group (referred
to as "Tradigrain").
NORTH AMERICAN GRAIN

MARKETING

Farmland markets wheat, corn, soybeans, milo, barley and oats, with wheat and
corn constituting the majority of the marketing business. We purchase grain
from members and nonmembers located in the Midwestern part of the United States
and assume all risks related to selling such grain. Grain is priced in the
United States principally through bids based on organized commodity markets.

In 1998, Farmland and ConAgra Inc., formed Farmland-Atwood, LLC, a 50%-owned
venture. In May 1999, Farmland purchased ConAgra's, interest in the venture.
Farmland-Atwood provides risk management services, financial and grain support
services and grain brokerage to its customers.

Farmland is exposed to price risk as a result of holding grain inventory and
because, in the ordinary course of business, Farmland is a party to numerous
fixed price sales and fixed price purchase contracts. To reduce the price
change risk associated with holding positions in grain, Farmland takes opposite
and offsetting positions by entering into grain commodity futures contracts.
Generally, such contracts have terms of up to one year. Our strategy is to
maintain hedged positions on as close to 100% of our grain positions as is
possible. Farmland maintained hedges on its grain positions of approximately
93% during 1997, 93% during 1998, and 95% during 1999. The average market value
of grain positions not hedged during the year amounted to less than 1% of our
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

Grain revenues from export sales or sales to domestic customers for export as a
percent of total domestic grain sales were approximately 41% in 1997, 43% in
1998, and 37% in 1999. Foreign sales of grain generally are paid in U.S.
Dollars. Export-related sales are affected by the level of grain production in
foreign countries. Furthermore, export-related sales are subject to
international political events and changes in other countries' trade policies
which are not within the control of the United States or Farmland.

PROPERTY

Farmland owns or leases 26 inland elevators and one export elevator in the
United States with a total capacity of approximately 178.8 million bushels of
grain.

INTERNATIONAL GRAIN

Farmland's international grain trading subsidiaries (together referred to as
"Tradigrain") transact business in all major grains, oilseeds, and sugar. Final
consumers are either governmental entities, private companies or other major
grain companies throughout the world.

Tradigrain's purchases of grain are made on a cash basis and its sales of grain
are mostly made against confirmed letters of credit. Furthermore, Tradigrain
may take long or short grain positions. These positions are accounted for on a
mark-to-market basis and the gain or loss is recognized as a component of net
income.

RESEARCH

Farmland operates a research and development farm for the primary purpose of
developing improvements in nutrition, breeding and feeding practices of
livestock and pets. We also conduct research at our pork processing facilities
directed toward product development and process improvement. Additionally,
Farmland formed a five-year research alliance, beginning in 1997, with Kansas
State University.

Expenditures related to product research and process improvements sponsored by
Farmland amounted to $2.1 million, $2.4 million and $2.4 million for 1997, 1998
and 1999, respectively.

CAPITAL EXPENDITURES AND INVESTMENTS IN VENTURES

In 1999, Farmland made capital expenditures totaling $121.2 million and
investments in ventures totaling $23.3 million.

Farmland's Board of Directors has authorized expenditures of up to $221.9
million for capital additions and improvements during the years 2000 and 2001.
The majority of these expenditures are in the crop production, pork processing
and marketing, beef processing and marketing and petroleum businesses and are
primarily for plant improvements. From time to time, management may recommend
additional capital projects to Farmland's Board of Directors for approval.

We intend to fund our capital program with cash from operations, through
borrowings or through other capital market transactions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Financial Condition, Liquidity and Capital Resources" beginning on page 42.

YEAR 2000

Farmland has not experienced any significant problems related to Year 2000
issues. Also, we do not anticipate encountering significant Year 2000 problems
in the future. Farmland's total cost to ensure our software was Year 2000
compliant was approximately $6.5 million.
GOVERNMENT REGULATION

Farmland'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. Farmland
believes that its operating procedures conform to the intent of these laws and
that we currently are in compliance with all such laws, the violation of which
could have a material adverse effect on us.

Certain policies may be implemented from time to time by the United States
Department of Agriculture, the Department of Energy or other governmental
agencies which may impact the demands of farmers and ranchers for our products
or which may impact the methods by which certain of our operations are
conducted. Such policies may have a significant impact on any or all of
Farmland's operating businesses.

The Federal Agriculture Improvement and Reform Act ("FAIR") represents the most
significant change in government farm programs in more than 60 years. Under
FAIR, the former system of variable price-linked deficiency payments to farmers
has been replaced by a program of fixed payments which decline over a seven-year
period from 1996 to 2002. To compensate for adverse market and weather
conditions, additional transfer payments were made by the Federal government
during 1998 and 1999. FAIR eliminates federal planting restrictions and acreage
controls. Farmland believes that FAIR was intended to accelerate the trend
toward greater market orientation and reduced Government influence on the
agricultural sector. As a result, we expect the number of acres under
cultivation to increase over a long period of time. This increase may favorably
impact demand of producers for our plant nutrients and crop protection products
and fuels. Whether demand for our products is favorably impacted depends in a
large part on whether U.S. agriculture becomes more competitive in world markets
as this industry moves toward greater market orientation, the extent which
governmental actions expand international trade agreements and whether market
access opportunities for U.S. agriculture is increased.

The U.S. Congress has in the past considered, and may in the future consider,
trade measures which, if passed, could enhance agricultural export potential.
Farmland believes "fast-track" (legislation which would authorize the President
to submit a trade agreement to Congress with the assurance that it will be voted
on within 90 days and not be subject to amendments), normal trading relations
with China, and removal of trade sanctions and language to prohibit embargoes
could benefit U.S. agricultural interests by opening markets, increasing exports
and expanding trade opportunities with countries which import agricultural
products. Absent such legislation, our access to international markets may be
adversely impacted.

Management is not aware of any newly implemented or pending policies, other than
as discussed above, having a significant impact or which may have a significant
impact on our operations.

EMPLOYEE RELATIONS

At August 31, 1999, Farmland had approximately 17,700 employees. Approximately
44% of the our employees were represented by unions having national
affiliations. Farmland considers its relationship with employees to be generally
satisfactory. No labor strikes or work stoppages within the last three fiscal
years have had a materially adverse effect on our operating results. Current
labor contracts expire on various dates through April 2002.

PATRONAGE REFUNDS AND DISTRIBUTION OF ANNUAL EARNINGS

Farmland operates on a cooperative basis. In accordance with its bylaws,
Farmland determines its annual net earnings from transactions with members
("member-sourced earnings"). For this purpose, annual net earnings means income
before income tax determined in accordance with generally accepted accounting
principles. 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. The member-sourced earnings (after handling of member-
sourced losses) are returned to members as patronage refunds in the form of
qualified and/or nonqualified written notices of patronage refund allocation.
Each member's portion of the annual patronage refund is determined by the
earnings of Farmland attributed to the quantity or value of business transacted
by the member with Farmland during the year for which the patronage is paid.

A qualified patronage refund must be paid at least 20% in cash. The portion of
the qualified patronage refund not paid in cash (the allocated equity portion)
is currently paid by Farmland in common shares, associate member common shares
or capital credits (depending on the membership status of the recipient). The
Board of Directors may determine to pay the allocated equity portion in any
other form or forms of equities. The allocated equity portion of the qualified
patronage refund is determined annually by the Board of Directors. Farmland is
allowed an income tax deduction for the total amount (the cash portion and the
allocated equity portion) of its qualified patronage refunds.

Nonqualified patronage refunds may be paid entirely in allocated equity; there
is no minimum cash requirement. Nonqualified patronage refunds paid by Farmland
have been recorded as book credits in the form of common shares, associate
member common shares or capital credits (depending on the membership status of
the recipient). The Board of Directors may determine to record the nonqualified
patronage refund in any other form or forms of nonpreferred equities. Farmland
is not allowed an income tax deduction for a nonqualified patronage refund in
the year paid. The nonqualified patronage refund is deductible for federal
income tax purposes only when such nonqualified written notices of allocation
are redeemed for cash or tangible property.

For the years ended 1997, 1998 and 1999, patronage refunds authorized by the
Board of Directors were:
<TABLE>
<CAPTION>

Cash or Cash Equivalent
Portion of Patronage Non-Cash Portion of Total Patronage
Refunds Patronage Refunds Refunds

(Amounts in Thousands)
<S> <C> <C> <C>
1997............... $ 40,228 $ 68,079 $ 108,307
1998............... $ 23,593 $ 35,528 $ 59,121
1999............... $ 6,054 $ 24,215 $ 30,269
</TABLE>

Nonmember-sourced income (earnings attributed to transactions with persons not
eligible to receive patronage refunds, i.e. nonmembers) and nonpatronage income
or loss (income or loss from activities not directly related to the cooperative
marketing or purchasing activities of Farmland) are 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, the
estate settlement plan and the special equity redemption plans (together, 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 not binding upon
the Board of Directors or Farmland, and the Board of Directors reserves the
right to redeem, or not redeem, any of Farmland's equities without regard to
whether such action or inaction is in accordance with the Plans. Factors which
the Board of Directors may consider in determining when and under what
circumstances, Farmland may redeem equities include, but are not limited to, the
terms of our base capital plan and other equity redemption plans, results of
operations, financial position, cash flow, capital requirements, long-term
financial planning needs, income and other tax considerations 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 Farmland and our owners will be
protected.

BASE CAPITAL PLAN

For the purposes of acquiring and maintaining adequate capital to finance
Farmland's business, the Board of Directors has established a base capital plan.

The base capital plan provides a mechanism for determining Farmland's total
capital requirements and each voting member's and associate member's share
(referred to as 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 shares or associate member common shares held by voting members
or associate members whose holdings of common shares or associate member shares
exceed 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 equity holdings of deceased natural
persons (except for equity purchased and held for less than five years) be
redeemed at par value. This provision is subject to a limitation of $1.0
million in any one fiscal year without further authorization by the Board of
Directors for such year.

SPECIAL EQUITY REDEMPTION PLANS

From time to time, Farmland has redeemed portions of its outstanding equity
under various special equity redemption plans. The special equity redemption
plans have been and may be changed at any time or from time to time at the sole
and absolute discretion of the Board of Directors. The special equity redemption
plans are not binding upon the Board of Directors or Farmland, and the Board of
Directors reserves the right to redeem, or not redeem, any equities without
regard to whether such action or inaction is in accordance with the special
equity redemption plans.

The special equity redemption plans are designed to return cash to members or
former members of Farmland or Farmland Foods by providing a method for
redemption of outstanding equity which may not be subject to redemption through
other Plans, such as the base capital plan or the estate settlement plan. The
order in which each type of equity is redeemed is determined by the Board of
Directors.

Presented below are the amounts of equity approved for redemption by the Board
of Directors of Farmland and Farmland Foods under the base capital plan, the
estate settlement plan and special equity redemption plans for each of the years
in the three-year period ended 1999. During the third quarter of 1998, Farmland
approved and paid a special equity redemption of approximately $50.0 million.
Substantially all other amounts approved for redemptions are paid in cash in the
year following approval.
<TABLE>
<CAPTION>
Estate
Base Capital Settlement and
Plan Redemptions Special Equity Total Plan
Redemptions(A) Redemptions

(Amounts in Thousands)
<S> <c <C> <C>
>
1997....... $ 17,228 $ 11,492 $ 28,720
1998....... $ 8,868 $ 50,103 $ 58,971
1999....... $ -0- $ 377 $ 377
</TABLE>

(a)Includes redemptions of preferred stock.

LEGAL PROCEEDINGS

Management believes there is no litigation existing or pending against Farmland
or any of its subsidiaries that, based on the amounts involved or the defenses
available, would have a material adverse effect on our financial position.

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, 1999 are derived from the
Consolidated Financial Statements of Farmland, which have been audited by KPMG
LLP, independent certified public accountants. The following selected
consolidated financial data as of the end of and for the three month periods
ended November 30, 1998 and 1999 are derived from the unaudited Condensed
Consolidated Financial Statements of Farmland (which reflect all adjustments,
consisting only of normal recurring adjustments, which in management's opinion
are necessary for a fair statement of results for these interim periods). The
information set forth below should be read in conjunction with the audited
Consolidated Financial Statements and the unaudited Condensed Consolidated
Financial Statements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and related notes.
<TABLE>
<CAPTION>
Three Months Ended
Year Ended August 31 November 30

1995 1996 1997 1998 1999 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Net Sales....................$ 7,256,869 $ 9,788,587 $ 9,147,507 $ 8,775,046 $ 10,709,073 $ 2,582,250 $ 2,984,465
Operating Income of Industry
Segments(1)<F1>............ 323,254 291,781 295,626 192,874 181,852 33,822 38,160
Interest Expense............. 53,862 62,445 62,335 73,645 90,773 19,929 25,535
Net Income (loss)............ 162,799 126,418 135,423 58,770 13,865 (6,400) (26,542)

DISTRIBUTION OF NET INCOME:
Patronage Refunds:
Allocated Equity...........$ 61,356 $ 60,776 $ 68,079 $ 35,528 $ 24,215 Note 3 Note 3
Cash and Cash
Equivalents................ 33,061 32,719 40,228 23,593 6,054 Note 3 Note 3
Earned Surplus and Other
Equities................... 68,382 32,923 27,116 (351) (16,404) Note 3 Note 3

RATIO OF EARNINGS TO
FIXED CHARGES (2)<F2> 4.0 3.0 3.0 1.6 1.2 Note 2 Note 2

BALANCE SHEETS:
Working Capital..............$ 319,513 $ 322,050 $ 242,211 $ 435,482 $ 450,439 $ 450,439 $ 367,849
Property, Plant and
Equipment, Net............. 592,145 717,224 783,108 827,149 833,203 833,203 833,548
Total Assets................. 2,185,943 2,568,446 2,645,312 2,874,618 3,257,649 3,257,649 3,170,884
Long-Term Borrowings
(excluding
current maturities)........ 469,718 616,258 580,665 728,103 808,413 808,413 797,200
Capital Shares and
Equities................... 687,287 755,331 821,993 912,696 917,327 Note 3 Note 3

<FN>

<F1>
1.Includes segment gross income, segment selling, general, and administrative expenses, and the segment's equity in income (loss)
of investees.
<F2>
2.The ratios of earnings to fixed charges have been computed by dividing fixed charges into the sum of (a) income (loss) before
taxes for the enterprise as a whole, less capitalized interest and with adjustments to appropriately reflect the Company's
majority-owned and 20%-to 50%-owned affiliates, and (b) fixed charges. Fixed charges consist of interest on all indebtedness
(including amortization of debt issuance expenses) and the component of operating rents determined to be interest, with
adjustments as appropriate to reflect the Company's 20%-to 50%-owned affiliates. Income was inadequate to cover fixed charges
for the three months ended November 30, 1998 and 1999. The dollar amount of the deficiencies were $11.5 million and $20.8
million, respectively.

3.We make the determination of members' income (and members' loss) only after the end of the fiscal year. Our Board of Directors,
in their sole discretion, then determines how member losses are to be handled and the resulting amount of patronage refunds to be
paid or losses to be allocated from such member income or loss. Since we determine the amount of members' income and the amount
of members' loss only after the end of the fiscal year, and since only after that determination has been made can our Board of
Directors determine the handling of members' loss, the resulting amount of patronage refunds to be paid, the portion of such
refund to be paid either in cash or Farmland equity (common stock, associate member common stock and capital credits) and since
the amount of income appropriated to earned surplus is dependent on the amount of patronage refunds and the handling of members'
losses, Farmland makes no provision for patronage refunds in its interim financial statements. Therefore, the amount of net
income (loss) for the interim periods presented has been excluded from the Capital Shares and Equities.

</FN>
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

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

Farmland's debt securities issued under the continuous debt program generally
are offered on a best-efforts basis through our wholly owned broker-dealer
subsidiary, Farmland Securities Company and also may be offered by selected
unaffiliated broker-dealers. The types of debt securities offered in the
continuous debt program include Demand Loan Certificates and Subordinated
Debenture Bonds. The total amount of debt securities outstanding and the flow of
funds to, or from, Farmland as a result of the continuous debt program are
influenced by the rate of interest which we establish for each type or series of
debt security offered and by options of Farmland to call for redemption certain
of its outstanding debt securities. During the year ended August 31, 1999, the
outstanding balance of Demand Loan Certificates decreased by $3.7 million and
the outstanding balance of Subordinated Debenture Bonds increased by
$101.1 million. During the three months ended November 30, 1999, the
outstanding balance of demand certificates decreased by $1.7 million and the
outstanding balance of subordinated debt securities decreased $3.0 million.

In May 1996, Farmland entered into a five year Syndicated Credit Facility (the
"Credit Facility") with various participating banks. The Credit Facility
provides a $1.1 billion credit, subject to compliance with financial covenants
as set forth in the Credit Facility, consisting of an annually renewable short-
term credit of up to $650.0 million and a long-term credit of up to $450.0
million.

Farmland pays commitment fees under the Credit Facility equal to 22.5 basis
points annually on the unused portion of the short-term credit and 25 basis
points annually on the unused portion of the long-term credit. In addition,
Farmland must comply with financial covenants regarding working capital, the
ratio of certain debts to average cash flow, and the ratio of equity to total
capitalization, all as defined in the Credit Facility. The short-term credit
provided under the Credit Facility is reviewed and/or renewed annually. The
next scheduled review date is in May 2000. The revolving long-term credit
provided under the Credit Facility expires in May 2001.

At November 30, 1999, the Company had $375.2 million of short-term borrowings
under the Credit Facility and $180.0 million of revolving term borrowings.
Additionally, $54.2 million of the Credit Facility was utilized to support
letters of credit. At November 30, 1999, we had capacity to finance additional
current assets of $222.9 million under the short-term credit. Requirements
under the Credit Facility limit current availability under the long-term credit
to $106.5 million.

Farmland maintains other borrowing arrangements with banks and financial
institutions. Under such agreements, at November 30, 1999, $28.6 million was
borrowed.

Farmland National Beef Packing Company, L.P. ("FNBPC") has a five year $130.0
million credit facility which expires March 31, 2003. This facility is provided
by various participating banks and all borrowings thereunder are nonrecourse to
Farmland or Farmland's other affiliates. At November 30, 1999, FNBPC had
borrowings under this facility of $63.4 million and $3.3 million of the facility
was utilized to support letters of credit. FNBPC has pledged certain assets to
support its borrowings under the facility.

Our international grain trading subsidiaries (collectively referred to as
"Tradigrain") have borrowing agreements with various international banks which
provide financing and letters of credit to support Tradigrain's international
grain trading activities. Obligations of Tradigrain under these loan agreements
are nonrecourse to Farmland or Farmland's other affiliates. At November 30,
1999, such borrowings totaled $116.8 million.

Leveraged leasing has been utilized to finance railcars and a significant
portion of our fertilizer production equipment. In December 1997, Farmland
entered into a series of agreements which provide for the construction and
operation under a long-term lease of facilities adjacent to our petroleum
refinery at Coffeyville, Kansas. These facilities are designed to convert
petroleum coke by-products into fertilizers. When the facilities are completed
in the spring of 2000, Farmland will be obligated to make future minimum lease
payments with an approximate present value of $223 million. Alternatively,
Farmland has an option to purchase the facilities for a purchase price equal to
the facilities' construction costs less any portion of the original construction
cost previously paid. In the event Farmland should default on the obligations
described above, future lease obligations may be accelerated. If accelerated,
obligations due and payable would total approximately $263 million, all of which
would be senior to the subordinated debt securities. Upon payment of such
amount, we would receive title to the assets.

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

Net cash from operating activities for 1999 decreased $200.1 million compared to
1998, reflecting lower net income and an increase in accounts receivable and
inventories, partially offset by an increase in accounts payable. Major uses of
cash for 1999 include: $162.5 million used in operations, $121.2 million for
capital expenditures, $38.2 million for acquisition of other long-term assets,
and $23.6 million for patronage refunds distributed from income of the 1998
fiscal year. Major sources of cash include: $114.9 million from net increase
in bank loans and other notes payable, $101.3 million from the net increase of
subordinated debt certificates outstanding, $54.1 million of distributions from
joint ventures, and $76.1 million from an increase in the balance of checks and
drafts outstanding.

Operating activities generated $19.7 million of cash during the three months
ended November 30, 1999. This cash was generated primarily as a result of
decreases in inventories and receivables, partially offset by a decrease in
trade payables. Major uses of cash during the three months ended November 30,
1999 include: capital expenditures of $26.3 million; net repayment of bank
borrowings of $17.8 million; $6.1 million for patronage refunds distributed from
income of the 1999 fiscal year; and $9.5 million for additions to investments
and notes receivable. The major source of cash was an increase in the balance
of checks and drafts outstanding of $41.8 million.

In the normal course of business, Farmland utilizes derivative commodity
instruments, primarily related to grain, to limit its exposure to price
volatility. These instruments consist mainly of grain contracts traded on
organized exchanges and forward purchase and sales contracts in cash markets.
The activities which limit the risk of loss also limit the potential for gain
which otherwise could result from changes in market prices. Also, in the
ordinary course of its international grain trading business, Farmland may take
long or short grain positions. Such positions are accounted for on a mark-to-
market basis and the gain or loss is recognized currently as a component of net
earnings.

Farmland operates on a cooperative basis. In accordance with its bylaws,
Farmland determines its annual earnings before income tax in accordance with
generally accepted accounting principles. Such earnings are then identified to
the various patronage refund allocation units (groups of similar products or
services) which have been established by the Board of Directors The earnings of
each patronage refund allocation unit are then divided into 1) a patronage
sourced portion determined on the basis of the quantity or value of business
done by such allocation unit with or for its members who are eligible to receive
patronage refunds and 2) a non-patronage sourced portion for which amounts are
determined on the basis of the quantity or value of business done by such
allocation unit with or for persons who are not eligible to receive patronage
refunds, plus such net amount of earnings, expense or loss in an allocation unit
which are unrelated to the cooperative operations carried on by Farmland for its
members. The patronage sourced portion of each patronage refund allocation unit
is allocated among the members transacting business with such allocation unit in
the ratio that the quantity or value of the business done with or for each such
member bears to the quantity or value of the business done with or for all of
such members. The Board of Directors reasonably and equitability determines
whether allocations within any allocation unit will be on the basis of the
quantity or value. The non-patronage sourced portion of annual earnings and
earnings unrelated to the cooperative operations carried on by Farmland for its
members are transferred to earned surplus after appropriate reduction for income
tax.

Under Farmland's bylaws, patronage refunds are distributed to members from the
member sourced earnings as determined above, unless the earned surplus account
after such distribution is lower than 30% of the sum of the prior year-end
balance of outstanding common shares, associate member shares, capital credits
and patronage refunds for reinvestment. In such cases, the patronage refund 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. The earned
surplus account exceeded the required amount by $101.7 million at August 31,
1997, $80.1 million at August 31, 1998, and $57.3 million at August 31, 1999.

The patronage refunds may be paid in the form of qualified or nonqualified
written notices of allocation or cash. The nonqualified patronage refund and the
allocated equity portion of the qualified patronage refund are sources of funds
from operations which are retained for use in the business and which increase
our equity base. Common shares and associate member common shares may be
redeemed by cash payments from Farmland to holders of these equities who
participate in Farmland's base capital plan. Common stock, associate member
common stock, capital credits and other equities of Farmland and Farmland Foods
may also be redeemed under other equity redemption plans. The base capital plan
and other equity redemption plans are described under "Business and Properties -
Equity Redemption Plans" beginning on page 39.

The Board of Directors of this Association has complete discretion to determine
the handling and ultimate disposition of the Association's patronage-sourced net
losses (including allocation unit losses) and the form, priority and manner in
which such losses or portions thereof are taken into account, retained, and
ultimately disposed of or recovered. The Board may retain such losses of the
Association and subsequently:

. dispose of them by offset against the net earnings of the Association of
subsequent years,
. apply such losses to prior years' patronage allocation at any time in order
to dispose of them by means of offset and cancellation against members' and
patrons' equity account balances, or
. select and use any other method of disposition of such losses as the Board of
Directors, in its sole discretion, from time to time determines.

RESULTS OF OPERATIONS FOR YEARS ENDED AUGUST 31, 1997, 1998 AND 1999

Farmland's sales, gross margins and net income depend, to a large extent, on
conditions in agriculture and may be volatile due to factors beyond our 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 use
of fertilizers and other chemicals. Global variables which affect supply,
demand and price of crude oil, refined fuels, natural gas and other commodities
may impact our operations. Historically, changes in the costs of raw materials
used in the manufacture of Farmland's finished products have not necessarily
resulted in corresponding changes in the prices at which such products have been
sold. Management cannot determine the extent to which these factors may impact
our future operations. Farmland's cash flow and net income may be volatile as
conditions affecting agriculture and markets for our products change.
The table below shows the increase (decrease) in sales and income by business
segment in each of the years in the three-year period ended 1999, compared with
the respective prior year.
<TABLE>
<CAPTION>

Change in Sales

1997 1998 1999
Compared Compared Compared
with 1996 with 1997 with 1998

(Amount in Millions)
<S> <C> <C> <C>
INCREASE (DECREASE) OF BUSINESS SEGMENT SALES:

Plant Foods..................................................... $ (73) $ (94) $ (155)
Crop Protection................................................. - (11) -
Petroleum....................................................... 270 (195) (183)
Feed............................................................ 47 (68) 26
Other Operating Units........................................... 8 7 117
Pork Processing and Marketing................................... 283 (145) (130)
Livestock Production............................................ - 3 7
Beef Processing and Marketing................................... 55 232 223
North American Grain............................................ (1,221) (133) 116
International Grain............................................. (10) 32 1,913

TOTAL INCREASE (DECREASE) IN BUSINESS SEGMENT SALES............... $ (641) $ (372) $ 1,934

Change in Business Segment Income

1997 1998 1999
Compared Compared Compared
with 1996 with 1997 with 1998

(Amount in Millions)
<S> <C> <C> <C>
INCREASE (DECREASE) OF BUSINESS SEGMENT INCOME OR LOSS:

Plant Foods...................................................... $ (19) $ (112) $ (60)
Crop Protection.................................................. (1) 2 1
Petroleum........................................................ 32 (35) 18
Feed............................................................. (7) 4 5
Other Operating Units............................................ (3) 6 3
Pork Processing and Marketing.................................... (30) 33 19
Livestock Production............................................. 4 (11) (17)
Beef Processing and Marketing.................................... 6 (17) 27
North American Grain............................................. 33 5 8
International Grain.............................................. (6) 21 (3)

TOTAL INCREASE (DECREASE) IN BUSINESS SEGMENT INCOME OR LOSS.......
$ 9 $ (104) $ 1
<S> <C> <C> <C>
CORPORATE EXPENSES AND OTHER:
General corporate expenses (increase) decrease................... $ 6 $ (8) $ (26)
Interest expense (increase)...................................... - (11) (17)
Interest income increase......................................... - - 3
Other income and deductions - net increase (decrease)............ (8) 11 (10)
Corporate Equity in net income of investees increase............. 1 3 -
Income taxes decrease............................................ 1 32 $ 4

TOTAL INCREASE (DECREASE) IN NET INCOME............................ $ 9 $ (77) $ (45)

</TABLE>

In computing the change of business segment income or loss, income and expenses
not identified to an industry segment and income taxes have been excluded. See
Note 11 of the Consolidated Financial Statements.

Following is management's discussion of business segment sales, segment income
or loss and other factors affecting Farmland's net income during 1997, 1998 and
1999.

PLANT FOODS

SALES

Plant foods unit sales in 1999 were comparable to unit sales in 1998; however,
the average unit selling price for nitrogen-based plant foods decreased 16%. As
a result, sales decreased $155.3 million, or 13%, in 1999 as compared to 1998.
The nitrogen plant foods industry has experienced market price declines due to
increased worldwide supplies of nitrogen and decreased demand for plant foods in
response to decreased unit prices that producers realize for their grain. These
adverse conditions were exacerbated by heavy spring rains throughout Farmland's
market area, which restricted the use of fertilizer products. As a result of
the above market conditions, Farmland temporarily ceased production of urea
ammonia nitrate ("UAN") at our Lawrence, Kansas and Enid, Oklahoma facilities
during the fourth quarter of 1999. We expect to commence production at these
facilities in the second quarter of 2000 in order to meet expected demand during
the 2000 year planting season.

In 1998, plant foods unit sales increased 2% compared to 1997. However, unit
prices for nitrogen-based plant foods decreased 15% and unit prices for
phosphate-based plant foods decreased 7%. As a result, crop production sales
decreased $94.4 million, or 7.5%, in 1998 compared with 1997. The decline in
nitrogen-based plant foods prices resulted from pressures of rising capacity and
inventories in the industry combined with decreased demand from East Asia and
China.

Plant foods sales decreased $73.5 million, or 5.5%, in 1997 compared with 1996.
This decrease was primarily a result of lower unit sales of phosphate and
nitrogen plant foods and lower phosphate-based plant foods prices partially
offset by higher nitrogen prices.

INCOME

Income of the plant foods segment decreased from $93.0 million in 1998 to $32.6
million in 1999. This decrease was primarily attributable to lower unit margins
on nitrogen plant foods products. Unit margins declined as additional global
plant foods production capacity combined with reduced domestic demand continued
to decrease selling prices of nitrogen products in 1999. Partially offsetting
the decline in gross margin, plant foods realized a $7.7 million gain on the
sale of phosphate rock reserves, a $4.1 million gain on futures positions closed
as a result of anticipated natural gas purchases which will not occur and $4.3
million from settlement of litigation related to the acquisition of raw
materials.

During the past year, the nitrogen plant foods industry has experienced market
price declines due to increased worldwide supplies of nitrogen and decreased
demand for plant foods in response to decreased unit prices that producers have
realized for their grains. While no assurances can be given that this trend
will not continue, management anticipates a limited price recovery during the
spring season.

Income of the plant foods segment decreased $112.2 million, or 55%, in 1998
compared with 1997. This decrease was primarily a result of lower nitrogen
plant foods unit margins partially offset by higher unit margins for phosphate
plant foods. Nitrogen margins decreased primarily due to lower selling prices
which declined as a result of additional global plant foods production capacity
combined with lower demand in the East Asian market, particularly China.

Income of the plant foods segment decreased $19.4 million, or 9%, in 1997
compared with 1996. This decrease was primarily a result of higher natural gas
costs which resulted in lower nitrogen plant foods unit margins and by a $2.3
million decrease in our share of net income from crop production ventures. The
effect of this decrease was partially offset by higher unit margins related to
the distribution of phosphate plant foods.

CROP PROTECTION

SALES

Sales of crop protection products are conducted primarily through two 50%-owned
ventures, WILFARM LLC ("WILFARM") and Omnium LLC ("Omnium"), and are not
included in consolidated sales.

INCOME

Income of the crop protection segment primarily consists of Farmland's share of
venture income, which increased $0.8 million in 1999 as compared to 1998. The
majority of this increase was attributable to a full year effect on WILFARM's
margins of its seed business. WILFARM added seed to its product line in 1998.

Income of the crop protection segment increased $2.4 million in 1998 from 1997.
Farmland's share of WILFARM's income increased $1.4 million, is due to improved
operational efficiencies coupled with the expansion of the geographic market
area into the mid-South (Arkansas, Alabama, Mississippi and Louisiana). In
addition, WILFARM's margins improved due to a favorable shift of its product
sales mix. The increase in Omnium, $0.8 million, is a result of improved
production volumes and efficiencies compared with 1997.

Income for the crop protection segment decreased $1.2 million in 1997 as
compared to 1996. The decrease is primarily attributable to WILFARM, which had
lower margins combined with increased expenses.

PETROLEUM

SALES

Sales of the petroleum business decreased $182.8 million, or 16%, in 1999
compared to 1998. This decrease resulted in a 12% decrease in unit sales for
refined fuels (gasoline, distillates and diesel) and a decrease in the average
unit price for refined fuels and propane of 16% and 12%, respectively. The
price decline was primarily due to a temporary excess of product supplies in the
market relative to demand.

In 1998, unit sales of refined fuels increased by 7.5% compared to 1997.
However, dollar sales of this business segment decreased by $194.9 million, or
15%, primarily due to a 15% decrease in the average unit price of refined fuels
and a 29% decrease in the average unit price of propane.

Sales of the petroleum business increased $270.2 million, or 25%, in 1997
compared with 1996. This increase was principally attributable to expansion of
capacity at the Coffeyville, KS refinery, which enabled us to increase unit
sales of refined fuels. In addition, unit prices for these products were higher
than in 1996.

INCOME

The petroleum business segment had income of $20.5 million in 1999 compared to
$2.6 million in 1998. The increase in income is primarily a result of volatile
market prices for energy products. In 1998, market prices fell sharply and we
reduced our income and the carrying value of inventories by approximately $27.6
million to reflect this market value decline. In 1999, the market value
increased. We increased income and the carrying value of petroleum inventories
by $27.6 million to reflect this market value increase. In addition, we placed
the operations of the Coffeyville refining in a venture which commenced
operations on September 1, 1999. In anticipation of the venture's operations,
we were able to liquidate certain LIFO inventories and realize a $14.5 million
gain. These increases in income were partially offset by strong industry-wide
production of refined fuels combined with lower demand for these products, which
reduced the spread between crude oil costs and refined product selling prices.

The petroleum business segment had income of $2.6 million in 1998 compared with
$37.3 million in 1997. This decrease resulted primarily from the $27.6 million
adjustment of year-end LIFO inventories to market value as explained above.
Petroleum operating income also decreased as finished goods prices declined more
than crude oil prices declined, resulting in lower unit margins.

Segment income of the petroleum business increased $32.0 million in 1997
compared with 1996. This increase was primarily a result of higher margins
coupled with increased unit sales. The higher margins are primarily
attributable to an increase in the difference between crude oil prices and
finished product prices, the ability of the refinery to process crude oil
streams containing a higher proportion of sulfur and to production efficiencies
resulting from increased refinery capacity.
FEED

SALES

Sales of the feed business increased $25.8 million in 1999 compared with 1998.
This increase resulted primarily from higher unit sales due to geographic
expansion partially offset by lower per ton selling prices for livestock feed
and feed ingredients.

Sales of the feed business decreased $68.3 million in 1998 compared with 1997.
The decrease resulted primarily from lower prices. Unit sales were
approximately the same volume as in the prior year.

Sales of the feed business increased $47.2 million in 1997 compared with 1996.
This increase resulted primarily from higher unit prices of feed ingredients
combined with a slight increase in volume.

INCOME

Income of the feed business increased $4.7 million in 1999 compared to 1998.
The increase was primarily due to higher unit margins on pet/specialty/equine
feeds.

Income of the feed business increased $4.0 million in 1998 compared with 1997.
The increase was primarily attributable to higher margins per ton in livestock
feed, feed ingredients and pet/specialty/equine feeds as well as lower expenses.

Income of the feed business decreased $6.7 million in 1997 compared with 1996.
This decrease was primarily attributable to declining sales through traditional
local cooperative channels and an increase in sales to lower margin commercial
accounts.

PORK PROCESSING AND MARKETING

SALES

Sales from the pork processing and marketing business decreased $130.4 million
in 1999 compared with 1998. The decrease was attributable to a decrease in unit
sales price of approximately 11% partly offset by a 3% increase in the number of
hogs processed.

The Company's pork processing and marketing business sales decreased $145.2
million in 1998 compared with 1997. The decrease was attributable to a decrease
in hog prices partly offset by a 9% increase in the number of hogs processed.

The Company's pork processing and marketing business sales increased $283.5
million in 1997 compared with 1996. The increase was largely attributable to
increased unit volume primarily resulting from the operations of pork processing
plants acquired during the third and fourth quarters of 1996.

INCOME

Income of the pork processing and marketing segment increased $19.0 million in
1999 compared with 1998. The increase was primarily due to increased gross
margins as the decline in live hog prices was greater than the decline in the
selling price of fresh pork. This increase in gross margins was partially
offset by an increase in promotional, advertising and storage expenses.

Income of the Company's pork processing and marketing segment increased $33.0
million in 1998 compared with 1997. The increase was primarily due to increased
gross margins in pork processing.

Income of the pork processing and marketing segment decreased $29.9 million in
1997 compared with 1996. The decrease was primarily due to increased cost of
live hogs and to the increased selling and administrative expenses related to
the pork processing business.

LIVESTOCK PRODUCTION

INCOME

The livestock production segment had a loss of $24.8 million in 1999 compared to
a loss of $8.2 million in 1998. The increased loss was primarily due to lower
live hog prices partially offset by lower selling and administrative expenses.

The livestock production segment had a loss of $8.2 million in 1998 compared to
income of $3.3 million in 1997. The decrease was primarily due to lower live
hog prices.

The livestock production segment had income of $3.3 million in 1997 compared
with a loss of $0.7 million in 1996. This improvement was primarily due to an
increase in live hog prices.

BEEF PROCESSING AND MARKETING

SALES

Sales from beef processing and marketing business increased $223.0 million in
1999 compared with 1998. The increase was attributable to higher unit sales
prices.

Beef processing and marketing business sales increased $232.1 million in 1998
compared with 1997. The increase was attributable to increases of approximately
15% in the number of cattle processed partly offset by lower wholesale prices
for beef.

Beef processing and marketing business sales increased $54.9 million in 1997
compared with 1996. This increase was due to the increase of the number of
cattle processed and higher wholesale prices for beef.

INCOME

Income of the beef processing and marketing segment increased $27.5 million in
1999 compared with 1998. The increase was primarily due to increased selling
prices, stable cost of raw product, and a decrease in selling and administrative
expenses.

Income of the beef processing and marketing segment decreased $17.5 million in
1998 compared with 1997. The decrease was primarily due to lower unit margin
partially offset by an increase in the number of cattle processed.

Income of the beef processing and marketing segment increased $6.4 million in
1997 compared with 1996. The increase was primarily due to increased beef unit
sales and increased margin per head of cattle.

NORTH AMERICAN GRAIN

SALES

North American grain sales increased $116.3 million, or 6% in 1999 compared to
1998. This increase is primarily due to an increase in unit sales related to
feed grains.

In 1998, unit sales increased 4%. However, commodity prices decreased and sales
declined from $2.2 billion in 1997 to $2.1 billion in 1998.
North American grain sales decreased $1.2 billion in 1997 compared with 1996.
This decrease resulted from decreases in both unit sales (primarily due to a
reduction in export sales) and unit prices.

INCOME

North American grain's segment income increased $7.7 million in 1999 compared to
1998. The increase is a result of increased margins and reduced expenses.

North American grain income increased $4.9 million in 1998 compared with 1997.
This increase resulted primarily from improved margins.

The North American grain segment had income of $2.5 million in 1997 compared
with a loss of $30.9 million in 1996. This increase in operating income was
primarily attributable to higher margins.

INTERNATIONAL GRAIN

SALES

International Grain's sales increased $1.9 billion in 1999 compared to 1998.
The primary cause of this increase in sales is the change in Tradigrain's
business from grain brokerage operations to buy/sell operations. Due to this
change, it is appropriate for Tradigrain to record the full value of the grain
sold as revenue ($2.0 billion in 1999) and the related cost of grain acquisition
as cost of goods sold ($1.9 billion in 1999), rather than recognizing as revenue
only the net margins on grain transactions. For 1997 and 1998, the net margin
recognized as revenue totaled $31.2 million and $63.5 million, respectively.
The gross value of these transactions for 1997 and 1998 totaled $2.3 billion and
$1.7 billion, respectively.

INCOME

Income of the international grain business decreased $2.7 million in 1999
compared to 1998 primarily as a result of increased administrative expenses.

Income of the international grain business increased $21.2 million in 1998
compared to 1997. This increase was primarily attributable to higher margins on
wheat, oil, and meal and lower selling, general and administrative expenses.

Income of the international grain business decreased $5.8 million in 1997
compared to 1996. In the ordinary course of its international grain trading
business, Tradigrain may take long or short positions in grain. In 1997, a late
spring freeze in certain wheat producing areas of the United States caused
short-term grain market price volatility. The grain market price movement
adversely impacted the market value of Tradigrain's grain positions and its
operating results for that year.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

SGA increased $48.8 million, or 11%, in 1999 compared with 1998. SGA directly
associated with business segments increased $22.7 million (primarily related to
the pork business and acquisition of SF Services, Inc.) and has been included in
the determination of the operating income of business segments. General
corporate expenses not identified to business segments increased $26.1 million
primarily as a result of the increased cost of management information systems
and increased expenses related to geographic expansion.

Selling, general and administrative expenses ("SG&A") increased $22.6 million,
or 5.5%, in 1998 compared with 1997. SG&A directly associated with business
segments increased $15.1 million (primarily related to the grain marketing and
meats businesses) and has been included in the determination of the operating
income of business segments. General corporate expenses not identified to
business segments increased $7.5 million primarily as a result of the increased
cost of management information systems and the acquisition of SF Services, Inc.

SG&A increased $40.4 million, or 11%, in 1997 compared with 1996. SG&A directly
associated with business segments increased $45.8 million (primarily associated
with the food processing and marketing segment) and has been included in the
determination of the operating income of business segments. General corporate
expenses not identified to business segments decreased $5.4 million primarily as
a result of lower employee-related costs.

OTHER INCOME (DEDUCTIONS)

INTEREST EXPENSE

Interest expense increased $17.1 million in 1999 compared with 1998, primarily
reflecting higher average borrowings.

Interest expense increased $11.3 million in 1998 compared with 1997, primarily
reflecting higher average borrowings.

Interest expense decreased $0.1 million in 1997 compared with 1996, reflecting
lower average borrowings offset by a slight increase in the average interest
rate.

OTHER, NET

Other income was $43.3 million in 1999, $30.3 million in 1998, and $22.5 million
in 1997. Significant components of the increase in 1999 compared to 1998
include a $7.7 million gain on the sale of phosphate rock reserves, a $4.3
million gain from litigation relating to the purchase of raw materials (natural
gas) consumed in producing nitrogen fertilizers, and a $4.1 million gain from
closing futures contracts used to hedge anticipated purchases of natural gas
which purchases are no longer anticipated due to temporary suspension of
production of the Enid, Oklahoma and Lawrence, Kansas UAN facilities, and have
been included in the income of the plant foods business segment..

The increase in 1998 compared to 1997 of $7.8 million is principally a gain of
$7.2 million on the sale of a 3.8% interest in National Beef Packing Co. L.P.
and a $2.2 million gain on the sale of Cooperative Service Company, a wholly
owned subsidiary engaged in insurance and auditing services.

CAPITAL EXPENDITURES

See "Business and Properties - Business - Capital Expenditures and Investments
in Ventures" beginning on page 72.

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED NOVEMBER 30, 1999 COMPARED TO THREE
MONTHS ENDED NOVEMBER 30, 1998

GENERAL

In view of the seasonality of Farmland's businesses, it must be emphasized that
the results of operations for the periods presented are not necessarily
indicative of the results for a full fiscal year. Historically, the majority of
farm supply products have been sold in the spring. Sales in the beef and grain
marketing businesses historically have been concentrated in the summer. Summer
is the lowest sales period for pork products.
For the three months ended November 30, 1999, our sales were $3.0 billion
compared with sales of $2.6 billion for the same period last year. This
increase is primarily due to a $0.2 billion increase in sales of the petroleum
segment, a $0.1 billion increase in sales of the beef processing and marketing
segments and a $0.1 billion increase in sales of international grain segment.
For the three months ended November 30, 1999, Farmland incurred a net loss of
$26.5 million compared with a net loss of $6.4 million for the same period last
year. The net loss in the three months ended November 30, 1999 compares
unfavorably with the prior year primarily because market prices of plant foods
continued to decline, which adversely impacted the operating results of
Farmland.

PLANT FOODS

Sales of the plant foods segment decreased $11.8 million for the three months
ended November 30, 1999 compared with the same period last year. The decrease
results from lower unit selling prices for both nitrogen- and phosphate-based
plant foods, partly offset by an increase in unit sales of phosphate-based
fertilizers. Plant food market prices have declined due to a relatively high
inventory level present in the industry.

The plant foods segment had a loss of $19.6 million for the three months ended
November 30, 1999 compared with income of $6.1 million the same period last
year. This loss results primarily from a continued excess supply of plant foods
products, which has caused market prices for both nitrogen- and phosphate-based
plant foods to decline. Also, as a result of this situation, we decided to
temporarily curtail production at two facilities, which adversely affected our
ability to recover certain manufacturing fixed costs. Also contributing to the
segment loss were approximately $5.0 million of startup costs related to our
gasification plant located in Coffeyville, Kansas.

PETROLEUM

Sales of the petroleum segment in the three months ended November 30, 1999
increased $155.8 million compared with the same period last year. This increase
was primarily attributable to higher unit prices for refined fuels and
distillates combined with a slight increase in unit sales.

Income for the petroleum segment decreased $1.6 million for the three months
ended November 30, 1999 compared with the prior period. This decline was
primarily due to a decrease in the spread between crude oil costs and refined
products selling prices. With the formation of the Cooperative Refining
venture, a portion of petroleum income is now recognized as equity in income of
investees, rather than as gross income.

FEED

Sales of the feed business increased approximately 5% in the three months ended
November 30, 1999 compared with the prior year. This increase is as a result of
increased unit sales. Income for the feed segment increased $1.1 million for
the three months ended November 30, 1999 compared with the same period last year
primarily due to a slight improvement in feed ingredient and formula feed
margins.

PORK PROCESSING AND MARKETING AND LIVESTOCK PRODUCTION

Sales in the pork processing and marketing business segment increased $15.3
million, or approximately 4%, from the same period last year. This increase is
primarily attributable to higher unit prices partially offset by lower unit
sales.

Income in the pork processing and marketing business segment for the three
months ended November 30, 1999 decreased $4.0 million compared to the prior
period. This decrease is primarily attributable to lower margins which reflect
higher live hog prices and to lower unit sales. In addition, the livestock
production segment had a loss of $5.2 million for the three months ended
November 30, 1999 compared with a loss of $11.7 million in the prior year. This
improvement is primarily attributable to improved unit margins due to higher
live hog prices.

BEEF PROCESSING AND MARKETING

Sales of the beef processing and marketing segment increased $108.6 million for
the three months ended November 30, 1999 compared with the same period last
year. The increase is due to a 6% increase in the number of cattle processed
combined with a 13% increase in unit selling prices.

Farmland's share of the beef processing and marketing segment's income increased
$9.2 million for the three months ended November 30, 1999 compared to the prior
period. This increase is primarily attributable to increased beef unit sales
and increased margin per head of cattle processed. These increases were
partially offset by higher per head labor-related expenses.

NORTH AMERICAN GRAIN

Sales of the North American grain segment decreased $10.0 million for the three
month period ended November 30, 1999 compared with the same period last year
primarily as the result of declines in grain prices largely offset by a
significant increase in unit sales of wheat.

North American grain segment income for the three months ended November 30, 1999
increased $1.3 million compared to the same period last year. This increase is
primarily attributable to improved grain margins. During 1999, our Concourse
Grain venture was liquidated and certain of Concourse Grain's marketing
activities were assumed by North American grain. As a result, during the three
months ended November 30, 1999, income related to grain marketing was included
as a component of gross income. During the first quarter of last year, this
income was included as a component of equity in net income from investees.

INTERNATIONAL GRAIN

International Grain's sales increased $103.4 million and their income increased
$2.2 million for the three month period ended November 30, 1999 compared with
the same period last year primarily as a result of increased volume for all
major commodities.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ("SG&A") expenses increased $5.2 million, or
4%, from the same period last year. SG&A expenses directly connected to
segments increased approximately $1.5 million and these expenses have been
included in the determination of business segment income. SG&A expenses not
identified to business segments increased $3.7 million, primarily a result of
increased costs of management information services, increased group health plan
expenses, and expenses incurred in connection with the proposed merger with
Cenex Harvest States.

INTEREST EXPENSE

Interest expense increased $5.6 million due to both an increase in average
borrowings and an increase in average interest rate.

TAX BENEFIT

The income tax benefit increased $6.7 million due to an increase in Farmland's
loss combined with an increase in the effective tax rate. The increase in the
effective tax rate is the result of a change in the income that is available for
patronage.

MATTERS INVOLVING THE ENVIRONMENT

Farmland 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 we use hazardous substances and generate
hazardous wastes in the ordinary course of our manufacturing processes.
Liabilities related to remediation of contaminated properties are recognized
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 Farmland's share of costs attributable to
potentially responsible parties 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.

Farmland wholly or jointly owns or operates 27 grain elevators and 65
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. Farmland also has been identified as a
potentially responsible party ("PRP") under the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") at
various National Priority List sites and has unresolved liability with respect
to the past disposal of hazardous substances at five such sites. CERCLA 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 owners or operators of a contaminated property
and companies that generated, disposed of, or arranged for the disposal of
hazardous substances found at the property. We are investigating or remediating
contamination at 31 properties under CERCLA and/or the state and federal
hazardous waste management laws. We paid, for environmental investigation and
remediation, approximately $4.6 million during 1997, $3.1 million during 1998,
and $7.2 million during 1999.

Farmland currently is aware of probable obligations for environmental matters at
41 properties. As of November 30, 1999, we had an environmental accrual in our
Condensed Consolidated Balance Sheet (unaudited) for probable and reasonably
estimated cost for remediation of contaminated property of $12.9 million. We
periodically review and, as appropriate, revise our environmental accruals.
Based on current information and regulatory requirements, we believe that the
accruals established for environmental expenditures are adequate. As of
November 30, 1999, Farmland has also recorded, as a receivable, approximately
$1.0 million of estimated, probable insurance proceeds related to an
environmental issue which has been remediated.

Some environmental matters are in preliminary stages and the timing, extent and
costs of actions which governmental authorities may require are currently
unknown. As a result, certain costs of addressing environmental matters are
either not probable or not reasonably estimable and, therefore, have not been
accrued. In management's opinion, it is reasonably possible that Farmland may
incur $11.8 million of costs in addition to the $12.9 million which has been
accrued.

Under the Resource Conservation Recovery Act of 1976 (' 'RCRA''), Farmland has
three closure and four post-closure plans in place for five locations. Closure
and post-closure plans also are in place for three landfills and two injection
wells as required by state regulations. Such closure and post-closure costs are
estimated to be $5.0 million at November 30, 1999 (and are in addition to the
$12.9 million accrual and the $11.8 million discussed in the prior paragraph).
These liabilities are accrued when plans for termination of plant operations
have been made. Operations are being conducted at these locations and we do not
plan to terminate such operations in the foreseeable future. Therefore, these
environmental exit costs have not been accrued.

There can be no assurance that the environmental matters described above, or
environmental matters which may develop in the future, will not have a material
adverse effect on our business, financial condition or results of operations.

Protection of the environment requires us to incur expenditures for equipment or
processes. These expenditures may impact our future net income. However, we do
not anticipate that our 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. To improve our environmental compliance and the efficiency
of our operations, Farmland made capital expenditures of approximately $8.4
million in 1997, $8.7 million in 1998, and $6.5 million in 1999. Management
believes we currently are in substantial compliance with existing environmental
rules and regulations.

RECENT ACCOUNTING PRONOUNCEMENTS

Statements of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" was issued in June 1998 by the
FASB and is effective for fiscal periods beginning after June 15, 2000 as a
result of SFAS No. 137. Farmland is currently evaluating the impact, if any,
that adoption of the provisions of SFAS No. 133 will have on its financial
statements.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

Farmland is including the following cautionary statement in this prospectus to
make applicable and take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statement made by, or on behalf of, Farmland. The factors identified in this
cautionary statement are important factors (but not necessarily all important
factors) that could cause actual results to differ materially from those
expressed in any forward-looking statement made by, or on behalf of, Farmland.

Where any such forward-looking statement includes a statement of the assumptions
or basis underlying such forward-looking statement, we caution that, while we
believe such assumptions or basis to be reasonable and makes them in good faith,
the assumed facts or basis almost always vary from actual results, and the
differences between the assumed facts or basis and actual results can be
material, depending upon the circumstances. Where, in any forward-looking
statement, Farmland, or its management, expresses an expectation or belief as to
future results, such expectation or belief is expressed in good faith and
believed to have a reasonable basis, but there can be no assurance that the
statement of expectation or belief will result or be achieved or accomplished.
Such forward looking statements include, without limitation, statements
regarding the seasonal effects upon our business, the anticipated expenditures
for environmental remediation, Farmland's assessment of future problems related
to Year 2000 issues, the continuation of current operating trends through the
end of this fiscal year, the ultimate consummation of proposed ventures or
alliances, the likelihood of recovery of nitrogen-based plant foods prices, the
impact of seasonal demand on the profitability of the crop production business,
the consequences of an adverse judgment in certain litigations, the perceived
future business benefits related to our agronomy marketing venture, and our
ability to fully and timely complete modifications and expansions with respect
to certain manufacturing facilities. Discussion containing such forward-
looking statements is found in the material set forth under "Risk Factors,"
"Business and Properties", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Notes to Consolidated Financial
Statements", as well as within this prospectus generally.

Taking into account the foregoing, the following are identified as important
factors that could cause actual results to differ materially from those
expressed in any forward-looking statement made by, or on behalf of, Farmland:

1.Weather patterns (flood, drought, frost, etc.) or crop failure.

2.Federal or state regulations regarding agricultural programs and production
efficiencies.

3.Federal or state regulations regarding the amounts of fertilizer and other
chemical applications used by farmers.

4.Factors affecting the export of U.S. agricultural produce (including foreign
trade and monetary policies, laws and regulations, political and governmental
changes, inflation and exchange rates, taxes, operating conditions and world
demand).

5.Factors affecting supply, demand and price of crude oil, refined fuels,
natural gas and other commodities.

6.Regulatory delays and other unforeseeable obstacles beyond our control that
may affect growth strategies through unification, acquisitions and
investments in ventures.

7.Competitors in various segments which may be larger than Farmland, offer more
varied products or possess greater resources.

8.Technological changes (including "Year 2000" compliance issues) are more
difficult or expensive to implement than anticipated.

9.Unusual or unexpected events such as, among other things, litigation
settlements, adverse rulings or judgments and environmental remediation costs
in excess of amounts accrued.

10.The factors identified in "Risk Factors".

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

SENSITIVITY ANALYSIS

Farmland is exposed to various market risks, including commodity price risk,
foreign currency risk and interest rate risk. To manage the volatility related
to these risks, we enter into various derivative transactions pursuant to our
policies in areas such as counterparty exposure and hedging practices. Within
limits approved by the Board of Directors, our international grain trading
subsidiary, Tradigrain, may take net long or short commodity positions.
Otherwise, Farmland does not hold or issue derivative instruments for trading
purposes. Commodities to which we have risk exposure include: feedgrains,
wheat, oilseeds, sugar, cattle, hogs, natural gas, crude oil and refined fuels.
Farmland maintains risk management control systems to monitor its commodity
risks and the offsetting hedge positions.

The following table presents one measure of market risk exposure using
sensitivity analysis. Market risk exposure is defined as the change in the fair
value of the derivative commodity instruments assuming a hypothetical change of
10% in market prices of related commodities. Actual changes in market prices of
commodities may differ from hypothetical changes. Fair value was determined for
derivative commodity contracts using the average quoted market prices for the
three near-term contract periods. For derivative commodity instruments, fair
value was based on Farmland's net position in derivative commodity instruments
by commodity at year-end. The market risk exposure excludes the related
commodity holdings and anticipated purchases. The related commodities have a
high inverse correlation to price changes of the derivative commodity
instruments.

Effect of 10% Change in Fair Value
As of August 31
(Amounts in Millions)
DERIVATIVE COMMODITY CONTRACTS:
1998 1999

Grains:
Trading.................... $10.4 $18.9
Other than trading......... $ 6.5 $23.0
Energy, other than trading... $11.2 $11.3
Meats, other than trading.... $ 0.6 $ 3.2

Farmland uses interest rate swaps to hedge a portion of its variable interest
rate exposure and uses foreign currency forward contracts to hedge its exposure
related to certain foreign currency denominated transactions. Assuming an
adverse interest rate movement of 100 basis points, the impact on fair value of
interest positions held at August 31, 1998 and 1999 would be $3.1 million and
$1.6 million, respectively. Assuming an adverse movement in the foreign
currency spot price of 10%, the impact on fair value of currency positions held
at August 31, 1998 and 1999 would be $4.1 million and $2.6 million,
respectively. Market risk on other than trading transactions is not material to
our results of operations or financial position, as we have offsetting physical
positions. The market risk of trading positions is unlikely to have a material
impact on our financial position, but could have a material impact on our
results of operations.

Farmland's market exposure to derivative transactions, entered into for the
purpose of managing commodity price risk, foreign currency risk and interest
rate risk, were not materially changed as of November 30, 1999 compared with our
positions as of August 31, 1999.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FARMLAND CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets,
August 31, 1999 and November 30, 1999 (unaudited) .........123

Condensed Consolidated Statements of Operations
for the three months ended November 30, 1998 and
1999 (unaudited)...........................................62

Condensed Consolidated Statements of Cash Flows
for the three months ended November 30, 1998 and
1999 (unaudited)...........................................63

Notes to Condensed Consolidated Financial
Statements (unaudited).....................................64

Independent Auditors' Report ...............................73

Consolidated Balance Sheets, August 31, 1998 and
1999 .......................................................74

Consolidated Statements of Operations for each of
the years in the three-year period ended August
31, 1999 ...................................................76

Consolidated Statements of Cash Flows for each of
the years in the three-year period ended August
31, 1999 ...................................................77
Consolidated Statements of Capital Shares and
Equities for each of the years in the three-year
period ended August 31, 1999 ...............................79

Notes to Consolidated Financial Statements .................80

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
August 31 November 30
1999 1999

(Amounts in Thousands)
<S> <C> <C>
Accounts receivable - trade............................... $ 794,237 $ 728,582
Inventories (Note 2)...................................... 840,504 764,295
Deferred income taxes..................................... 49,495 49,613
Other current assets...................................... 153,833 158,101

Total Current Assets................................. $ 1,838,069 $ 1,700,591

Investments and Long-Term Receivables (Note 4).............. $ 329,729 $ 383,102

Property, Plant and Equipment:
Property, plant and equipment, at cost.................... $ 1,744,252 $ 1,764,148
Less accumulated depreciation and
amortization........................................... 911,049 930,600

Net Property, Plant and Equipment......................... $ 833,203 $ 833,548

Other Assets................................................ $ 256,648 $ 253,643
Total Assets................................................ $ 3,257,649 $ 3,170,884

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

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND EQUITIES
<TABLE>
<CAPTION>
August 31 November 30
1999 1999

(Amounts in Thousands)
<S> <C> <C>
Current Liabilities:
Checks and drafts outstanding................................... $ 76,128 $ 117,977
Short-term notes payable ....................................... 546,180 532,898
Current maturities of long-term debt ........................... 44,771 45,996
Accounts payable - trade........................................ 463,296 396,252
Other current liabilities....................................... 257,255 239,619

Total Current Liabilities................................... $ 1,387,630 $ 1,332,742

Long-Term Liabilities:
Long-term borrowings (excluding current maturities)............. $ 808,413 $ 797,200
Other long-term liabilities..................................... 40,212 39,097

Total Long-Term Liabilities................................. $ 848,625 $ 836,297

Deferred Income Taxes............................................... $ 63,058 $ 64,303

Minority Owners' Equity in Subsidiaries............................. $ 41,009 $ 47,179

Net (loss) (Note 1)................................................. $ -0- $ (26,542)

Capital Shares and Equities:
Preferred Shares, Authorized 8,000,000 Shares, 8% Series A
cumulative redeemable preferred shares, stated at
redemption value, $50 per share .................................. $ 100,000 $ 100,000
Other Preferred Shares, $25 Par Value ............................ 69 48
Common shares, $25 par value--Authorized
50,000,000 shares.............................................. 508,029 525,703
Earned surplus and other equities............................... 309,229 291,154

Total Capital Shares and Equities........................... $ 917,327 $ 916,905

Contingent Liabilities and Commitments (Note 3)

Total Liabilities and Equities...................................... $ 3,257,649 $ 3,170,884

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

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended

November 30 November 30
1998 1999

(Amounts in Thousands)
<S> <C> <C>
Sales......................................................... $ 2,582,250 $ 2,984,465
Cost of sales................................................. 2,469,777 2,860,648

Gross income.................................................. $ 112,473 $ 123,817

Selling, general and administrative expenses.................. $ 118,000 $ 123,171

Other income (deductions):
Interest expense, net...................................... $ (17,727) $ (23,732)
Other, net................................................. 8,467 (5,424)

Total other income (deductions)............................... $ (9,260) $ (29,156)

Loss before income taxes, equity in net income of investees an
minority owners' interest in
net (income) of subsidiaries (Note 4)..................... $ (14,787) $ (28,510)

Equity in net income of investees............................. 10,318 1,077

Minority owners' interest in net (income)
of subsidiaries............................................ (2,296) (6,131)
Loss before income taxes...................................... $ (6,765) $ (33,564)

Income tax benefit 365 7,022

Net loss $ (6,400) $ (26,542)

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

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)

Three Months Ended

November 30 November 30
1998 1999

(Amounts in Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................................... $ (6,400) $ (26,542)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization.......................................... 30,978 28,038
Equity in net (income) of investees.................................... (9,734) (1,077)
Other.................................................................. 985 9,320
Changes in assets and liabilities:
Accounts receivable.................................................. (25,597) 65,555
Inventories.......................................................... (224,648) 22,654
Other assets......................................................... (5,713) (765)
Accounts payable..................................................... 41,849 (67,044)
Other liabilities.................................................... 44,200 (10,437)

Net cash provided by (used in) operating activities......................... $ (154,080) $ 19,702

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................................ $ (26,075) $ (26,329)
Distributions from joint ventures........................................... 4,798 6,737
Additions to investments and notes receivable............................... (12,427) (9,542)
Acquisition of other long-term assets....................................... (9,253) (6,743)
Proceeds from disposal of investments and notes receivable.................. 4,834 2,106
Proceeds from sale of fixed assets.......................................... 4,189 3,322

Net cash used in investing activities....................................... $ (33,934) $ (30,449)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of patronage refunds............................................... $ (24,003) $ (6,054)
Payments for redemption of equities......................................... (3,422) -0-
Payments of dividends....................................................... (2,000) (2,004)
Proceeds from bank loans and notes payable.................................. 196,521 915,172
Payments on bank loans and notes payable.................................... (60,316) (933,017)
Proceeds from issuance of subordinated debt certificates.................... 10,333 2,751
Payments for redemption of subordinated debt certificates................... (3,780) (5,720)
Increase of checks and drafts outstanding................................... 74,498 41,849
Net decrease in demand loan certificates.................................... (7,157) (1,715)
Other ...................................................................... 6 (515)

Net cash provided by financing activities................................... $ 180,680 $ 10,747

Net decrease in cash and cash equivalents................................... $ (7,334) $ -0-
Cash and cash equivalents at beginning of period............................ 7,334 -0-

Cash and cash equivalents at end of period.................................. $ -0- $ -0-

</TABLE>

[FN]
See accompanying Notes to Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1) INTERIM FINANCIAL STATEMENTS

Unless the context suggests differently, (i) "Farmland", "we", "us" and "ours"
refers to Farmland Industries, Inc. and its consolidated subsidiaries, (ii) all
references to "year" or "years" are to fiscal years ended August 31 and (iii)
all references to "members" are to persons eligible to receive patronage refunds
from Farmland including voting members, associate members and other patrons with
which Farmland has a currently effective patronage refund agreement.

The information included in these unaudited 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.

Our sales, margins and net income depend, to a large extent, on conditions in
agriculture and may be volatile due to factors beyond our control, such as
weather, crop failures, federal agricultural programs, production efficiencies
and U.S. imports and exports. In addition, various federal and state
regulations intended to protect the environment encourage farmers to reduce the
use of fertilizers and other chemicals. Global variables which affect supply,
demand and price of crude oil, refined fuels, natural gas, livestock, grain and
other commodities may impact Farmland's operations. Historically, changes in
the costs of raw materials used in the manufacture of our finished products have
not necessarily resulted in corresponding changes in the prices at which we have
sold such products. We cannot determine the extent to which these factors may
impact our future operations. Our cash flow and net income may be volatile as
conditions affecting agriculture and markets for our products change.

In accordance with the bylaws of Farmland and its cooperative subsidiaries, we
determine annually the members' portion of income or loss before income taxes.
From this amount, patronage refunds are distributed or losses are allocated to
our members.

We make the determination of members' income (and members' loss) only after the
end of the fiscal year. Our Board of Directors, in their sole discretion, then
determines how member losses are to be handled and the resulting amount of
patronage refunds to be paid or losses to be allocated from such member income
or loss. Since we determine the amount of members' income and the amount of
members' loss only after the end of the fiscal year, and since only after that
determination has been made can our Board of Directors determine the handling of
members' loss, the resulting amount of patronage refunds to be paid, the portion
of such refund to be paid either in cash or Farmland equity (common stock,
associate member common stock and capital credits) and since the amount of
income appropriated to earned surplus is dependent on the amount of patronage
refunds and the handling of members' losses, Farmland makes no provision for
patronage refunds in its interim financial statements. Therefore, the amount of
net income (loss) for the interim period presented is reflected as a separate
item in the accompanying unaudited Condensed Consolidated Balance Sheet as of
November 30, 1999.

(2) INVENTORIES

Major components of inventories are as follows:
<TABLE>
<CAPTION>
August 31 November 30

1999 1999

(Amounts in Thousands)
<S> <C> <C>
Finished and in-process products.............. $ 719,118 $ 676,507
Materials..................................... 54,387 18,526
Supplies...................................... 66,999 69,262

$ 840,504 $ 764,295

</TABLE>

On September 1, 1999, we contributed all of our crude oil and in-process
petroleum inventories to Cooperative Refining, LLC in exchange for a 42%
interest in the venture. Cooperative Refining operates refineries at
Coffeyville, Kansas and McPherson, Kansas on behalf of its partners. This
investment is accounted for using the equity method.

At November 30, 1999, the carrying value of our remaining petroleum inventories
stated under the LIFO method (gasoline and distillates) were $39.3 million,
which approximates the replacement cost of these inventories.

(3) CONTINGENCIES

(A) TAX LITIGATION

On November 29, 1999, the United States Tax Court issued an opinion holding that
the gains and losses we realized in 1983 and 1984 on the sale of the stock of
Terra Resources, Inc. and certain other assets were patronage-sourced, and that
we had reported these gains and losses correctly. By ruling in our favor, the
Tax Court rejected claims of the Internal Revenue Service that would have
resulted in material additional federal income taxes plus accumulated interest.
This ruling also means that we do not owe additional state income tax and
accumulated interest related to these transactions.

Farmland is aware of probable obligations under state and federal environmental
laws at 41 properties. At November 30, 1999, we had an environmental accrual in
our Condensed Consolidated Balance Sheet for probable and reasonably estimated
costs for remediation of contaminated properties of $12.9 million. We
periodically review and, as appropriate, revise our environmental accruals.
Based on current information and regulatory requirements, we believe that the
accruals established for environmental expenditures are adequate. Farmland has
also recorded, as a receivable, approximately $1.0 million of estimated,
probable insurance proceeds related to an environmental issue which has been
remediated.

Under the Resource Conservation Recovery Act of 1976 (' 'RCRA''), Farmland has
three closure and four post-closure plans in place for five locations. Closure
and post-closure plans also are in place for three landfills and two injection
wells as required by state regulations. Such closure and post-closure costs are
estimated to be $5.0 million at November 30, 1999 (and are in addition to the
$12.9 million accrual and the $11.8 million discussed in the prior paragraphs).
These liabilities are accrued when plans for termination of plant operations
have been made. Operations are being conducted at these locations and we do not
plan to terminate such operations in the foreseeable future. Therefore, these
environmental exit costs have not been accrued.

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

Summarized financial information of investees accounted for by the equity method
for the three months ended November 30, 1998 and November 30, 1999 is as
follows:
<TABLE>
<CAPTION>
November 30 November 30
1998 1999

(Amounts in Thousands)
<S> <C> <C>
Net sales.....................................$ 513,294 $ 740,840

Net income....................................$ 16,905 $ 2,446

Farmland's equity in net income...............$ 10,318 $ 1,077

</TABLE>

The Company's investments accounted for by the equity method consist principally
of :
. 50% equity interests in three manufacturers of plant nutrient products,
Farmland Hydro, L.P., SF Phosphates Limited Company and Farmland MissChem,
Limited;
. a 50% equity interest in a distributor of crop protection products, WILFARM,
LLC;
. during the three months ended November 30, 1998, a 50% equity interest in a
grain marketer, Concourse Grain, LLC; and
. during the three months ended November 30, 1999, a 42% equity interest in
Cooperative Refining, LLC, which operates two refineries.

(5) INDUSTRY SEGMENT INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1998 (PAGE 1 OF 3)
(Amounts in Thousands)
CONSOLIDATED SEGMENTS

Combined
Segments Unallocated Consolidated

<S> <C> <C> <C>
Sales & transfers $ 2,673,798 $ - $ 2,673,798
Transfers between
segments (91,548) - (91,548)

Net sales $ 2,582,250 $ - $ 2,582,250

Cost of sales 2,469,777 - 2,469,777

Gross income $ 112,473 $ - $ 112,473

Selling, general and
administrative expenses $ 87,656 $ 30,344 $ 118,000

Other income (expense):
Interest expense $ - $ (19,929) $ (19,929)
Interest income - 2,202 2,202
Other, net 5,945 2,522 8,467

Total other income (expense) $ 5,945 $ (15,205) $ (9,260)
Equity in income/(loss)
of investees 9,005 1,313 10,318

Minority owners' interest
in net (income)/loss
of subsidiaries (2,296) - (2,296)

Income tax benefit - 365 365

Net income (loss) $ 37,471 $ (43,871) $ (6,400)

Total assets $ 2,822,391 $ 254,992 $ 3,077,383

</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1998 (PAGE 2 OF 3)
(Amounts in Thousands)
INPUT AND OTHER SEGMENTS

Other Total Input
Plant Crop Operating and Other
Foods Protection Petroleum Feed Units Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 257,720 $ 62 $ 215,677 $ 157,634 $ 92,287 $ 723,380
Transfers between
segments (12,323) - (21) (6,642) (37,992) (56,978)

Net sales $ 245,397 $ 62 $ 215,656 $ 150,992 $ 54,295 $ 666,402

Cost of sales 240,320 39 209,700 138,088 44,401 632,548

Gross income $ 5,077 $ 23 $ 5,956 $ 12,904 $ 9,894 $ 33,854

Selling, general and
administrative expenses $ 8,497 $ 4 $ 4,813 $ 8,235 $ 9,638 $ 31,187

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net 526 256 2,255 151 1,860 5,048

Total other income (expense) $ 526 $ 256 $ 2,255 $ 151 $ 1,860 $ 5,048

Equity in net income/(loss)
of investees 8,965 (1,535) 68 170 78 7,746

Minority owners' interest
in net (income)/loss
of subsidiaries 54 - - - 253 307

Income tax benefit - - - - - -

Net income (loss) $ 6,125 $ (1,260) $ 3,466 $ 4,990 $ 2,447 $ 15,768

Total assets $680,384 $ 20,590 $ 445,635 $ 93,456 $ 191,175 $ 1,431,240

</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1998 (PAGE 3 OF 3)
(Amounts in Thousands)
OUTPUT SEGMENTS

Pork Beef Grain Total

Processing Livestock Processing North Output
& Marketing Production & Marketing American International Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 368,936 $ 13,246 $ 547,715 $ 542,728 $ 477,793 $ 1,950,418
Transfers between
segments (1,536) (10,508) (565) (21,961) - (34,570)

Net sales $ 367,400 2,738 $ 547,150 $ 520,767 $ 477,793 $ 1,915,848

Cost of sales 306,393 13,534 532,743 512,488 472,071 1,837,229

Gross income $ 61,007 $ (10,796) $ 14,407 $ 8,279 $ 5,722 $ 78,619

Selling, general and
administrative expenses $ 41,209 $ 562 $ 4,383 $ 5,228 $ 5,087 $ 56,469

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net (111) (10) 363 180 475 897

Total other income (expense) $ (111) $ (10) $ 363 $ 180 $ 475 $ 897

Equity in net income/(loss)

THREE MONTHS ENDED
NOVEMBER 30, 1998 (PAGE 3 OF 3)
(Amounts in Thousands)
of investees - (362) (1,133) 2,754 - 1,259

Minority owners' interest
in net (income)/loss
of subsidiaries - - (2,603) - - (2,603)

Income tax benefit - - - - - -

Net income (loss) $ 19,687 $ (11,730) $ 6,651 $ 5,985 $ 1,110 $ 21,703

Total assets $ 336,561 $ 29,813 $ 254,701 $ 446,246 $ 323,830 $ 1,391,151

</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1999 (PAGE 1 OF 3)
(Amounts in Thousands)
CONSOLIDATED SEGMENTS

Combined
Segments Unallocated Consolidated

<S> <C> <C> <C>
Sales & transfers $ 3,144,262 $ - $ 3,144,262
Transfers between
segments (159,797) - (159,797)

Net sales $ 2,984,465 $ - $ 2,984,465

Cost of sales 2,860,648 - 2,860,648

Gross income $ 123,817 $ - $ 123,817

Selling, general and
administrative expenses 89,146 34,025 123,171

Other income (expense):
Interest expense - (25,535) (25,535)
Interest income - 1,803 1,803
Other, net (6,951) 1,527 (5,424)

Total other income (expense) $ (6,951) $ (22,205) $ (29,156)

Equity in income/(loss)
of investees 3,489 (2,412) 1,077

Minority owners' interest
in net (income)/loss
of subsidiaries (6,131) - (6,131)

Income tax benefit - 7,022 7,022

Net income (loss) $ 25,078 $ (51,620) $ (26,542)

Total assets $ 2,845,805 $ 325,079 $ 3,170,884

</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1999 (PAGE 2 OF 3)
(Amounts in Thousands)
INPUT AND OTHER SEGMENTS

Other Total Input
Plant Crop Operating and Other
Foods Protection Petroleum Feed Units Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 234,570 $ 53 $ 371,470 $ 176,594 $ 106,665 $ 889,352
Transfers between
segments (930) - - (17,552) (23,397) (41,879)

Net sales $ 233,640 $ 53 $ 371,470 $ 159,042 $ 83,268 $ 847,473

Cost of sales 239,927 33 367,364 145,361 71,782 824,467

Gross income $ (6,287) $ 20 $ 4,106 $ 13,681 $ 11,486 $ 23,006

Selling, general and
administrative expenses $ 8,131 $ - $ 4,124 $ 7,980 $ 10,169 $ 30,404

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net (8,858) - (6) 217 1,079 (7,568)

Total other income (expense) $ (8,858) $ 0 $ (6) $ 217 $ 1,079 $ (7,568)

Equity in net income/(loss)

of investees 3,712 (2,610) 1,875 380 63 3,420

Minority owners' interest
in net (income)/loss
of subsidiaries - - - (196) 16 (180)

Income tax benefit - - - - - -

Net income (loss) $ (19,564) $ (2,590) $ 1,851 $ 6,102 $ 2,475 $ (11,726)

Total assets $ 648,824 $ 17,403 $ 385,085 $ 132,249 $ 107,551 $ 1,291,112

</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1999 (PAGE 3 OF 3)
(Amounts in Thousands)
OUTPUT SEGMENTS

Pork Beef Grain Total

Processing Livestock Processing North Output
& Marketing Production & Marketing American International Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 384,004 $ 23,803 $ 656,233 $ 609,663 $ 581,207 $ 2,254,910
Transfers between
segments (1,265) (17,247) (488) (98,918) - (117,918)

Net sales $ 382,739 $ 6,556 $ 655,745 $ 510,745 $ 581,207 $ 2,136,992

Cost of sales 327,510 11,012 629,221 497,094 571,344 2,036,181

Gross income $ 55,229 $ (4,456) $ 26,524 $ 13,651 $ 9,863 $ 100,811

Selling, general and
administrative expenses $ 40,860 $ 614 $ 5,044 $ 6,622 $ 5,602 $ 58,742

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net 1,320 (52) 215 121 (987) 617

Total other income (expense) $ 1,320 $ (52) $ 215 $ 121 $ (987) $ 617

Equity in net income/(loss)

THREE MONTHS ENDED
NOVEMBER 30, 1999 (PAGE 3 OF 3)
(Amounts in Thousands)
of investees 9 (121) 70 111 - 69

Minority owners' interest
in net (income)/loss
of subsidiaries - - (5,951) - - (5,951)

Income tax benefit - - - - - -

Net income (loss) $ 15,698 $ (5,243) $ 15,814 $ 7,261 $ 3,274 $ 36,804

Total assets $ 365,042 $ 56,176 $ 304,702 $ 432,866 $ 395,907 $ 1,554,693

</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, 1998 and 1999, 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, 1999.
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, 1998 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended August 31, 1999, in conformity with generally accepted accounting
principles.

KPMG LLP

Kansas City, Missouri
October 15, 1999,
except as to Note 6a, which is as of December 6, 1999

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents.......................................... $ 7,334 $ 0
Accounts receivable - trade........................................ 596,415 794,237
Inventories (Note 2)............................................... 725,967 840,504
Deferred income taxes (Note 6)..................................... 61,844 49,495
Other current assets............................................... 145,151 153,833

Total Current Assets.......................................... $ 1,536,711 $ 1,838,069

Investments and Long-Term Receivables (Note 3) $ 298,402 $ 329,729

Property, Plant and Equipment (Notes 4 and 5):
Property, plant and equipment, at cost............................. $ 1,680,373 $ 1,744,252
Less accumulated depreciation and amortization..................... 853,224 911,049

Net Property, Plant and Equipment.................................. $ 827,149 $ 833,203

Other Assets......................................................... $ 212,356 $ 256,648

Total Assets......................................................... $ 2,874,618 $ 3,257,649

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

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND EQUITIES

<TABLE>
<CAPTION>
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Current Liabilities:
Short-term notes payable (Note 5)...................................... $ 408,639 $ 546,180
Current maturities of long-term debt (Note 5).......................... 38,946 44,771
Accounts payable - trade............................................... 330,043 463,296
Other current liabilities.............................................. 323,601 333,383

Total Current Liabilities......................................... $ 1,101,229 $ 1,387,630

Long-term Liabilities:
Long-term borrowings (excluding current maturities) (Note 5)........... $ 728,103 $ 808,413
Other long-term liabilities............................................ 31,942 40,212

Total Long-Term Liabilities....................................... $ 760,045 $ 848,625

Deferred Income Taxes (Note 6)........................................... $ 65,177 $ 63,058

Minority Owners' Equity in Subsidiaries (Note 7) $ 35,471 $ 41,009

Capital Shares and Equities (Note 8):
Preferred shares, Authorized 8,000,000 shares, 8% Series A cumulative
redeemable preferred shares, stated at redemption value, $50 per share,
2,000,000 shares issued and outstanding ............................... $ 100,000 $ 100,000
Other preferred shares, $25 par value, 2,743 shares issued and
outstanding (2,838 shares in 1998) .... 71 69

Common shares, $25 par value -
Authorized 50,000,000 shares,
20,321,160 shares issued and outstanding
(18,072,136 shares in 1998) ........................................... 451,804 508,029

Associate member common shares
(nonvoting), $25 par value - Authorized 2,000,000 shares, 1,075,560
shares issued and outstanding
(1,140,304 shares in 1998) ............................................ 28,508 26,889

Earned surplus and other equities...................................... 332,313 282,340

Total Capital Shares and Equities................................. $ 912,696 $ 917,327

Contingent Liabilities and Commitments (Notes 5, 6 and 9)

Total Liabilities and Equities.............................................$ 2,874,618 $ 3,257,649

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

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended August 31

1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C>
Sales....................................................... $ 9,147,507 $ 8,775,046 $ 10,709,073
Cost of sales............................................... 8,580,826 8,299,505 10,231,081

Gross income................................................ $ 566,681 $ 475,541 $ 477,992

Selling, general and administrative expenses................ $ 409,378 $ 431,999 $ 480,839

Other income (expense):
Interest expense......................................... $ (62,335) $ (73,645) $ (90,773)
Interest income.......................................... 5,352 5,436 8,337
Other, net (Note 15)..................................... 22,486 30,265 43,322

Total other income (expense)................................ $ (34,497) $ (37,944) $ (39,114)

Income (loss) before equity in net income of investees,
minority owners interest in net income of subsidiaries
and income tax (expense) benefit......................... $ 122,806 $ 5,598 $ (41,961)

Equity in net income of investees (Note 3).................. 49,551 56,434 65,510

Minority owners' interest in net income
of subsidiaries.......................................... (8,684) (7,005) (17,727)

Net income before income taxes (Note 6) 163,673 55,027 5,822

Income tax (expense) benefit (Note 6)....................... (28,250) 3,743 8,043

Net income ................................................. $ 135,423 $ 58,770 $ 13,865

Distribution of net income (Note 8):
Patronage refunds:
Farm supply patrons.................................. $ 101,262 $ 51,513 $ 20,320
Pork marketing patrons............................... -0- 1,274 4,050
Beef marketing patrons............................... 6,458 3,817 5,420
Grain marketing patrons.............................. 585 2,517 479
Livestock production................................. 2 -0- -0-

$ 108,307 $ 59,121 $ 30,269
Earned surplus and other equities........................ 27,116 (351) (16,404)

$ 135,423 $ 58,770 $ 13,865

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

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended August 31

1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................... $ 135,423 $ 58,770 $ 13,865
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:

Depreciation and amortization............................... 90,351 101,833 109,184
Equity in net income of investees........................... (49,551) (56,434) (65,510)
Minority owners' equity in net
income of subsidiaries.................................... 8,684 7,005 17,727
(Gain) loss on disposition of investments................... (552) (9,450) 189
Patronage refunds received in equities...................... (1,830) (1,099) (2,143)
Proceeds from redemption of patronage equities.............. 5,106 6,546 4,598
Deferred income taxes....................................... (1,469) (641) 10,230
Adjustment of LIFO inventories.............................. -0- 27,593 (27,593)
Other....................................................... 1,951 1,029 (4,028)
Changes in assets and liabilities (exclusive
of assets and liabilities of businesses acquired):
Accounts receivable....................................... 27,644 25,398 (181,454)
Inventories............................................... (9,343) 17,295 (76,190)
Other assets.............................................. 6,249 6,893 (30,592)
Accounts payable.......................................... (26,091) (67,286) 105,028
Other liabilities......................................... 35,736 (79,784) (35,791)

Net cash provided by (used in) operating activities........... $ 222,308 $ 37,668 $ (162,480)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.......................................... $ (158,655) $ (108,837) $ (121,184)
Distributions from joint ventures............................. 55,238 57,635 54,121
Acquisition of investments and notes receivable............... (46,243) (69,466) (69,811)
Acquisition of other long-term assets......................... (25,724) (27,267) (38,240)
Proceeds from sale of investments
and collection of notes receivable.......................... 24,758 40,884 61,993
Proceeds from sale of fixed assets............................ 6,895 20,632 22,023
Acquisition of businesses, net of cash acquired............... (3,515) (2,766) (5,829)
Other......................................................... -0- 2,642 (233)

Net cash used in investing activities......................... $ (147,246) $ 86,543) $ (97,160)

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

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Year Ended August 31

1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of patronage refunds.............................. $ (32,511) $ (40,449) $ (23,593)
Payments for redemption of equities........................ (25,440) (80,243) (9,050)
Payments of dividends on preferred shares.................. (4) (4,937) (8,004)
Proceeds from bank loans and notes payable................. 337,407 612,634 2,739,865
Payments of bank loans and notes payable................... (416,715) (516,391) (2,624,938)
Proceeds from issuance of subordinated debt
certificates........................................... 86,132 99,309 121,630
Payments for redemption of subordinated
debt certificates...................................... (37,455) (66,000) (20,376)
Net increase (decrease) in checks
and drafts outstanding................................. 16,299 (47,243) 76,128
Proceeds from issuance of preferred shares................. -0- 100,000 -0-
Other increase (decrease).................................. (2,775) (471) 644

Net cash provided by (used in) financing activities........ $ (75,062) $ 56,209 $ 252,306

Net increase (decrease) in cash and cash equivalents....... $ -0- $ 7,334 $ (7,334)
Cash and cash equivalents at beginning of year............. -0- -0- 7,334

Cash and cash equivalents at end of year................... $ -0- $ 7,334 $ -0-

SUPPLEMENTAL SCHEDULE OF CASH PAID FOR INTEREST AND INCOME
TAXES:
Interest................................................... $ 57,650 $ 76,087 $ 77,143

Income tax expense (benefit), net of refunds............... $ 13,922 $ 13,446 $ (4,045)

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Equities and minority owners' interest called
for redemption......................................... $ 28,579 $ 8,868 $ -0-

Transfer of assets in exchange for investment in
joint ventures......................................... $ 10,292 $ 4,601 $ 300

Appropriation of current year's net income as
patronage refunds...................................... $ 108,307 $ 59,121 $ 30,269

Acquisition of businesses:
Fair value of assets acquired.......................... $ -0- $ 168,409 $ 32,883
Goodwill............................................... 2,550 14,819 14,574
Minority owners' investment............................ 965 -0- -0-
Equity issuable........................................ -0- (26,323) -0-
Cash paid or payable................................... (3,515) (2,766) (7,750)

Liabilities assumed........................................ $ -0- $ 154,139 $ 39,707

<FN>
See accompanying Notes to Consolidated Financial Statements.

</FN>
</TABLE>

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL SHARES AND EQUITIES

Years Ended August 31, 1997, 1998 and 1999

Associate Earned
Member Surplus and Total Capital
Preferred Common Common Other Shares and
Shares Shares Shares Equities Equities

(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
BALANCE AT AUGUST 31, 1996......................... $ 1,264 $ 414,503 $ 15,576 $ 323,988 $ 755,331
Appropriation of current year's net income......... -0- -0- -0- 135,423 135,423
Patronage refund payable in cash transferred
to current liabilities........................... -0- -0- -0- (40,228) (40,228)
Base capital redemptions transferred
to current liabilities........................... -0- (16,783) (444) -0- (17,227)
Other equity redemptions transferred
to current liabilities........................... (1,189) (6,737) (302) (2,963) (11,191)
Prior year patronage refund allocation............. -0- 53,269 5,640 (59,103) (194)
Dividends on preferred shares...................... -0- -0- -0- (4) (4)
Exchange of common shares, associate
member common shares and other equities.......... -0- (2,566) 1,929 637 -0-
Issue, redemption and cancellation of equities..... (3) 326 (151) (89) 83

BALANCE AT AUGUST 31, 1997......................... $ 72 $ 442,012 $ 22,248 $ 357,661 $ 821,993
Appropriation of current year's net income......... -0- -0- -0- 58,770 58,770
Patronage refund payable in cash transferred
to current liabilities........................... -0- -0- -0- (23,593) (23,593)
Base capital redemptions transferred
to current liabilities........................... -0- (8,738) (130) -0- (8,868)
Prior year patronage refund allocation............. -0- 60,238 7,551 (67,789) -0-
Dividends on preferred shares...................... -0- -0- -0- (6,933) (6,933)
Exchange of common shares, associate

member common shares and other equities.......... -0- (2,058) 123 1,935 -0-
Equity issuable for purchase of
SF Services, Inc................................. -0- -0- -0- 26,323 26,323
Issue, redemption and cancellation of equities..... 99,999 (39,650) (1,284) (14,061) 45,004

BALANCE AT AUGUST 31, 1998......................... $ 100,071 $ 451,804 $ 28,508 $ 332,313 $ 912,696
Appropriation of current year's net income......... 0 0 0 13,865 13,865
Patronage refund payable in cash transferred
to current liabilities .... 0 0 0 (6,054) (6,054)
Prior year patronage refund allocation............. 0 32,481 3,046 (35,527) 0
Dividends on preferred stock....................... 0 0 0 (8,004) (8,004)
Exchange of common stock, associate member
common stock and other equities 0 (1,821) (1,393) 3,214 0
Issue, redemption and cancellation of equities.... (2) 25,565 (3,272) (17,467) 4,824

BALANCE AT AUGUST 31, 1999......................... $ 100,069 $ 508,029 $ 26,889 $ 282,340 $ 917,327

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

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Farmland Industries, Inc., a Kansas corporation, is organized and operated as a
cooperative and its mission is to be a global, consumer-driven, producer-owned,
farm-to-table cooperative system.

General -- The consolidated financial statements include the accounts of
Farmland Industries, Inc. and all of its majority-owned subsidiaries
("Farmland", "we", "us", "our", or the "Company", unless the context requires
otherwise). All significant intercompany accounts and transactions have been
eliminated. When necessary, the financial statements include amounts based on
informed estimates and judgments of management. Our fiscal year ends August 31.
Accordingly, all references to "year" or "years" are to fiscal years ended
August 31.

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

Investments -- Investments in companies over which Farmland exercises
significant influence (20% to 50% voting control) are accounted for by the
equity method. Other investments are stated at cost, less any provision for
impairment which is other than temporary.

Accounts Receivable - Farmland uses the allowance method to account for doubtful
accounts and notes.

Inventories -- Grain inventories are valued at market adjusted for net
unrealized gains or losses on open commodity contracts. Crude oil and refined
petroleum 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.

Property, Plant and Equipment -- Assets, including assets under capital leases,
are stated at cost. Depreciation and amortization are computed principally
using the straight-line method over the estimated useful lives of the assets and
the remaining terms of the capital leases, respectively.

Goodwill and Other Intangible Assets -- 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. Farmland assesses the recoverability of
goodwill and measures impairment, if any, by determining whether the unamortized
balance can be recovered over its remaining life through undiscounted future
operating cash flows. Goodwill is reflected in the accompanying Consolidated
Balance Sheets net of accumulated amortization of $16.4 million and
$18.4 million, respectively, at August 31, 1998 and 1999. Other intangible
assets, primarily software, are amortized over three to ten years.

Sales - Farmland recognizes sales at the time product is shipped. Farmland's
international grain trading business ("Tradigrain") has changed from a grain
brokerage operation to a buy/sell operation. Accordingly, only the net margins
of the international grain business were included in sales during 1997 and 1998.
Sales and cost of sales for 1999 include the gross value of the international
grain business transactions. Consistent with this change, Tradigrain's 1999
bank borrowings and repayments have been included as cash flows from financing
activities.

Derivative Commodity Instruments -- Farmland uses derivative commodity
instruments, including forward contracts, futures and options contracts,

primarily to reduce its exposure to risk of loss from changes in commodity
prices. Derivative commodity instruments which are designated as hedges and for
which changes in value exhibit high correlation to changes in value of the
underlying position are accounted for as hedges.

Gains and losses on hedges of inventory are deferred as part of the carrying
amount of the related inventories and, upon sale of the inventory, recognized in
cost of sales. Gains and losses related to qualifying hedges of firm
commitments or anticipated transactions also are deferred and are recognized as
an adjustment to the carrying amounts of the commodities when the underlying
hedged transaction occurs. When a qualifying hedge is terminated or ceases to
meet the specified criteria for use of hedge accounting, any deferred gains or
losses through that date continue to be deferred. To the extent an anticipated
transaction is no longer likely to occur, related hedges are closed with gains
or losses charged to operations.

Tradigrain uses derivative commodity instruments to establish positions for
trading purposes. Instruments used for this purpose are marked-to-market and all
related gains and losses are included in operations. Cash flows from commodity
instruments are classified in the same category as cash flows from the hedged
commodities in the Consolidated Statements of Cash Flows.

Farmland enters into interest rate exchange agreements which involve the
exchange of fixed-rate and variable-rate interest payments over the life of the
agreements and effectively results in the conversion of specifically identified,
variable-rate debt into fixed-rate debt. Differences to be paid or received are
accrued as interest and are recognized as an adjustment to interest expense.

Gains and losses on termination of interest rate exchange agreements are
deferred and recognized over the term of the underlying debt instrument as an
adjustment to interest expense. In cases where there is no remaining underlying

debt instrument, gains and losses on termination are recognized currently in
other income (expense).

Environmental Expenditures -- 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 as new facts or changes in law or technology occur. Environmental
expenditures are capitalized when such costs provide future economic benefits.

Federal Income Taxes -- Farmland is subject to income taxes on all income not
distributed to patrons as qualified patronage refunds. Farmland files
consolidated federal and state income tax returns.

Reclassifications -- Certain prior year amounts have been reclassified to
conform with the current year presentation.

(2) INVENTORIES

Major components of inventories are as follows:

<TABLE>
<CAPTION>
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Finished and in-process products..... $ 605,876 $ 719,118
Materials............................ 62,578 54,387
Supplies............................. 57,513 66,999

$ 725,967 $ 840,504

</TABLE>

Income before income taxes for the year ended August 31, 1998 was reduced by
$27.6 million to recognize a non-cash charge for the adjustment of crude oil and
refined petroleum inventories to market value. In fiscal year 1999, the
inventories market value exceeded LIFO cost and the lower of LIFO cost or market
adjustment made in 1998 was reversed. The carrying values of crude oil and
refined petroleum inventories stated under the lower of LIFO cost or market at
August 31, 1998 and 1999, were $112.7 million and $113.2 million, respectively.
Replacement cost approximated the carrying values of petroleum inventories at
both August 31, 1998 and 1999. During 1999, LIFO inventory quantities were
reduced, resulting in a liquidation of LIFO inventory layers. The effect of
these layer liquidations was to decrease cost of goods sold and increase income
before income taxes by approximately $14.5 million.

(3) INVESTMENTS AND LONG-TERM RECEIVABLES

Investments and long-term receivables are as follows:

August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Investments accounted for by the equity method................ $ 196,106 $ 205,047
Investments in and advances to other cooperatives............. 39,112 42,037
National Bank for Cooperatives................................ 16,554 22,362
Other investments and long-term receivables................... 46,630 60,283

$ 298,402 $ 329,729

</TABLE>

National Bank for Cooperatives ("CoBank") requires its borrowers 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, 1998 and 1999, Farmland's investment in CoBank
approximated its requirement. CoBank maintains a statutory lien on the
investment held by Farmland in CoBank.

Summarized financial information of investees accounted for by the equity method
is as follows:

August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Current Assets................................................ $ 614,845 $ 488,447
Long-Term Assets.............................................. 596,869 707,548

Total Assets.............................................. $ 1,211,714 $ 1,195,995

Current Liabilities........................................... $ 513,293 $ 418,183
Long-Term Liabilities......................................... 308,382 370,882

Total Liabilities......................................... $ 821,675 $ 789,065

Net Assets.................................................... $ 390,039 $ 406,930

</TABLE>

<TABLE>
<CAPTION>
Year Ended August 31

1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C>
Net sales.................................. $ 1,366,038 $ 1,859,159 $ 2,618,163

Net income................................. $ 99,264 $ 115,241 $ 125,826

Farmland's equity in net income............ $ 49,551 $ 56,434 $ 65,510

</TABLE>

Farmland's investments accounted for by the equity method consist principally of
50% equity interests in three manufacturers of crop production products,
Farmland Hydro, L.P., SF Phosphates Limited Company and Farmland MissChem,
Limited and a 50% equity interest in a distributor of crop protection products,
WILFARM, LLC. During 1998, Farmland's North American Grain business formed two
50%-owned alliances; Concourse Grain, LLC and Farmland-Atwood, LLC, with
ConAgra. Concourse Grain, a marketing alliance, provided both domestic and
international customers with multiple classes of wheat. Farmland-Atwood
provides risk management services, financial and grain support services and
grain brokerage to its customers. On May 24, 1999, the owners of Concourse
Grain voted to liquidate the venture. On May 28, 1999, we acquired the
remaining 50% interest in Farmland-Atwood. At August 31, 1999, our share of the
undistributed earnings of all ventures accounted for by the equity method
totaled $63.6 million.

(4) PROPERTY, PLANT AND EQUIPMENT

A summary of cost for property, plant and equipment is as follows:

<TABLE>
<CAPTION>
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Land and improvements..................... $ 57,381 $ 59,072
Buildings................................. 296,163 291,131
Machinery and equipment................... 1,043,831 1,067,838
Automotive equipment...................... 70,676 71,948
Furniture and fixtures.................... 59,859 56,463
Capital leases............................ 54,467 54,461
Leasehold improvements.................... 30,750 38,231
Other..................................... 7,598 5,622
Construction in progress.................. 59,648 99,486

$ 1,680,373 $ 1,744,252

</TABLE>

(5) BANK LOANS, SUBORDINATED DEBT CERTIFICATES AND NOTES PAYABLE

Bank loans, subordinated debt certificates and notes payable are as follows:

<TABLE>
<CAPTION>
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Subordinated capital investment certificates
--6% to 9%, maturing 2000 through 2014......................... $ 318,733 $ 404,218
Subordinated monthly income certificates
--6.25% to 9.25%, maturing 2000 through 2009................... 87,675 103,314
Syndicated Credit Facility
--5.91% to 6.19%, maturing 2001................................ 170,000 180,000
Other bank notes-6.39% to 10.75%,
maturing 2000 through 2008..................................... 122,214 94,272
Industrial revenue bonds-3.05% to 6.75%,
maturing 2000 through 2021..................................... 25,475 25,500
Promissory notes-5% to 8.5%,
maturing 2000 through 2007..................................... 8,927 6,513
Other-3% to 14.92%................................................ 34,025 39,367

$ 767,049 $ 853,184
Less current maturities........................................... 38,946 44,771

$ 728,103 $ 808,413

</TABLE>

Farmland has a $1.1 billion Syndicated Credit Facility with a group of domestic
and international banks ("the Credit Facility"). The Credit Facility provides
revolving short-term credit of up to $650.0 million to finance seasonal
operations and inventory, and revolving term credit of up to $450.0 million. At
August 31, 1999, Farmland had outstanding $368.5 million of revolving short-term
borrowings under the Credit Facility and $180.0 million of revolving term
borrowings; additionally, $52.7 million of the Credit Facility was being
utilized to support letters of credit issued on our behalf.

Farmland pays commitment fees under the Credit Facility of 22.5 basis points
annually on the unused portion of the revolving short-term commitment and 25
basis points annually on the unused portion of the revolving term commitment.
In addition, we must comply with the Credit Facility's financial covenants
regarding working capital, the ratio of certain debt to average cash flow and
the ratio of equity to total capitalization, all as defined therein. The short-
term provisions of the Credit Facility are reviewed and/or renewed annually.
The next review date is in May 2000. The revolving term provisions of the
Credit Facility expire in May 2001.

During April 1998, Farmland National Beef Packing Company, L.P., a consolidated
subsidiary, replaced its existing borrowing arrangements with a new five-year
$130.0 million credit facility. This facility, which expires March 31, 2003, is
provided by various participating banks and all borrowings thereunder are
nonrecourse to Farmland. Farmland National Beef used a portion of this facility
to repay in full its borrowings from Farmland. At August 31, 1999, Farmland
National Beef had borrowings under this facility of $64.2 million, and $3.3
million of the facility was being utilized to support letters of credit.
Farmland National Beef has pledged assets with a carrying value at August 31,
1999, of $241.0 million to support its borrowings under the facility.

Farmland maintains other borrowing arrangements with banks and financial
institutions. At August 31, 1999, $62.2 million was borrowed under these
agreements.

Tradigrain has borrowing agreements with various international banks which
provide financing and letters of credit to support current international grain
trading transactions. At August 31, 1999, these short-term borrowings totaled
$108.3 million. Obligations of Tradigrain under these loan agreements are
nonrecourse to Farmland or Farmland's other affiliates.

Subordinated debt certificates have been issued under several indentures.
Certain subordinated capital investment certificates may be redeemed prior to
maturity at the option of the owner in accordance with the indenture. Subject
to limitations in the indenture, Farmland has options to redeem certain
subordinated capital investment certificates in advance of scheduled maturities.
Additionally, upon written request we will redeem subordinated capital
investment certificates and subordinated monthly income certificates in the case
of death of an owner.

Outstanding subordinated debt certificates are subordinated to senior
indebtedness ($682.2 million at August 31, 1999) and certain additional
financings (principally long-term operating leases). See Note 9.

At August 31, 1999, under industrial revenue bonds and other agreements, assets
with a carrying value of $17.6 million have been pledged.

Borrowings from CoBank, under both the Syndicated Credit Facility and short-term
notes payable, totaling $215.6 million at August 31, 1999, are partially secured
by liens on the equity investment held by Farmland in CoBank. See Note 3.

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

(Amounts in
Thousands)

2001................. $ 231,864
2002................. 55,677
2003................. 64,544
2004................. 59,470
2005 and after....... 396,858

$ 808,413

At August 31, 1998 and 1999, we had demand loan certificates and short-term bank
debt outstanding of $408.6 million (weighted average interest rate of 6.06%) and
$546.2 million (weighted average interest rate of 6.45%), respectively.

During 1997, 1998 and 1999, Farmland capitalized interest of $4.0 million, $3.9
million and $0.3 million, respectively.

(6) INCOME TAXES

A. TERRA RESOURCES, INC.

In late November, 1999, the United States Tax Court issued an opinion holding
that the gains and losses we realized in 1983 and 1984 on the sale of the stock
of Terra Resources, Inc. and certain other assets were patronage-sourced, and

that we had reported these gains and losses correctly. By ruling in our favor,
the Tax Court rejected claims of the Internal Revenue Service that would have
resulted in material additional federal income taxes plus accumulated interest.
This ruling also means that we do not owe additional state income tax and
accumulated interest related to these transactions.

b. OTHER INCOME TAX MATTERS

Income (loss) before income taxes include the following components:

<TABLE>
<CAPTION>
Year Ended August 31

1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C>
Foreign.................................. $ 9,709 $ 30,269 $ 27,381
Domestic................................. 153,964 24,758 (21,559)

Total.................................... $ 163,673 $ 55,027 $ 5,822

</TABLE>

Income tax expense (benefit) is comprised of the following:

Year Ended August 31

1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C>
Federal:
Current.................................. $ 24,940 $ (5,610) $ (23,440)
Deferred................................. (1,129) (512) 12,119

$ 23,811 $ (6,122) $ (11,321)

State:
Current................................. $ 4,418 $ (981) $ (4,135)
Deferred................................ (199) (90) 2,138

$ 4,219 $ (1,071) $ (1,997)

Foreign:
Current................................. $ 361 $ 2,967 $ 1,362
Deferred................................ (141) 483 3,913

$ 220 $ 3,450 $ 5,275

Total income tax expense (benefit)......... $ 28,250 $ (3,743) $ (8,043)

</TABLE>

Income tax expense (benefit) differs from the "expected" income tax expense
(benefit) using a statutory rate of 35% as follows:

Year Ended August 31

1997 1998 1999

<S> <C> <C> <C>
Computed "expected" income tax expense on
income
before income taxes ..................... 35.0 % 35.0 % 35.0 %
Increase (reduction) in income tax
expense attributable to:
Patronage refunds ....................... (22.9) (37.6) (181.7)
State income tax expense, net of
federal income tax effect.............. 1.2 3.3 2.4

Other, net .............................. 4.0 (7.5) 6.2

Income tax expense (benefit)............... 17.3 % (6.8) % (138.1) %

</TABLE>

The tax effect of temporary differences that give rise to significant portions
of deferred tax liabilities and deferred tax assets at August 31, 1998 and 1999
are as follows:

<TABLE>
<CAPTION>
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment,
principally due to differences
in depreciation......................... $ 75,808 $ 90,321
Prepaid pension cost ....................... 16,388 16,114
Income from foreign subsidiaries ........... 11,187 16,776
Basis differences in pass-through
ventures................................ 4,677 6,446
Other ...................................... 6,169 7,701

Total deferred tax liabilities.......... $ 114,229 $ 137,358

Deferred tax assets:
Safe harbor leases ......................... $ 3,802 $ 3,435
Accrued expenses ........................... 61,700 55,241
Benefit of nonqualified
written notices......................... 33,761 39,542
Alternative minimum tax credit ............. 5,829 15,389
Accounts receivable, principally due to
allowance for doubtful accounts......... 3,024 6,359
Other ...................................... 2,780 3,829

Total deferred tax assets............... $ 110,896 $ 123,795

Net deferred tax liability ................. $ 3,333 $ 13,563

</TABLE>

At August 31, 1999, Farmland has nonmember-sourced loss carryforwards, expiring
in 2019, amounting to $36.6 million, available to offset future nonmember-
sourced income. Farmland also has alternative minimum tax credit carryovers
amounting to $15.4 million available to reduce future federal income taxes
payable.

At August 31, 1999, Farmland has member-sourced loss carryforwards, expiring
from 2010 through 2019, amounting to $24.1 million available to offset future
member-sourced income. No deferred tax asset has been established for these
carryforwards since member-sourced losses offset future patronage refunds.

(7) MINORITY OWNERS' EQUITY IN SUBSIDIARIES

A summary of the equity of subsidiaries owned by others is as follows:

<TABLE>
<CAPTION>.
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Farmland National Beef Packing Company, L.P................$ 30,084 $ 36,414
Farmland Foods, Inc........................................ 4,061 3,723
Other subsidiaries......................................... 1,326 872

$ 35,471 $ 41,009

</TABLE>

(8) PREFERRED STOCK, EARNED SURPLUS AND OTHER EQUITIES

A summary of preferred stock is as follows:

<TABLE>
<CAPTION>
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Preferred shares - Authorized 8,000,000 shares:
8%, Series A cumulative redeemable preferred shares,
stated at redemption value, $50 per share, 2,000,000
shares issued and outstanding .... $ 100,000 $ 100,000

5-1/2% and 6%, $25 par value - 2,743 shares issued and
outstanding (2,838 shares in 1998).........................
71 69

$ 100,071 $ 100,069

</TABLE>

Dividends on the Series A preferred shares accumulate whether or not: Farmland
has earnings; funds are legally available for the payment; or such dividends are
declared. These preferred shares are redeemable, beginning on December 15,
2022, at our sole discretion. No redemption is allowed prior to that time.
Series A preferred shares each have a liquidation preference of $50 per share,
plus an amount equal to accumulated and unpaid dividends, if any, thereon. The
preferred shares are not entitled to vote.

A summary of earned surplus and other equities is as follows:

<TABLE>
<CAPTION>
August 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
Earned surplus............................................ $ 249,108 $ 226,476
Patronage refund payable in equities...................... 35,528 24,215
Capital credits........................................... 19,694 26,453
Equity issuable for the purchase of SF Services, Inc...... 26,323 0
Additional paid-in surplus................................ 1,596 5,102
Other..................................................... 64 94

$ 332,313 $ 282,340

</TABLE>

Patronage refunds payable in equities represent the portion of patronage refunds
payable from current year earnings, in the form of common shares, associate
member common shares and capital credits.

In July 1998, Farmland acquired all of the common stock of SF Services, Inc. in
exchange for $26.3 million in Farmland equity, $2.8 million in cash and warrants
which, when exercisable, may be exchanged for $21.7 million in Farmland equity.
The right to exercise the warrants is contingent on achieving a specified volume
of purchases over seven years. As of August 31, 1999, no warrants had been
converted to Farmland equity. SF Services operated as a regional farm supply
cooperative, serving local cooperative members in Arkansas, Mississippi,
Louisiana and Alabama.

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
no longer meet qualifications for membership or associate membership in
Farmland.

(9) CONTINGENT LIABILITIES AND COMMITMENTS

Farmland leases various equipment and real properties under long-term operating
leases. For 1997, 1998 and 1999, rental expense totaled $53.9 million, $64.3
million, and $66.3 million, respectively. Rental expense is reduced for
sublease income, primarily rental income received on leased railroad cars and
ammonia trailers ($5.4 million in 1997, $1.1 million in 1998 and $1.0 million in
1999).

The lease agreements have various remaining terms ranging from one year to
fourteen years. Some agreements are renewable, at our option, for additional
periods. The minimum required payments for these agreements during the fiscal
years ending August 31 are as follows:

(Amounts in Thousands)
2000........................... $ 63,769
2001........................... 56,393
2002........................... 46,382
2003........................... 21,179
2004........................... 17,132
2005 and after................. 61,816

$266,671

Commitments for capital expenditures and investments in joint ventures
aggregated $32.8 million at August 31, 1999.

Farmland 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, we are aware of possible obligations
associated with environmental matters at other sites, including sites where no
claim or assessment has been made. Our accrued liability for probable and
reasonably estimable obligations for resolution of environmental matters at NPL
and other sites was $14.4 million and $13.3 million at August 31, 1998 and 1999,
respectively.

The ultimate costs of resolving certain 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
estimable at August 31, 1999. In the opinion of management, it is reasonably
possible for such costs to approximate an additional $9.7 million.

In the ordinary course of conducting international grain trading, Tradigrain, as
of August 31, 1999, was contingently liable in the amount of $92.0 million of
performance and bid bonds, guarantees and letters of credit.

In December 1997, Farmland entered into a series of agreements which provide for
the construction and operation under a long-term lease of facilities adjacent to
our petroleum refinery at Coffeyville, Kansas. These facilities are designed to
convert petroleum coke by-products into fertilizers. When the facilities are
completed (presently scheduled during the second quarter of fiscal 2000),
Farmland will be obligated to make future minimum lease payments which, at that
time, will have an approximate present value of $223 million. Alternatively,
Farmland has an option to purchase the facilities. Our subordinated debt
securities are subordinated in right of payment to payments related to the
Coffeyville facility and to $72.8 million of certain lease obligations.

Farmland is involved in various lawsuits arising in the normal course of
business. In the opinion of management, except for the tax litigation relating
to Terra as explained in Note 6, the ultimate resolution of these litigation
issues is not expected to have a material adverse effect on our Consolidated
Financial Statements.

(10) EMPLOYEE BENEFIT PLANS

The Farmland Industries, Inc. Employee Retirement Plan (the "Plan") is a defined
benefit plan in which employees whose customary employment is at the rate of at

least 15 hours per week may participate. Participation in the Plan is optional
prior to age 34, but mandatory thereafter. 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 bonds, short-term investment funds, private REITS and venture capital
funds.

Our funding strategy is to make the maximum annual contribution to the Plan's
trust fund that can be deducted for federal income tax purposes. Farmland
charges pension costs as accrued based on the actuarial valuation of the plan.

Farmland adopted SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits" for the year ended August 31, 1999. Prior year
disclosures have been conformed to this standard.

Components of the Company's pension cost are as follows:

<TABLE>
<CAPTION>
Year Ended August 31

1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C>
Service cost....................................................... $ 11,333 $ 12,013 $ 15,126
Interest cost...................................................... 19,816 21,403 23,405
Expected return on Plan assets..................................... (25,771) (28,192) (34,621)
Curtailment gain................................................... (3,582) 0 0

Net amortization................................................... 207 207 207

Pension expense.................................................... $ 2,003 $ 5,431 $ 4,117

</TABLE>

The following table sets forth the Plan's funded status and amounts recognized
as assets in our Consolidated Balance Sheets at August 31, 1998 and 1999. Such
prepaid pension cost is based on the Plan's funded status as of May 31, 1998 and
1999.

<TABLE>
<CAPTION>
AUGUST 31

1998 1999

(Amounts in Thousands)
<S> <C> <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Projected Benefit Obligation, beginning of year $ 264,523 $ 342,548
Service Cost 12,013 15,126
Employee Contributions 5,186 5,961
Interest Cost 21,403 23,405
Actuarial (Gain) Loss 48,647 (30,293)
Benefits Paid (9,224) (11,760)

Projected Benefit Obligation, end of year $ 342,548 $ 344,987

CHANGE IN FAIR VALUE OF PLAN ASSETS:

Plan Assets at Fair Value, beginning of year 331,822 385,112
Return on Plan Assets 56,047 13,052
Company Contributions 1,281 427
Employee Contributions 5,186 5,961
Benefits Paid (9,224) (11,760)

Plan Assets at Fair Value, end of year $ 385,112 $ 392,792

FUNDED STATUS AND PREPAID PENSION COST:
Funded Status of the Plan, end of year $ 42,564 $ 47,805

Unrecognized Prior Service cost 414 207
Unrecognized Net (Gain)/Loss 5,387 (3,337)

Prepaid Pension Cost, end of year $ 48,365 $ 44,675

</TABLE>

The following rates were used when calculating service cost, interest cost,
expected return on plan assets, the projected benefit obligation and the Plan's
funded status.

<TABLE>
<CAPTION>
Year Ended August 31 ......................

1997 1998 1999

<S> <C> <C> <C>
Discount rate......................... 8.0% 7.25% 7.5%

Rate of increase in future compensation
levels............................... 4.5% 4.5% 4.9%

Expected long-term rate of return on pla
assets............................... 8.5% 9.0% 9.0%
</TABLE>

(11) INDUSTRY SEGMENT INFORMATION

Farmland adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" for the year ended August 31, 1999. This statement
requires companies to report certain information about operating segments in
their financial statements and establishes standards for related disclosures
about products and services, geographic areas and major customers. SFAS 131
defines operating segments as components of an enterprise about which separate
financial information is available that is evaluated regularly by management in
deciding how to allocate resources and in assessing performance. Comparative
information for prior years presented has been restated to conform to the
requirements of SFAS 131.

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

Our farm supply operations consist of four segments: petroleum, plant foods,
crop protection and feed. Principal products of the petroleum division are
refined fuels, propane, jet fuels and by-products of petroleum refining.
Principal products of the plant foods division are nitrogen-based and phosphate-
based plant foods. Principal products of the crop protection business are,
through the Company's ownership in the WILFARM, LLC and Omnium L.L.C. joint
ventures, 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.

On the output side, Farmland's operations consist of five segments: hog
production, the processing and marketing of pork, the processing and marketing
of beef, the origination, storage and marketing of grain domestically, and the
origination, storage and marketing of grain internationally.

Other operations primarily includes: financial, management, printing and
transportation services.

The operating income (loss) of each industry segment includes the revenue
generated on transactions involving products within that industry segment less
identifiable expenses. Corporate assets include cash, investments in other
cooperatives, and certain other assets.

Following is a summary of industry segment information as of and for the years
ended August 31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
1997 (PAGE 1 OF 3)
(Amounts in Thousands)
CONSOLIDATED SEGMENTS

Combined
Segments Unallocated Consolidated

<S> <C> <C> <C>
Sales and transfers $ 9,425,548 $ - $ 9,425,548
Transfers between
segments (278,041) - (278,041)

Net sales $ 9,147,507 $ - $ 9,147,507

Cost of sales 8,580,826 - 8,580,826

Gross income $ 566,681 $ - $ 566,681

Selling, general and
administrative expenses $ 320,549 $ 88,829 $ 409,378

Other income (expense):
Interest expense $ - $ (62,335) $ (62,335)
Interest income - 5,352 5,352
Other, net 10,211 12,275 22,486

Total other income (expense) $ 10,211 $ (44,708) $ (34,497)

Equity in net income
of investees 49,494 57 49,551

Minority owners' interest
in net (income)/loss
of subsidiaries (8,933) 249 (8,684)

Income tax (expense) - (28,250) (28,250)

Net income (loss) $ 296,904 $ (161,481) $ 135,423

Investment in and
advances to investees $ 168,977 $ 9,017 $ 177,994

Total assets $ 2,394,678 $ 250,634 $ 2,645,312

Depreciation and
amortization expense $ 80,969 $ 9,382 $ 90,351

Capital expenditures $ 145,229 $ 16,941 $ 162,170

</TABLE>

1997 (PAGE 2 OF 3)
(Amounts in Thousands)
INPUT AND OTHER SEGMENTS

Other Total Input
Plant Crop Operating and Other
Foods Protection Petroleum Feed Units Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 1,267,684 $ 11,634 $ 1,336,940 $ 636,134 $ 153,919 $ 3,406,311
Transfers between
segments (15,752) - (5,153) (18,134) (24,166) (63,205)

Net sales $ 1,251,932 $ 11,634 $ 1,331,787 $ 618,000 $ 129,753 $ 3,343,106

Cost of sales 1,064,147 10,635 1,272,617 579,006 104,911 3,031,316

Gross income $ 187,785 $ 999 $ 59,170 $ 38,994 $ 24,842 $ 311,790

Selling, general and
administrative expenses $ 27,612 $ 1,137 $ 22,904 $ 32,351 $ 36,405 $ 120,409

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net 1,381 (65) 903 (416) 3,612 5,415

Total other income (expense) $ 1,381 $ (65) $ 903 $ (416) $ 3,612 $ 5,415

Equity in net income

of investees 43,269 4,986 163 399 237 49,054

Minority owners' interest
in net (income)/loss
of subsidiaries 382 - - - 992 1,374

Income tax (expense) - - - - - -

Net income (loss) $ 205,205 $ 4,783 $ 37,332 $ 6,626 $ (6,722) $ 247,224

Investment in and
advances to investees $ 148,634 $ 9,914 $ 706 $ 3,185 $ 3,281 $ 165,720

Total assets $ 591,638 $ 20,482 $ 449,754 $ 110,721 $ 67,942 $ 1,240,537

Depreciation and
amortization expense $ 15,898 $ 785 $ 13,901 $ 4,959 $ 7,695 $ 43,238

Capital expenditures $ 71,488 $ 102 $ 22,403 $ 3,035 $ 9,906 $ 106,934

</TABLE>

1997 (PAGE 3 OF 3)
(Amounts in Thousands)
OUTPUT SEGMENTS

Pork Beef Grain Total

Processing Livestock Processing North Output
& Marketing Production & Marketing American International Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 1,655,893 $ 61,318 $ 1,903,413 $ 2,367,447 $ 31,166 $ 6,019,237
Transfers between
segments - (54,523) - (160,313) - (214,836)

Net sales $ 1,655,893 $ 6,795 $ 1,903,413 $ 2,207,134 $ 31,166 $ 5,804,401

Cost of sales 1,516,055 3,050 1,840,497 2,189,908 - 5,549,510

Gross income $ 139,838 $ 3,745 $ 62,916 $ 17,226 $ 31,166 $ 254,891

Selling, general and
administrative expenses $ 144,625 $ 1,497 $ 13,474 $ 17,556 $ 22,988 $ 200,140

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net 676 747 2,281 2,718 (1,626) 4,796

Total other income (expense) $ 676 $ 747 $ 2,281 $ 2,718 $ (1,626) $ 4,796

Equity in net income

1997 (PAGE 3 OF 3)
(Amounts in Thousands)
of investees - 287 - 153 - 440

Minority owners' interest
in net (income)/loss
of subsidiaries - - (10,307) - - (10,307)

Income tax (expense) - - - - - -

Net income (loss) $ (4,111) $ 3,282 $ 41,416 $ 2,541 $ 6,552 $ 49,680

Investment in and
advances to investees $ 18 $ 2,618 $ - $ 621 $ - $ 3,257

Total assets $ 354,224 $ 29,818 $ 277,008 $ 263,403 $ 229,688 $ 1,154,141

Depreciation and
amortization expense $ 19,673 $ 1,772 $ 11,222 $ 3,039 $ 1,935 $ 37,641

Capital expenditures $ 16,475 $ 3,439 $ 15,735 $ 1,696 $ 950 $ 38,295

</TABLE>

1998 (PAGE 1 OF 3)
(Amounts in Thousands)
CONSOLIDATED SEGMENTS

Combined
Segments Unallocated Consolidated

<S> <C> <C> <C>
Sales & transfers $ 8,985,984 $ - $ 8,985,984
Transfers between
segments (210,938) - (210,938)

Net sales $ 8,775,046 $ - $ 8,775,046

Cost of sales 8,299,505 - 8,299,505

Gross income $ 475,541 $ - $ 475,541

Selling, general and
administrative expenses $ 335,677 $ 96,322 $ 431,999

Other income (expense):
Interest expense $ - $ (73,645) $ (73,645)
Interest income - 5,463 5,436
Other, net 6,806 23,459 30,265

Total other income (expense) $ 6,806 $ (44,750) $ (37,944)

Equity in income/(loss)
of investees 53,010 3,424 56,434

Minority owners' interest
in net (income)/loss
of subsidiaries (7,202) 197 (7,005)

Income tax benefit - 3,743 3,743

Net income (loss) $ 192,478 $ (133,708) $ 58,770

Investment in and
advances to investees $ 183,614 $ 12,492 $ 196,106

Total assets $ 2,579,039 $ 295,579 $ 2,874,618

Depreciation and
amortization expense $ 86,218 $ 15,615 $ 101,833

Capital expenditures $ 150,579 $ 3,650 $ 154,229

</TABLE>

1998 (PAGE 2 OF 3)
(Amounts in Thousands)
INPUT AND OTHER SEGMENTS

Other Total Input
Plant Crop Operating and Other
Foods Protection Petroleum Feed Units Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 1,161,940 $ 299 $ 1,141,090 $ 570,622 $ 163,761 $ 3,037,712
Transfers between
segments (4,396) - (4,162) (20,890) (27,304) (56,752)

Net sales $ 1,157,544 $ 299 $ 1,136,928 $ 549,732 $ 136,457 $ 2,980,960

Cost of sales 1,081,397 243 1,114,081 509,418 103,869 2,809,008

Gross income $ 76,147 $ 56 $ 22,847 $ 40,314 $ 32,588 $ 171,952

Selling, general and
administrative expenses $ 28,188 $ 31 $ 22,485 $ 31,132 $ 37,449 $ 119,285

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net 1,978 (9) 1,938 272 2,997 7,176

Total other income (expense) $ 1,978 $ (9) $ 1,938 $ 272 $ 2,997 $ 7,176

Equity in net income/(loss)
of investees 42,768 7,199 260 1,123 566 51,916

Minority owners' interest
in net (income)/loss
of subsidiaries 281 - - - 687 968

Income tax benefit - - - - - -

Net income (loss) $ 92,986 $ 7,215 $ 2,560 $ 10,577 $ (611) $ 112,727

Investment in and
advances to investees $ 140,212 $ 13,264 $ 1,087 $ 7,308 $ 4,862 $ 166,733

Total assets $ 631,887 $ 23,027 $ 433,117 $ 98,555 $ 222,099 $ 1,408,685

Depreciation and
amortization expense $ 22,215 $ 57 $ 14,609 $ 4,500 $ 6,529 $ 47,910

Capital expenditures $ 25,761 $ 311 $ 26,172 $ 5,627 $ 47,866 $ 105,737

</TABLE>

1998 (PAGE 3 OF 3)
(Amounts in Thousands)
OUTPUT SEGMENTS

Pork Beef Grain Total

Processing Livestock Processing North Output
& Marketing Production & Marketing American International Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 1,510,677 $ 63,371 $ 2,135,476 $ 2,175,261 $ 63,487 $ 5,948,272
Transfers between
segments - (53,184) - (101,002) - (154,186)

Net sales $ 1,510,677 $ 10,187 $ 2,135,476 $ 2,074,259 $ 63,487 $ 5,794,086

Cost of sales 1,339,263 17,323 2,081,585 2,052,326 - 5,490,497

Gross income $ 171,414 $ (7,136) $ 53,891 $ 21,933 $ 63,487 $ 303,589

Selling, general and
administrative expenses $ 144,804 $ 2,172 $ 15,292 $ 19,375 $ 34,749 $ 216,392

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net 2,230 660 (4,934) 2,655 (981) (370)

Total other income (expense) $ 2,230 $ 660 $ (4,934) $ 2,655 $ (981) $ (370)

Equity in net income/(loss)

of investees - 477 (1,569) 2,186 - 1,094

Minority owners' interest
in net (income)/loss
of subsidiaries - - (8,170) - - (8,170)

Income tax benefit - - - - - -

Net income (loss) $ 28,840 $ (8,171) $ 23,926 $ 7,399 $ 27,757 $ 79,751

Investment in and
advances to investees $ - $ 3,496 $ - $ 13,385 $ - $ 16,881

Total assets $ 330,999 $ 33,343 $ 273,503 $ 297,050 $ 235,459 $ 1,170,354

Depreciation and
amortization expense $ 19,386 $ 1,231 $ 12,608 $ 3,065 $ 2,018 $ 38,308

Capital expenditures $ 19,166 $ 3,068 $ 18,680 $ 3,601 $ 327 $ 44,842

</TABLE>

<TABLE>
<CAPTION>
1999 (PAGE 1 OF 3)
(Amounts in Thousands)
CONSOLIDATED SEGMENTS

Combined
Segments Unallocated Consolidated

<S> <C> <C> <C>
Sales & transfers $ 11,038,775 $ - $ 11,038,775
Transfers between
segments (329,702) - (329,702)

Net sales $ 10,709,073 $ - $ 10,709,073

Cost of sales 10,231,081 - 10,231,081

Gross income $ 477,992 $ - $ 477,992

Selling, general and
administrative expenses 358,412 122,427 480,839

Other income (expense):
Interest expense - (90,773) (90,773)
Interest income - 8,337 8,337
Other, net 29,971 13,351 43,322

Total other income (expense) $ 29,971 $ (69,085) $ (39,114)

Equity in income/(loss)
of investees 62,272 3,238 65,510

Minority owners' interest
in net (income)/loss
of subsidiaries (18,010) 283 (17,727)

Income tax benefit - 8,043 8,043

Net income (loss) $ 193,813 $ (179,948) $ 13,865

Investment in and
advances to investees $ 193,143 $ 11,904 $ 205,047

Total assets $ 2,855,640 $ 402,009 $ 3,257,649

Depreciation and
amortization expense $ 93,284 $ 15,900 $ 109,184

Capital expenditures $ 114,986 $ 6,198 $ 121,184

</TABLE>

1999 (PAGE 2 OF 3)
(Amounts in Thousands)
INPUT AND OTHER SEGMENTS

Other Total Input
Plant Crop Operating and Other
Foods Protection Petroleum Feed Units Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 1,009,019 $ 247 $ 954,220 $ 599,208 $ 284,756 $ 2,847,450
Transfers between
segments (6,735) - (48) (23,661) (30,837) (61,281)

Net sales $ 1,002,284 $ 247 $ 954,172 $ 575,547 $ 253,919 $ 2,786,169

Cost of sales 1,004,267 174 918,186 530,246 216,879 2,669,752

Gross income $ (1,983) $ 73 $ 35,986 $ 45,301 $ 37,040 $ 116,417

Selling, general and
administrative expenses $ 30,085 $ 4 $ 20,553 $ 30,774 $ 42,527 $ 123,943

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net 18,166 242 2,726 355 7,465 28,954

Total other income (expense) $ 18,166 $ 242 $ 2,726 $ 355 $ 7,465 $ 28,954

Equity in net income/(loss)

of investees 46,374 7,682 2,366 906 229 57,557

Minority owners' interest
in net (income)/loss
of subsidiaries 167 - - (504) 498 161

Income tax benefit - - - - - -

Net income (loss) $ 32,639 $ 7,993 $ 20,525 $ 15,284 $ 2,705 $ 79,146

Investment in and
advances to investees $ 146,501 $ 16,310 $ 4,383 $ 7,771 $ 6,658 $ 181,623

Total assets $ 651,650 $ 26,287 $ 491,018 $ 121,380 $ 99,101 $ 1,389,436

Depreciation and
amortization expense $ 23,432 $ 66 $ 16,039 $ 4,844 $ 9,662 $ 54,043

Capital expenditures $ 6,683 $ 6 $ 26,841 $ 4,970 $ 11,758 $ 50,258

</TABLE>

1999 (PAGE 3 OF 3)
(Amounts in Thousands)
OUTPUT SEGMENTS

Pork Beef Grain Total

Processing Livestock Processing North Output
& Marketing Production & Marketing American International Segments

<S> <C> <C> <C> <C> <C> <C>
Sales & transfers $ 1,380,297 $ 64,156 $ 2,358,500 $ 2,411,788 $ 1,976,584 $ 8,191,325
Transfers between
segments - (47,237) - (221,184) - (268,421)

Net sales $ 1,380,297 $ 16,919 $ 2,358,500 $ 2,190,604 $ 1,976,584 $ 7,922,904

Cost of sales 1,175,938 38,332 2,273,251 2,159,466 1,914,342 7,561,329

Gross income $ 204,359 $ (21,413) $ 85,249 $ 31,138 $ 62,242 $ 361,575

Selling, general and
administrative expenses $ 157,419 $ 3,061 $ 17,750 $ 20,415 $ 35,824 $ 234,469

Other income (expense):
Interest expense $ - $ - $ - $ - $ - $ -
Interest income - - - - - -
Other, net 899 1 914 580 (1,377) 1,017

Total other income (expense) $ 899 $ 1 $ 914 $ 580 $ (1,377) $ 1,017

Equity in net income/(loss)

1999 (PAGE 3 OF 3)
(Amounts in Thousands)
of investees 15 (336) 1,191 3,845 - 4,715

Minority owners' interest
in net (income)/loss
of subsidiaries - (4) (18,167) - - (18,171)

Income tax benefit - - - - - -

Net income (loss) $ 47,854 $ (24,813) $ 51,437 $ 15,148 $ 25,041 $ 114,667

Investment in and
advances to investees $ 266 $ 5,890 $ - $ 5,364 $ - $ 11,520

Total assets $ 344,979 $ 41,614 $ 296,039 $ 470,301 $ 313,271 $ 1,466,204

Depreciation and
amortization expense $ 19,576 $ 829 $ 13,497 $ 4,588 $ 751 $ 39,241

Capital expenditures $ 18,169 $ 4,929 $ 21,027 $ 11,891 $ 8,712 $ 64,728

</TABLE>

Substantially all of Farmland's long-lived assets are located in the United
States. Sales by country, determined by customer location, were as follows:

<TABLE>
<CAPTION>
Year Ended August 31

1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C>
United States........................ $ 7,784,212 $ 7,474,758 $ 7,520,565
Mexico............................... 441,384 472,955 570,959
Japan................................ 158,694 157,022 220,763
Other................................ 763,217 670,311 2,396,786

Total................................ $ 9,147,507 $ 8,775,046 $ 10,709,073

</TABLE>

(12) SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK

Farmland extends credit to its customers on terms generally no more favorable
than standard terms of sale for the industries it serves. A substantial portion
of our receivables are concentrated in the agricultural industry. Collection of
these receivables may be dependent upon economic returns from farm crop and
livestock production. A significant amount of trade receivables are with
customers located in foreign countries. Although Farmland does not currently
foresee a credit risk associated with these receivables, repayment is dependent
upon the financial stability of those countries' national economies. Farmland
has counterparty performance risk on forward contracts we have entered into with
producers and local cooperatives. In the past, Farmland has not had significant
problems with non-performance on these contracts and we do not anticipate having
significant non-performance problems in the future. However, the risk of non-
performance always exists and such risk may change as the agricultural economy
changes. Our credit risks are continually reviewed and management believes that
adequate provisions have been made for doubtful accounts.

Farmland enters into interest rate swap agreements, natural gas/financial swap
agreements, and foreign currency exchanges with financial institutions. We
continually monitor our positions with, and the credit quality of, the financial
institutions which are counterparties to our financial instruments and we do not
anticipate non-performance by counterparties.

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 3.

(13)DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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 for our
investments in other cooperatives, the fair market value of all financial
instruments held by Farmland approximates the carrying value of these
instruments.

Investments in the equities of other cooperatives which have been purchased are
carried at cost and equities received as patronage refunds are carried at par
value, less provisions for other than temporary impairment. Management believes
it is not practicable to estimate the fair value of these equities because there
is no established market for these equities and estimated future cash flows,
which are largely dependent on the future equity redemption policy of each
cooperative, are not determinable. At August 31, 1998 and 1999, the carrying
value of our investments in other cooperatives' equities totaled $43.7 million
and $53.4 million, respectively.

For all other financial instrument assets, the fair value has been estimated by
discounting future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings. The estimated fair
value of the fixed rate financial instrument liabilities was calculated using a
discount rate equal to the interest rate on financial instruments with similar
maturities currently offered for sale by Farmland. The estimated fair value of
our variable rate financial instruments approximates the carrying value.

(14) RELATED PARTY TRANSACTIONS

Farmland has a 50% interest in two manufacturers of phosphate products and a
manufacturer of nitrogen products, Farmland Hydro, L.P., SF Phosphates Limited
Company and Farmland MissChem Limited, a 50% interest in a distributor of crop
protection products, WILFARM, LLC, a 50% interest in a manufacturer and
distributor of crop protection products, Omnium, LLC and a 50% interest in
OneSystem Group, LLC, which is an information technology service.

During 1997, 1998 and 1999, Farmland purchased $131.9 million, $231.5 million
and $224.1 million, respectively, of products and services from these ventures.
Farmland had accounts payable of $5.9 million and $14.6 million due to these
ventures at August 31, 1998 and 1999, respectively, and a note payable due to a
venture of $17.1 million and $12.6 million at August 31, 1998 and 1999,
respectively. Accounts receivable owed to us at August 31, 1998 and 1999
totaled $22.3 million and $6.2 million, respectively. Notes receivable due from
these ventures totaled $35.0 million and $35.4 million at August 31, 1998 and
1999, respectively.

(15) OTHER INCOME

During 1999, Farmland realized $10.3 million of gain resulting from the
favorable settlement of various lawsuits involving natural gas pricing, crude
oil supply, and environmental recoveries. Farmland also sold its investment in
its Florida phosphate reserves resulting in a gain of approximately $7.7 million
before income taxes. In connection with the temporary shutdown of the Lawrence
fertilizer production facility, Farmland realized a $4.1 million gain on futures
positions closed as a result of anticipated natural gas purchases which will not
occur.

During 1998, we sold: (1) an approximate 3.8% interest in Farmland National
Beef, resulting in a gain before income taxes of $7.2 million; and (2) all of

our interest in Cooperative Services Company, formerly a wholly-owned
subsidiary, resulting in a gain before income taxes of $2.2 million.

(16) SUBSEQUENT EVENTS

During September, the Boards of Directors of Farmland and Cenex Harvest States
separately approved the terms of a unification. Both cooperatives have
scheduled a November 23, 1999, member vote regarding the unification. If
members approve, the unification is scheduled to occur March 1, 2000. The
unified entity will be named United Country Brands.

During September, 1999, Land O'Lakes, Inc., Farmland and Cenex Harvest States
announced their intent to form a marketing venture which will distribute crop
production and crop protection products. The venture anticipates beginning
operations early in calendar year 2000.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

DIRECTORS AND EXECUTIVE OFFICERS OF FARMLAND

<TABLE>
<CAPTION>
The directors of Farmland are as follows:
Total Years
Expiration ofof Service
Age as of Positions Present Term as Board
August 31, Held With as Member
1999 Farmland Director

Name
Business Experience During Last Five Years

<S> <C> <C> <C> <C> <C>
Albert J. Shivley 56 Chairman of the 2001 15 General Manager--American Pride Co-op
Board Association, Brighton, Colorado, a local
cooperative association of farmers and
ranchers.
Jody Bezner 58 Vice Chairman 2000 8 Producer--Texline, Texas. Mr. Bezner
and Vice serves as President of Dalhart Consumers
President Fuel Association, Inc., Board of
Directors, Dalhart, Texas, a local
cooperative association of farmers and
ranchers.
Lyman Adams, Jr. 48 2001 7 General Manager--Cooperative Grain and
Supply, Hillsboro, Kansas, a local
cooperative association of farmers and
ranchers.
Ronald J. Amundson 55 2000 11 General Manager--Central Iowa Cooperative,
Jewell, Iowa, a local cooperative
association of farmers and ranchers.
Baxter Ankerstjerne 63 2002 9 Producer--Peterson, Iowa.
From 1988 to 1997, Mr. Ankerstjerne served
as Chairman of the Board of Directors of

Farmers Cooperative Association, Marathon,
Iowa.
Steven Erdman 49 2001 7 Producer--Bayard, Nebraska.
Mr. Erdman serves as Secretary, Panhandle
Co-op, Scottsbluff, Nebraska, a local
cooperative association of farmers and
ranchers.
Harry Fehrenbacher 51 2002 3 Producer--Newton, Illinois.
Mr. Fehrenbacher serves as President of
the Board of Directors of Effingham
Equity, Effingham, Illinois, a local
cooperative association of farmers and
ranchers.
Martie Floyd 51 2000 2 Producer--Johnson, Kansas. Mr. Floyd
serves as Secretary of the Board of
Directors of Johnson Cooperative Grain Co,
Inc., Johnson, Kansas, a local cooperative
association of farmers and ranchers.
Don Gales 37 2002 * General Manager--South Dakota Wheat
Growers, Aberdeen South Dakota a local
cooperative association of farmers and
ranchers.
Warren Gerdes 51 2001 6 General Manager--Farmers Cooperative
Elevator Company, Buffalo Lake, Minnesota,
a local cooperative association of farmers
and ranchers.

Thomas H. Gist 64 2002 1 Producer--Marianna, Ark. Mr. Gist serves
as Secretary of the Board of Directors of
Tri-County Farmers Association of
Brinkley, Ark., a local cooperative
association of farmers and ranchers.
Ben Griffith 50 2001 10 General Manager--Central Cooperatives,
Inc., Pleasant Hill, Missouri, a local
cooperative association of farmers and
ranchers.
Gail D. Hall 57 2000 11 Retired--Mr. Hall is the former General
Manager of the Lexington Cooperative Oil
Company, Lexington, Nebraska, a local
cooperative association of farmers and
ranchers.
Barry Jensen 54 2002 9 Producer--White River, South Dakota.
Mr. Jensen serves as a Director of Dakota
Pride Cooperative, Winner, South Dakota, a
local cooperative association of farmers
and ranchers.
Ron Jurgens 61 2001 4 General Manager-Agri Co-op, Holdrege,
Nebraska, a local cooperative association
of farmers and ranchers.
William F. Kuhlman 50 2002 3 Producer--Oakley, Kansas. Mr. Kuhlman
serves on the Boards of Directors of
Kansas Retail Venture Group. Formerly, he
was President and CEO of Cooperative
Agricultural Services, Inc., Oakley,
Kansas and General Manager of Menlo-
Rexford Cooperative, local cooperative
associations of farmers and ranchers.
Greg Pfenning 50 2000 7 Producer--Hobart, Oklahoma. Mr. Pfenning
formerly served as a Director of The

Farmers Cooperative Association, Hobart
Oklahoma, a local cooperative association
of farmers and ranchers.
Monte Romohr 46 2002 9 Producer--Gresham, Nebraska Mr. Romohr
serves as a Director of Farmers Co-op
Business Association, Shelby, Nebraska, a
local cooperative association of farmers
and ranchers.
Joe Royster 47 2002 6 General Manager--Dacoma Farmers
Cooperative, Inc., Dacoma, Oklahoma, a
local cooperative association of farmers
and ranchers.
E. Kent Stamper 53 2002 3 Producer--Plainville, Kansas. Mr. Stamper
serves as Director and Vice President of
the Board of Directors of Midland
Marketing Coop, Hays, Kansas, a local
cooperative association of farmers and
ranchers. He is a member of the Director
Development Committee of the Kansas
Cooperative Council.
Eli F. Vaughn 50 2000 2 General Manager--Farmers Cooperative
Company, Afton, Iowa, a local cooperative
association of farmers and ranchers.
Frank Wilson 51 2001 4 General Manager-Elkhart Farmers Co-op
Association, Elkhart, Texas, a local
cooperative association of farmers and
ranchers.
* Elected to the Board of Directors December 9, 1999
</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 the Board of Directors is elected each
year. The executive committee consists of Ronald Amundson, Lyman Adams, Jody
Bezner, 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 chairmen of standing committees of the Board of Directors as
follows: Ron Jurgens, corporate responsibility committee; Ben Griffith, audit
committee; Jody Bezner, compensation committee; Monte Romohr, finance committee;
and Albert Shivley, governance committee.

The executive officers of Farmland are as follows:

Age as of
August 31,
Name 1999 Principal Occupation and Other Positions

<S> <C> <C>
H. D. Cleberg 60 President and Chief Executive Officer--Mr. Cleberg has been with Farmland since
1968. He was appointed to his present position effective April 1991. Prior to
April 1991 Mr. Cleberg held senior leadership positions in Farmland's input and
output businesses and in corporate areas responsible for transportation and
logistics, sales, marketing and research.
R. W. Honse 56 Executive Vice President and Chief Operating Officer--Mr. Honse has been with
Farmland since 1973. He was appointed to his present position in February 1999.
From September 1995 to February 1999, he served as Executive Vice President and
Chief Operating Officer, Ag Input Businesses. From January 1992 to September
1995, he served as Executive Vice President, Agricultural Inputs Operations.
J. F. Berardi 56 Executive Vice President and President Grain and Grain Processing--Mr. Berardi
joined Farmland in March 1992 as Executive Vice President and Chief Financial
Officer and served in that position until July 1996. From July 1996 until
September 1999, he served as Executive Vice President, President Grain and Grain
Processing.
T. M. Campbell 49 Executive Vice President and Chief Financial Officer--Mr. Campbell joined Farmland
in August 1992, serving as Vice President and Treasurer. He was appointed to his
present position in August 1996.
G. E. Evans 55 Executive Vice President and Chief Operating Officer, Refrigerated Foods and
Livestock Production Group--Mr. Evans resigned from Farmland effective January,
2000. Mr. Evans had served as Executive Vice President and Chief Operating
Officer, Refrigerated Foods and Livestock Production Group since July 1997. He
held the same position in the Meat and Livestock Businesses from September 1995
until July 1997. From January 1992 to September 1995 he served as Senior Vice

President, Agricultural Production Marketing/Processing.
B. L. Sanders 58 Senior Vice President and Corporate Secretary--Dr. Sanders had 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.
S. A. Riemann 48 Executive Vice President and President, Crop Production Group--Mr. Riemann joined
Farmland in March 1974. He was appointed to his present position in May 1999.
K. G. Nunn 42 Vice President and Chief Information Officer Farmland Industries; President and
Chief Executive Officer OneSystem Group, LLC--Mr. Nunn joined Farmland in 1990.
He was appointed to his present position in 1995. He has served as President and
CEO of OneSystem Group, LLC since its formation in 1997.
R. B. Terry 43 Vice President and General Counsel--Mr. Terry has been with Farmland since September
1989. He was appointed to his present position in 1993.
</TABLE>

EXECUTIVE COMPENSATION

The following table sets forth the annual compensation awarded to, earned by, or
paid to the Chief Executive Officer and Farmland's next four most highly
compensated executive officers for services rendered to Farmland in all
capacities during 1997, 1998 and 1999.

<TABLE>
<CAPTION>
Compensation Under

Employee Long-Term
Year Variable Management
Ending Annual Compensation Compensation Plan
Name and Principal Position August 31 Salary Plan

<S> <C> <C> <C> <C>
H. D. Cleberg, 1997 $ 540,292 $ 469,954 $ 514,999
President and 1998 $ 578,878 $ 213,564 $ 400,436
Chief Executive Officer 1999 $ 623,814 $ -0- $ -0-

R. W. Honse, 1997 $ 322,125 $ 245,352 $ 257,499
Executive Vice President and 1998 $ 347,328 $ 110,144 $ 200,218
Chief Operating Officer 1999 $ 426,224 $ -0- $ -0-

G. E. Evans, 1997 $ 317,568 $ 245,352 $ 257,499
Executive Vice President and 1998 $ 333,456 $ 110,144 $ 200,218
Chief Operating Officer 1999 $ 348,456 $ -0- $ -0-
Refrigerated Foods and
Livestock Production Group

J. F. Berardi, 1997 $ 286,814 $ 245,352 $ 243,194
Executive Vice President and 1998 $ 326,016 $ 110,144 $ 200,218
Chief Operating Officer, 1999 $ 340,680 $ -0- $ -0-
Grain and Grain Group

S. A. Riemann 1997 $ 231,240 $ 165,044 $ 171,666
Executive Vice President and 1998 $ 246,264 $ 61,781 $ 133,479
President, Crop Production Group 1999 $ 261,314 $ -0- $ -0-
<FN>

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

Under the Annual Employee Variable Compensation Plan, all regular salaried
employees' total compensation is based on a combination of base and variable
pay. Variable compensation is dependent upon the employee's position, the
performance of Farmland for the fiscal year and/or the selected performance
criteria of the operating unit where the individual is employed. Variable
compensation is awarded only in years that Farmland achieves a threshold
performance level and is subject to approval each year by the Board of
Directors. We intend for our total compensation (base plus variable) to be
competitive, recognizing that in the event Farmland fails to achieve a
predetermined threshold level of performance, the base pay alone will place the
employees well under market rates. This system of compensation allows us to
keep our fixed cost base salaries lower.

Under the Management Long-Term Incentive Plan, selected management
employees are paid cash incentive amounts determined by a formula which takes
into account the position held and Farmland's aggregate income over periods
specified in the plan. Periods covered by the Management Long-Term Incentive
Plan are: 1998 through 2000 ("2000 Plan"), 1999 through 2001 ("2001 Plan") and
2000 through 2002 ("2002 Plan"). For each plan, if the aggregate income is less
than the Threshold or if the sum of the cash returned to members as patronage
refunds, redemptions under the base capital plan, estate settlement plans and
special allocated equity redemptions is less than the amount specified in the
respective Plan, subject to the following paragraph, no payment will occur with
respect to such Plan.

The Board of Directors may, in its sole discretion, amend or discontinue, adjust
or cancel any award otherwise payable under the Management Long-Term Incentive
Plan, should Farmland incur a loss in the final year of any plan. In addition,
the Board of Directors may impact the payout amount of a plan by approving for
inclusion or exclusion in the calculation of plan income the gains or losses
from nonrecurring transactions during a plan period.

Subject to the preceding paragraph, if aggregate income equals or exceeds the
Threshold and the cash returned to members equals or exceeds the specified
amounts, then .83% of aggregate income of the three year plan period is made
available to pay incentive awards. Of the amount made available to pay
incentives, Messrs. Cleberg, Honse, Evans, Berardi and Riemann will receive at
least the following percentages:

<TABLE>
<CAPTION>
2000 Plan 2001 Plan 2002 Plan

<S> <C> <C> <C>
H. D. Cleberg 11.2% 11.2% 11.2%
R. W. Honse 7.2% 7.9% 8.4%
G. E. Evans 5.6% 5.6% 5.6%
J. F. Berardi 5.6% 5.6% 5.6%
S. A. Riemann 3.7% 3.7% 3.7%

The percentages above may be adjusted if a significant change in the officer's responsibilities occurs during a plan period. In
general, a participant must be an active employee of Farmland at the end of a Plan in order to receive payment of the award.
</TABLE>

Under the 2000 Plan, the 2001 Plan and the 2002 Plan, certain management
employees, including those executives set forth below, may be eligible for
future awards, contingent on satisfying the terms and conditions of the
Plan as set forth above.
<TABLE>
<CAPTION>

Estimated Future Payouts Under Non-Stock
(A) (B) (C) Price Based Plans

Number of Shares, Performance or Other
Units or Other Period Until Maturation (D) (E) (F)
Name Rights (1) or Payout Threshold Target (2) Maximum (2)

(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
H. D. Cleberg 1998 - 2000 $ 463
1999 - 2001 460
2000 - 2002 376

R. W. Honse 1998 - 2000 $ 296
1999 - 2001 326
2000 - 2002 282

G. E. Evans 1998 - 2000 $ 232
1999 - 2001 230
2000 - 2002 188

J. F. Berardi 1998 - 2000 $ 232
1999 - 2001 230
2000 - 2002 188

S. A. Riemann 1998 - 2000 $ 153
1999 - 2001 152
2000 - 2002 124
<FN>

(1) Rights in the incentive pool are expressed as a minimum percentage
of the total pool.

(2) The Plan does not specify a target or maximum payment. Payouts are
only made when income over the three year plan period reaches the
threshold amount, and then the amount available for payment is a
fixed percentage of total income.
</FN><
/TABLE>

Our Executive Deferred Compensation Plan permits executive employees to defer
part of their base salary and/or part or all of their compensation under the
Employee Variable Compensation Plan and Long-Term Management Incentive Plan.
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 Farmland on any Subordinated
Debenture Bond 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 years 1997, 1998 and 1999 are included in the cash compensation
table.

Farmland established the Farmland Industries, Inc. Employee Retirement Plan
(the "Retirement Plan") in 1986. Generally, employees whose customary
employment is at the rate of at least 15 hours per week may participate
in the Retirement Plan. Participation in the Retirement Plan is optional
prior to age 34, but mandatory thereafter. Approximately 7,945 active and
9,300 inactive employees were participants in the Retirement Plan on
August 31, 1999. The Retirement Plan is funded by employer and employee
contributions to provide lifetime retirement income at normal retirement age
62, or a reduced income beginning as early as age 55. The Retirement Plan
also contains provisions for death and disability benefits. The Retirement
Plan has been determined qualified under the Internal Revenue Code. The
Retirement Plan is administered by a committee appointed by the Board of
Directors and all funds are held by a bank trustee in accordance with the
terms of the trust agreement. Farmland's funding strategy is to make the
maximum annual contributions to the Retirement Plan's trust fund that can be
deducted for federal income tax purposes. Farmland made contributions to the
Retirement Plan of $12.2 million for 1997, $-0- million for 1998, and
$ 1.7 million for 1999.

Payments to participants in the Retirement Plan are based upon length of
participation and compensation reported for the four highest of the last ten
years of employment. Compensation for this purpose includes base salary and
compensation earned under the Annual Employee Variable Compensation Plan
discussed above. However, at the present time, the maximum compensation per
participant which may be covered by a qualified pension plan is limited to
$160,000 annually and the maximum retirement benefit which may be paid by such
plan is limited to $130,000 annually by the Internal Revenue Code ("IRC").

We have established a Supplemental Executive Retirement Plan ("SERP"). The
SERP is intended to restore 100% of the employer provided retirement benefit
of executive participants in the Retirement Plan whose retirement benefit is
reduced because of the limitation of the IRC on the amount of annual salary
which can be included in the computation of retirement income or the amount of
annual retirement benefit which may be paid by a qualified retirement plan.

The following table sets forth, for compensation levels up to $160,000, the
estimated annual benefits payable at age 62 for members of the Retirement
Plan. These benefits are not reduced to take into account Social Security
payments. The following table also sets forth, for compensation levels
exceeding $160,000, an estimate of the combined annual benefits payable under
the Retirement Plan and SERP.

</TABLE>
<TABLE>
<CAPTION>

Final Averag Years of Service

Wage 15 20 25 30 35

<s <C> <C> <C> <C> <C>
100,000 $ 26,250 $ 35,000 $ 43,750 $ 52,500 $ 61,250
125,000 32,813 43,750 54,688 65,625 76,563
150,000 39,375 52,500 65,625 78,750 91,875
200,000 50,728 67,638 84,547 101,456 118,366
250,000 61,884 82,513 103,141 123,769 144,397
300,000 73,041 97,388 121,734 146,081 170,428
350,000 84,197 112,263 140,328 168,394 196,459
400,000 95,353 127,138 158,922 190,706 222,491
450,000 106,509 142,013 177,516 213,019 248,522
500,000 117,666 156,888 196,109 235,331 274,553
600,000 139,978 186,638 233,297 279,956 326,616
700,000 162,291 216,388 270,484 324,581 378,678
800,000 184,603 246,138 307,672 369,206 430,741
900,000 206,916 275,888 344,859 413,831 482,803
1,000,000 229,228 305,638 382,047 458,456 534,866
1,100,000 251,541 335,388 419,234 503,081 586,928
1,200,000 273,853 365,138 456,422 547,706 638,991
1,300,000 296,166 394,888 493,609 592,331 691,053
1,400,000 318,478 424,638 530,797 636,956 691,053
1,500,000 340,791 454,388 567,984 681,581 795,178

</TABLE>

The following table sets forth the credited years of service for certain of
Farmland's executive officers at August 31, 1999.

Name Years of Creditable Service

H. D. Cleberg 34
R. W. Honse 25
G. E. Evans 25
J. F. Berardi 7
S. A. Riemann 23

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The following persons served as members of the compensation committee during
1999: Messrs. Jody Bezner, Tom Gist, Harry Fehrenbacher, Barry Jensen and Joe
Royster. Except for Mr. Bezner, who has served as Vice Chairman and Vice
President of the Board of Farmland from December 1997 to the current date, none
of the above is either currently or formerly an officer or employee of Farmland
or any of its subsidiaries.

No executive officer of Farmland:

. served as a member of a compensation committee (or other board committee
performing equivalent functions or, in the absence of such committee, the
entire board of directors) of another entity that had an executive officer
who also served on the compensation committee of Farmland,
. served as a director of another entity that had an executive officer who
also served on the compensation committee of Farmland, or
. served as a member of a compensation committee (or other board committee
performing equivalent functions or, in the absence of such committee, the
entire board of directors) of another entity that had an executive officer
who also served as a director of Farmland.

COMPENSATION OF DIRECTORS

We pay annual retainers of $30,000 to the Chairman; $25,000 to each member of
the Executive Committee, other than the Chairman and President; and $20,000 to
all other directors. In addition, directors' compensation includes payment of
three hundred dollars ($300.00) per day of Farmland business (including, for
example, board and committee meetings and other similar activities), plus
reimbursement of necessary expenses incurred in connection with their official
duties.

EQUITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Farmland's equity consists of preferred shares, common shares, associate member
common shares and capital credits. Only the common shares have voting rights.

At August 31, 1999, no person was known by Farmland to be the beneficial owner
of more than five percent of Farmland's common shares.

At August 31, 1999, the directors and executive officers of Farmland, neither
individually nor as a group, beneficially owned in excess of one percent of any
class of Farmland's equity.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Farmland 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 members.

LEGAL MATTERS

Robert B. Terry, Vice President and General Counsel of Farmland, has given an
opinion upon the legality of the Offered Debt Securities.

EXPERTS

The Consolidated Financial Statements of Farmland as of August 31, 1998 and 1999
and for each of the years in the three-year period ended August 31, 1999
included in this prospectus, have been included in this prospectus in reliance
upon the report of KPMG LLP, independent certified public accountants, appearing
on page 166 of this prospectus and upon the authority of such firm as experts in
accounting and auditing.

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", beginning on
page 21, regarding the exception from pricing by the qualified independent
underwriter.

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 $ 90,000
..................................
State taxes and fees.............. 7,000
Printing and engraving............ 161,000
Accounting and legal.............. 20,000
Trustee fee....................... 32,000
Advertising and administration.... 1,328,000

$1,638,000

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

In December 1997, Farmland sold 2 million shares of 8% Series A Cumulative
Redeemable Preferred Shares (the "Preferred Shares") at $50 per Preferred Share
with an aggregate liquidation preference of $100 million ($50 liquidation
preference per share). The Preferred Shares were issued in a transaction which,
pursuant to Section 4(2) of the Securities Act of 1933, as amended, was exempt
from the registration requirements of the Securities Act and applicable state
securities laws. All Preferred Shares were sold in a private transaction to
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Initial Purchaser"), a
qualified institutional investor. All Preferred Shares were sold for $100
million in cash, less a $3 million commission. The Preferred Shares do not have
any stated maturity, are not subject to any sinking fund or mandatory redemption
provisions and are not convertible into any other securities of Farmland.

The Securities Act registration statement for the Preferred Shares was declared
effective in May 1998 and was assigned the SEC file number No. 333-49373.
Farmland estimates that it incurred approximately $65,000 of expenses to
register the Preferred Shares, resulting in net proceeds from the issuance of
the Preferred Shares of approximately $96.9 million. Such proceeds were used to
redeem approximately $47.6 million of principal and accumulated interest on
certain subordinated debt securities; the remaining proceeds were used to redeem
capital shares and equity. Of the proceeds paid to redeem capital shares held
by producers or member cooperatives, approximately $2.5 million was paid to
member cooperatives with which members of Farmland's Board of Directors are
affiliated, through either employment as General Manager or through service as a
Director on the cooperative's Board of Directors.

Farmland did not sell any unregistered subordinated debt securities during the
three years ended August 31, 1999.

ITEM 16. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

The following exhibits are filed as a part of this Form S-1 Registration
Statement. Certain of these exhibits are incorporated by reference. Items
marked with an asterisk (*) are filed with this registration statement.

Exhibit No. Description of Exhibits

ARTICLES OF INCORPORATION AND BYLAWS:

1. 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 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)

3.(i)A Articles of Incorporation and Bylaws of Farmland Industries, Inc.
effective December 10, 1998. (Incorporated by Reference - Form S-1/A,
filed December 16, 1998)

INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES**:

4.(i)A Form of Trust Indenture with UMB Bank, National Association, providing
for issuance of unsubordinated debt securities, including form of
Demand Loan Certificates. (Incorporated by Reference - Form S-1, No.
33-40759, effective December 31, 1997)

4.(i)B Form of Trust Indenture with Commerce Bank, National Association,
providing for issuance of Subordinated Debenture Bonds, including forms
of Ten-Year Bond, Series A, Ten-Year Bond, Series B, Five-Year Bond,
Series C, Five-Year Bond, Series D, Ten-Year Monthly Income Bond,
Series E, Ten-Year Monthly Income Bond, Series F, Five-Year Monthly
Income Bond, Series G and Five-Year Monthly Income Bond, Series H.
(Incorporated by Reference - Form S-1, No. 33-40759, effective
December 31, 1997)

4.(i)C Certificate of Designation for a Series of Preferred Shares Designated
as 8% Series A Cumulative Redeemable Preferred Shares, dated December
19, 1997. (Incorporated by Reference - Form S-2, filed April 3, 1998)

4(.ii)A Syndicated Credit Facility between Farmland Industries, Inc. and
various banks dated May 15, 1996, (Incorporated by Reference - Form 10-
Q filed July 15, 1996)

* 5 Opinion of Robert B. Terry, Vice President and General Counsel of
Farmland Industries, Inc. re Legality

MATERIAL CONTRACTS:

MANAGEMENT REMUNERATIVE PLANS:

10.(iii)A Employee Variable Compensation Plan (September 1, 1999 - August 31,
2000) (Incorporated by Reference - Form 10K, filed, November 19, 1999)

10.(iii)B Farmland Industries, Inc. Management Long-Term Incentive Plan
(Incorporated by Reference - Form 10-K, filed November 7, 1997)

10.(iii)B(1) Exhibit F to the Management Long-Term Incentive Plan
(Fiscal years 1998 through 2000) (Incorporated by Reference -
Form 10-K, filed November 7, 1997)

10.(iii)B(2) Exhibit G to the Management Long-Term Incentive Plan
(Fiscal years 1999 through 2001) (Incorporated by Reference -
Form 10-K, filed November 20, 1998)

10.(iii)B(3) Exhibit H to the Management Long-Term Incentive Plan
(Fiscal years 2000 through 2002) (Incorporated by Reference -
Form 10-K, filed November 19, 1999)

10.(iii)C Farmland Industries, Inc. Supplemental Executive Retirement Plan
(As Amended and Restated Effective September 1, 1999) (Incorporated by
Reference - Form 10-K, filed November 19, 1999)

10.(iii)C(1) Appendix A to the Supplemental Executive Retirement Plan
(Incorporated by Reference - Form 10-K, filed November 27, 1996)

10.(iii)D Farmland Industries, Inc. Executive Deferred Compensation Plan (As
Amended and Restated Effective November 1, 1996) (Incorporated by
Reference - Form 10-K, filed November 27, 1996)

* 12 Computation of Ratios

21 Subsidiaries of the Registrant (Incorporated by Reference - Form 10-K,
filed November 19, 1999)

* 23.A Independent Auditors' Consent

* 23.B Consent of Qualified Independent Underwriter

* 23.C Consent of Robert B. Terry, Vice President and General Counsel of
Farmland Industries, Inc. (Included in Exhibit 5)

* 24 Power of Attorney

* 25.A Statement of Eligibility of Trustee and Qualification of UMB Bank,
National Association, as Trustee, Form T-1

* 25.B Statement of Eligibility of Trustee and Qualification of Commerce Bank,
National Association, as Trustee, Form T-1

* Filed with this registration statement.

** Long-term debt instruments pursuant to which the debt issuable thereunder
does not exceed 10% of Farmland's total assets have not been filed. At the
Commission's request, we agree to furnish a copy of such instruments or
agreements.

(B) FINANCIAL STATEMENT SCHEDULES

All schedules are omitted as the required information is inapplicable or the
information is presented in the Consolidated Financial Statements or related
notes included herein.

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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) (Section 230.424(b)) if,
in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee"
table in the effective 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 REGISTRATION STATEMENT ON 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 JANUARY 19, 2000.

FARMLAND INDUSTRIES, INC.

BY /s/ TERRY M. CAMPBELL

Terry M. Campbell
Executive Vice President and
Chief Financial Officer

BY /s/ ROBERT B. TERRY

Robert B. Terry
Vice President and General Counsel

Signature Title Date

* Chairman of Board, January 19, 2000

Albert J. Shivley Director

* Vice Chairman of Board January 19, 2000

Jody Bezner Vice President and Director

* Director January 19, 2000

Lyman L. Adams, Jr.

* Director January 19, 2000

Ronald J. Amundson

* Director January 19, 2000

Baxter Ankerstjerne

* Director January 19, 2000

Steven Erdman

* Director January 19, 2000

Harry Fehrenbacher

Director January 19, 2000
Don Gales

* Director January 19, 2000

Martie Floyd

* Director January 19, 2000

Warren Gerdes

* Director January 19, 2000

Thomas H. Gist

* Director January 19, 2000

Ben Griffith

* Director January 19, 2000

Gail D. Hall

* Director January 19, 2000

Barry Jensen

* Director January 19, 2000

Ron Jurgens

* Director January 19, 2000

William F. Kuhlman

* Director January 19, 2000

Greg Pfenning

* Director January 19, 2000

Monte Romohr

* Director January 19, 2000

Joe Royster

* Director January 19, 2000

E. Kent Stamper

* Director January 19, 2000

Eli F. Vaughn

* Director January 19, 2000

Frank Wilson

/s/ H.D. CLEBERG President, January 19, 2000

H. D. Cleberg Chief Executive
Officer

/s/ TERRY M. CAMPBELL Executive Vice President January 19, 2000

Terry M. Campbell and Chief Financial Officer
(Principal Financial Officer)

/s/ MERL DANIEL Vice President and January 19, 2000

Merl Daniel Controller
(Principal Accounting Officer)

*BY /s/ TERRY M. CAMPBELL

Terry M. Campbell
Attorney-In-Fact

EXHIBIT 99

EXHIBIT INDEX

Exhibit No. Description of Exhibits

ARTICLES OF INCORPORATION AND BYLAWS:

1. 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 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)

3.(i)A Articles of Incorporation and Bylaws of Farmland Industries, Inc.
effective December 10, 1998. (Incorporated by Reference - Form S-1/A,
filed December 16, 1998)

INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES**:

4.(i)B Form of Trust Indenture with Commerce Bank, National Association,
providing for issuance of Subordinated Debenture Bonds, including
forms of Ten-Year Bond, Series A, Ten-Year Bond, Series B, Five-Year
Bond, Series C, Five-Year Bond, Series D, Ten-Year Monthly Income
Bond, Series E, Ten-Year Monthly Income Bond, Series F, Five-Year
Monthly Income Bond, Series G and Five-Year Monthly Income Bond,
Series H. (Incorporated by Reference - Form S-1, No. 33-40759,
effective December 31, 1997)

4(.ii)A Syndicated Credit Facility between Farmland Industries, Inc. and
various banks dated May 15, 1996, (Incorporated by Reference - Form
10-Q filed July 15, 1996)

* 5 Opinion of Robert B. Terry, Vice President and General Counsel of
Farmland Industries, Inc. re Legality

MATERIAL CONTRACTS:

MANAGEMENT REMUNERATIVE PLANS:

10.(iii)A Employee Variable Compensation Plan (September 1, 1999 - August 31,
2000) (Incorporated by Reference - Form 10K, filed, November 19,
1999)

10.(iii)B Farmland Industries, Inc. Management Long-Term Incentive Plan
(Incorporated by Reference - Form 10-K, filed November 7, 1997)

10.(iii)B(1) Exhibit F to the Management Long-Term Incentive Plan
(Fiscal years 1998 through 2000) (Incorporated by
Reference - Form 10-K, filed November 7, 1997)

10.(iii)B(2) Exhibit G to the Management Long-Term Incentive Plan
(Fiscal years 1999 through 2001) (Incorporated by
Reference - Form 10-K, filed November 20, 1998)

10.(iii)B(3) Exhibit H to the Management Long-Term Incentive Plan
(Fiscal years 2000 through 2002) (Incorporated by
Reference - Form 10-K, filed November 19, 1999)

10.(iii)C Farmland Industries, Inc. Supplemental Executive Retirement Plan
(As Amended and Restated Effective September 1, 1999)
(Incorporated by Reference - Form 10-K, filed November 19, 1999)

10.(iii)C(1) Appendix A to the Supplemental Executive Retirement Plan
(Incorporated by Reference - Form 10-K, filed November
27, 1996)

10.(iii)D Farmland Industries, Inc. Executive Deferred Compensation Plan (As
Amended and Restated Effective November 1, 1996) (Incorporated by
Reference - Form 10-K, filed November 27, 1996)

* 12 Computation of Ratios

21 Subsidiaries of the Registrant (Incorporated by Reference - Form 10-K,
filed November 19, 1999)

* 23.A Independent Auditors' Consent

* 23.B Consent of Qualified Independent Underwriter

* 23.C Consent of Robert B. Terry, Vice President and General Counsel of
Farmland Industries, Inc. (Included in Exhibit 5)

* 24 Power of Attorney

* 25.A Statement of Eligibility of Trustee and Qualification of UMB Bank,
National Association, as Trustee, Form T-1

* 25.B Statement of Eligibility of Trustee and Qualification of Commerce Bank,
National Association, as Trustee, Form T-1

* Filed with this registration statement.

EXHIBIT 12

FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Year Ended August 31

1995 1996 1997 1998 1999

(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Earnings:
Pretax Income......................... $ 197,641 $ 155,754 $ 163,672 $ 55,025 $ 5,822

Minority Interest in Income of
Consolidated Subsidiary 9,793 7,604 10,586 8,346 $ 17,727

Equity Interest in Loss (Income)
of Investees (A).................. (623) 574 (868) (56,531) (65,510)

Distributions from
Investees (A)..................... -0- -0- 5 57,620 59,715

Total Fixed Charges (excluding
interest capitalized)............. 68,271 76,658 79,247 94,960 113,611

Total Earnings............................. $ 275,082 $ 240,369 $ 250,740 $ 158,079 $ 131,365

Fixed Charges:
Interest (including amounts
capitalized and amortization of
debt issuance costs).............. $ 55,497 $ 65,361 $ 68,099 $ 79,421 $ 93,686

Estimated Interest Component
of Rentals........................ 13,494 12,926 15,127 19,483 19,925

Total Fixed Charges........................ $ 68,991 $ 78,287 $ 83,226 98,904 113,611

Ratio of Earnings to Fixed Charges......... 4.0 3.0 3.0 1.6 1.2

</TABLE>

(A) Through 1997, equity interest and distributions shown represent less-than-
50%-owned Investees. Beginning with 1998, equity interest and distributions
shown represent 50%-owned and less-than-50%-owned Investees.

EXHIBIT 23.A

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Farmland Industries, Inc.:

We consent to the use of our report 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
January 19, 2000

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints Robert B. Terry and Terry M. Campbell, and each of
them, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, as well as any related registration
statement (or amendments thereto) filed pursuant to Rule 462(b) promulgated
under the Securities Act of 1933, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together shall constitute one
instrument.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICTED.
<TABLE>
<CAPTION>

Signature Title Date

Chairman of Board December 9, 1999
Albert J. Shivley and Director

Vice Chairman of Board December 9, 1999
Jody Bezner and Director

Director December 9, 1999
Lyman L. Adams, Jr.

Director December 9, 1999
Ronald J. Amundson

Director December 9, 1999
Baxter Ankerstjerne

Director December 9, 1999
Richard L. Detten

Director December 9, 1999
Steven Erdman

Director December 9, 1999
Harry Fehrenbacher
Director December 9, 1999
Martie Floyd

Director December 9, 1999
Warren Gerdes

Director December 9, 1999
Thomas H. Gist

Director December 9, 1999
Ben Griffith

Director December 9, 1999
Gail D. Hall

Director December 9, 1999
Barry Jensen

Director December 9, 1999
Ron Jurgens

Director December 9, 1999
William F. Kuhlman

Director December 9, 1999
Greg Pfenning

Director December 9, 1999
Monte Romohr

Director December 9, 1999
Joe Royster
Director December 9, 1999
E. Kent Stamper

Director December 9, 1999
Eli F. Vaughn

Director December 9, 1999
Frank Wilson
</TABLE>

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 (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 and Subordinated Debenture
Bonds 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, and with respect to Subordinated Debenture Bonds may be
issued under an Indenture entered into between the Company and Commerce Bank,
National Association, as trustee. Said Demand Loan Certificates and
Subordinated Debenture Bonds, when issued and sold in accordance with this
Registration Statement presently to be filed with the Securities and Exchange
Commission, Washington, D.C., and registered in accordance with the laws of the
States in which the Demand Loan Certificates and Subordinated Debenture Bonds
are and will be sold, will constitute valid and binding obligations according to
their tenor and effect. 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 (including any Amendment thereto) 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.

Very truly yours,

/s/ ROBERT B. TERRY

Robert B. Terry
January 19, 2000

EXHIBIT 23.B

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

January 11, 2000

Exhibit 25.A

SECURITIES AND EXCHANGE COMMISSION{PRIVATE }
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

UMB BANK, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
44-0201230
(I.R.S. Employer
Identification No.)
928 Grand Avenue, Kansas City, Missouri...............64106
(Address of principal executive offices) (Zip Code)

FARMLAND INDUSTRIES, INC.
(Exact name of obligor as specified in its charter)
KANSAS 42-0209330
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification No.)
3315 North Oak Trafficway
Post Office Box 7305
Kansas City, Missouri 64116
(Address of principal executive offices) (Zip Code)

DEMAND LOAN CERTIFICATES
Dated: November 20, 1981
(Title of the indenture securities)

Item 1.General Information
(a) Name and address of each examining or
supervising authority to which the Trustee is
subject is as follows:

The Comptroller of the Currency
Mid-Western District
2345 Grand Avenue, Suite 700
Kansas City, Missouri 64108

Federal Reserve Bank of Kansas City
Federal Reserve P.O. Station
Kansas City, Missouri 64198

Supervising Examiner
Federal Deposit Insurance Corporation
720 Olive Street, Suite 2909
St. Louis, Missouri 63101

(b) The Trustee is authorized to exercise
corporate trust powers.

Item 2. Affiliations with obligor and underwriters.
The Obligor is not affiliated with the
Trustee. No person, who is not an affiliate
of the Obligor, has served as an underwriter
for the Obligor.

Item 3. Voting securities of the Trustee.
The following information as to each class of
voting securities of the Trustee is furnished
as December 1999:

Column A Column B
Title of Amount
Class Outstanding
-------- ------------
Common 660,000

Item 4. Trusteeships under other indentures.
The Trustee is not a trustee under another
indenture under which any other securities, or
certificates of interest or participation in other
securities, of the Obligor are outstanding.
Item 5. Interlocking directorates and similar
relationships with the obligor or underwriters.
Neither the Trustee nor any of its directors or
officers is a director, officer, partner,
employee, appointee, or representative of the
Obligor.

No person, who is not an affiliate of the Obligor,
has served as an underwriter for the Obligor.

Item 6. Voting securities of the trustee owned by the
obligor or its officials.
No voting securities of the Trustee are owned
beneficially by the Obligor or its directors and
executive officers as of December 8, 1999.

Item 7. Voting securities of the trustee owned by
underwriters or their officials.
Not applicable

Item 8. Securities of the obligor owned or held by the
trustee. No securities of Obligor are owned
beneficially or held as collateral security for
obligations in default by the Trustee as of.
December 8, 1999.

Item 9. Securities of the underwriters owned or held by
the trustee.
Not applicable

Item 10. Ownership or holdings by the trustee of voting
securities of certain affiliates or security
holders of the obligor.
The Trustee neither owns beneficially nor holds as
collateral security for obligations in default any
voting securities of a person who, to the
knowledge of the Trustee, (1) owns 10 percent or
more of the voting securities of the Obligor, or
(2) is an affiliate, other than a subsidiary of
Obligor, as December 8, 1999.

Item 11. Ownership or holdings by the trustee of any
securities of a person owning 50 percent or more
of the voting securities of the obligor.
The Trustee neither owns beneficially nor holds as
collateral security for obligations in default any
securities of a person who, to the knowledge of
the Trustee, owns 50 percent or more of the voting
shares of the Obligor as of December 8, 1999.

Item 12. Indebtedness of the Obligor to the Trustee.
None

Item 13. Defaults of the Obligor.
There has been no default with respect to the
securities under this Indenture.

Item 14. Affiliations with the Underwriters.
Not Applicable

Item 15. Foreign Trustee.
Not Applicable

Item 16. List of exhibits.
Listed below are all exhibits filed as a part of
this statement of eligibility and qualification.

Exhibit No. Exhibit

1. Articles of Association of the Trustee, as now in
effect.

2. Certificate of Authority from the Comptroller of
the Currency evidencing a change of the corporate
title of the Association. Incorporated by
Reference - In the Statement of Eligibility and
Qualification of United Missouri Bank, National
Association, as Trustee, Form T-1 #22-21530, Filed
on FORM SE dated December 19, 1991.

3. Certificate from the Comptroller of the Currency
evidencing authority to exercise corporate trust
powers and a letter evidencing a change of the
corporate title of the Association. Incorporated
by Reference - In the Statement of Eligibility and
Qualification of United Missouri Bank, National
Association, as Trustee, Form T-1 #22-21530, Filed
on FORM SE dated December 19, 1991.

4. Bylaws, as amended, of the Trustee.

5. N/A

6. Consent of the Trustee required by Section 321 (b)
of the Act.

7. Report of Condition of the Trustee as of
September 30, 1999.

SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the Trustee, UMB Bank, National Association, a
national bank organized and existing under the laws of the
United States of America, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the city of Kansas City,
and State of Missouri, on the 8th day of December, 1999.

UMB BANK, NATIONAL ASSOCIATION

BY: Frank C. Bramwell, Senior Vice President
Frank C. Bramwell, Senior Vice President

T-1 Exhibit 6
Consent of Trustee

Pursuant to Section 321(B) of the Trust Indenture Act of
1939, UMB Bank, National Association, a national bank
organized under the laws of the United States, hereby
consents that reports of examinations by the Comptroller of
the Currency, of the Federal Deposit Insurance Corporation,
and any other federal, state, territorial or district
authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.

UMB BANK, NATIONAL ASSOCIATION

By: Frank C. Bramwell, Senior Vice President
Frank C. Bramwell, Senior Vice President

Date: December 8, 1999

UMB BANK, NATIONAL ASSOCIATION
RESTATED ARTICLES OF ASSOCIATION

FIRST: The title of this Association shall be "UMB
Bank, National Association" (amended as of October 1, 1994).

SECOND: The main office shall be in the City of Kansas
City, County of Jackson, State of Missouri. The general
business of this Association, and its operations of discount
and deposit, shall be conducted at its main office.

THIRD: The Board of Directors of this Association shall
consist of not less than five nor more than twenty-five
shareholders, the exact number of Directors within such
minimum and maximum limits to be fixed and determined from
time to time by resolution of a majority of the full Board
of Directors or by resolution of the shareholders at any
annual or special meeting thereof. Unless otherwise
provided by the laws of the United States, any vacancy in
the Board of Directors for any reason, including an increase
in the number thereof, may be filled by action of the Board
of Directors.

FOURTH: The regular annual meeting of the shareholders
for the
election of directors and the transaction of whatever other
business which may be brought before said meeting shall be
held at the main office, or at such other place as the Board
of Directors may designate, on the day of each year
specified therefor in the By-Laws of the Association, but if
no election be held on that day it may be held on any
subsequent day according to the provisions of law.

FIFTH: The amount of authorized capital stock of this
Association shall be Sixteen Million Five Hundred Thousand
Dollars ($16,500,000), divided into 660,000 shares of common
stock of the par value of Twenty-Five Dollars ($25) each;
but said capital stock may be increased or decreased from
time to time in accordance with the provisions of the laws
of the United States.

If the capital stock is increased by the sale of
additional shares thereof, each shareholder shall be entitled
to subscribe for such additional shares in proportion to the
number of shares of said capital stock owned by him at the
time the increase is authorized by the shareholders, unless
another time subsequent to the date of the shareholders'
meeting is specified in a resolution adopted by the
shareholders at the time the increase is authorized. The
Board of Directors shall have the power to prescribe a
reasonable period of time within which the pre-emptive
rights to subscribe to the new shares of capital stock must
be exercised.

If the capital stock is increased by a stock dividend,
each shareholder shall be entitled to his proportion of
the amount of such increase in accordance with the number
of shares of capital stock owned by him at the time
the increase is authorized by the shareholders, unless
another time subsequent to the date of the shareholders'
meeting is specified in a resolution adopted by the
shareholders at the time the increase is authorized.

SIXTH: The Board of Directors shall appoint one of its
members to be President of this Association. The Board of
Directors may appoint one of its members to be Chairman of
the Board, who shall perform such duties as the Board of
Directors may designate.

The Board of Directors shall have the power to appoint one
or more Vice Presidents and to appoint a Cashier and such
other officers and employees as may be required to transact
the business of the Association.

The Board of Directors shall have the power to define
the duties of the officers and employees of the Association;
to fix the salaries to be paid to them; to dismiss them;
to require bonds from them and to fix the penalty thereof;
to regulate the manner in which any increase in the capital
of the Association shall be made; to manage and administer
the business and affairs of the Association; to make all
By-Laws that it may be lawful for them to make; and generally
to do and perform all acts that it may be legal for the Board
of Directors to do and perform.

The Board of Directors, without the approval of the
shareholders, but subject to the approval of the Comptroller
of the Currency, shall have the power to change the location
of the main office of the Association to any other place
within the limits of Kansas City, Missouri and to establish
or change the location of any branch or branches to any
other location permitted under applicable law.

SEVENTH: The corporate existence of this Association
shall continue until terminated in accordance with the laws
of the United States.

EIGHTH: The Board of Directors of this Association, or
any three or more shareholders owning, in the aggregate,
not less than ten percentum (10%) of the stock of
this Association, may call a special meeting of the shareholders
at any time; provided, however, that unless otherwise
provided by law, not less than ten (10) days prior to the
date fixed for any such meeting, a notice of the time, place
and purpose of the meeting shall be given by first class
mail, postage prepaid, to all shareholders of record at
their respective addresses as shown upon the books of the
Association.

Subject to the provisions of the laws of the United
States, these Articles of Association may be amended at any
meeting of the shareholders, for which adequate notice has
been given, by the affirmative vote of the owners of two-thirds
of the stock of this Association, voting in person or by proxy.

NINTH: Any person, his heirs, executors, or
administrators, may be indemnified or reimbursed by the
Association for reasonable expenses actually incurred in
connection with any action, suit, or
proceeding, civil or criminal, to which he or they shall be
made a party by reason of his being or having been a
director, officer, or employee of the Association or any
firm, corporation, or organization which he served in any
capacity at the request of the Association; provided,
however, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit,
or proceeding as to which he shall finally be adjudged to
have been guilty of or liable for gross negligence or
willful misconduct or criminal acts in the performance of
his duties to the Association; and, provided further, that
no person shall be so indemnified or reimbursed in relation
to any matter in such action, suit, or proceeding which has
been made the subject of a compromise settlement except with
the approval of a court of competent jurisdiction, or the
holders of record of a majority of the outstanding shares of
the Association, or the Board of Directors, acting by vote
of directors not parties to the same or substantially the
same action, suit, or proceeding, constituting a majority of
the whole number of the directors. The foregoing right of
indemnification or reimbursement shall not be exclusive of
other rights to which such person, his heirs, executors, or
administrators, may be entitled as a matter of law.

T-1 Exhibit 2

Certificate, dated January 10th, 1934, of the Office of
Comptroller of the Currency authorizing the City National
Bank and Trust Company of Kansas City to Commence the
business of Banking.

C E R T I F I C A T E

For and on behalf of UMB Bank, National Association, a
national banking association organized under the laws of the
United States of America (formerly named The City National
Bank and Trust Company of Kansas City and the United
Missouri Bank of Kansas City, National Association and
United Missouri Bank, National Association), the
undersigned, R. William Bloemker, Assistant Secretary of
said Association, hereby certifies that attached hereto are
the following:

1) A true and correct copy of the certificate of the
Comptroller of the Currency, dated December 19,
1972, evidencing a change in corporate title from
The City National Bank and Trust Company of Kansas
City to United Missouri Bank of Kansas City,
National Association;

2) A true and correct copy of the letter of
authorization from the Comptroller of the Currency,
dated April 9, 1991, authorizing the Association to
adopt the name United Missouri Bank, National
Association; and

3) Certified Resolution evidencing recordation of
change of the name of the Association to UMB Bank,
National Association.

Certified under the corporate seal of said Association
this 8th day of December, 1999.

/s/ R. William Bloemker
Assistant Secretary

Certificate, dated December 19, 1972, of the
Comptroller of the Currency evidencing change in corporate
title from the City National Bank and Trust Company of
Kansas City to United Missouri Bank of Kansas City, National
Association.

Letter, dated April 9, 1991, from the Comptroller of
the currency, authorizing the Association to adopt the name
United Missouri Bank, National Association.

CERTIFIED RESOLUTION

I hereby certify that the following is an excerpt from
a letter dated October 3, 1994 from the Office of the
Comptroller of the Currency (OCC) confirming the Bank's
change of name:

The OCC has recorded that as of October 1, 1994, the
title of United Missouri Bank, National Association,
Charter No. 13936, was changed to "UMB Bank, National
Association."

/s/ R. William Bloemker
Assistant
Secretary

[SEAL]

T-l Exhibit 3

C E R T I F I C A T E

For and on behalf of UMB Bank, National Association, a
national banking association under the laws of the United
States of America, the undersigned, R. William Bloemker,
Assistant Secretary of said Association, hereby certifies
that the attached document is a true and correct copy of the
certificate issued by the Comptroller of the Currency of the
United States evidencing its authority to exercise fiduciary
powers under the statutes of the United States.

Certified under the corporate seal of said Association
this 8th day of December, 1999.

/s/ R. William Bleomker
Assistant
Secretary

Certificate, dated December 31, 1972, of the
Comptroller of the Currency evidencing the authority of the
Association to exercise fiduciary powers under the statutes
of the United States.

T-l Exhibit No. 4

TO WHOM IT MAY CONCERN

The attached ByLaws are the ByLaws for the UMB Bank,
National Association and are current as of this date.

/s/ R. William Bloemker
Assistant Secretary

December 8, 1999

[SEAL]

UMB BANK, NATIONAL ASSOCIATION BY-LAWS

ARTICLE I

Meetings of Shareholders

Section 1.1 - Where Held. All meetings of shareholders
of this Association shall be held at its main banking house
in Kansas City, Jackson County, Missouri, or at such other
place as the Board of Directors may from time to time
designate.

Section 1.2 - Annual Meeting. The annual meeting of
shareholders shall be held at 11 o'clock in the forenoon, or
at such other time as shall be stated in the notice thereof,
on the third Wednesday of January in each year or, if that
day be a legal holiday, on the next succeeding banking day,
for the purpose of electing a Board of Directors and
transacting such other business as may properly come before
the meeting.

Section 1.3 - Special Meetings. Except as otherwise
provided by law, special meetings of shareholders may be
called for any purpose, at any time, by the Board of
Directors or by any three or more shareholders owning, in
the aggregate, not less than ten percent (10%) of the
outstanding stock in the Association.

Section 1.4 - Notice of Meetings. Written notice of
the time, place, and purpose of any meeting of shareholders
shall be given to each shareholder (a) by delivering a copy
thereof in person to the shareholder, or (b) by depositing a
copy thereof in the U.S. mails, postage prepaid, addressed
to the shareholder at his address appearing on the books of
the Association, in either case at least ten (10) days prior
to the date fixed for the meeting.

Section 1.5 - Quorum. A majority of the outstanding
capital stock, represented in person or by proxy, shall
constitute a quorum for the transaction of business at any
meeting or shareholders, unless otherwise provided by law.
A majority of the votes cast shall decide every question
or matter submitted to the shareholders at any meeting,
unless otherwise provided by law or by the Articles of
Association.

Section 1.6 - Adjournment. Any meeting of shareholders
may, by majority vote of the shares represented at such
meeting, in person or by proxy, though less than a quorum,
be adjourned from day to day or from time to time, not
exceeding, in the case of elections of directors, sixty (60)
days from such adjournment, without further notice, until a
quorum shall attend or the business thereof shall be
completed. At any such adjourned meeting, any business may
be transacted which might have been transacted at the
meeting as originally called.

Section 1.7 - Voting. Each shareholder shall be
entitled to one (1) vote on each share of stock held, except
that in the election of directors each shareholder shall
have the right to cast as many votes, in the aggregate, as
shall equal the number of shares owned by him, multiplied by
the number of directors to be elected, and said votes may be
cast for one director or distributed among two (2) or more
candidates. Voting may be in person or by proxy, but no
officer or employee of this Association shall act as proxy.
Authority to vote by proxy shall be by written instrument,
dated and filed with the records of the meeting, and shall
be valid only for one meeting, to be specified therein, and
any adjournments of such meeting.

ARTICLE II

Directors

Section 2.1 - Number and Qualifications. The Board of
Directors (hereinafter sometimes referred to as the "Board")
shall consist of not less than five (5) nor more than
twenty-five (25) shareholders, the exact number, within such
limits, to be fixed and determined from time to time by
resolution of a majority of the full Board of Directors or
by resolution of the shareholders at any meeting thereof;
provided, however, that a majority of the full Board of
Directors shall not increase the number of directors to a
number which: (a) exceeds by more than two (2) the number of
directors last elected by shareholders where such number was
fifteen (15) or less; or (b) exceeds by more than four (4)
the number of directors last elected by shareholders where
such number was sixteen (16) or more. No person who has
attained the age of seventy (70) shall be eligible for
election to the Board of Directors unless such person is
actively engaged in business at the time of his election,
but any person not so disqualified at the time of his
election as a director shall be entitled to serve until the
end of his term. All directors shall hold office for one
(1) year and until their successors are elected and
qualified.

Section 2.2 - Advisory Directors. The Board of
Directors may appoint Advisory Directors, chosen from former
directors of the Association or such other persons as the
Board shall select. The Advisory Directors shall meet with
the Board at all regular and special meetings of the
Board and may participate in such meetings but shall have
no vote. They shall perform such other advisory functions
and shall render such services as may from time to time be
directed by the
Board.

Section 2.3 - Powers. The Board shall manage and
administer the business and affairs of the Association.
Except as expressly limited by law, all corporate powers
of the Association shall be vested in and may be exercised
by said Board. It may not delegate responsibility for its
duties to others, but may assign the authority and
responsibility for various functions to such directors,
committees and officers or other employees as it shall see fit.

Section 2.4 - Vacancies. In case of vacancy occurring
on the Board through death, resignation, disqualification,
disability or any other cause, such vacancy may be filled at
any regular or special meeting of the Board by vote of a
majority of the surviving or remaining directors then in
office. Any director elected to fill a vacancy shall hold
office for the unexpired term of the director whose place
was vacated and until the election and qualification of his
successor.

Section 2.5 - Organization Meeting. Following the
annual meeting of shareholders, the Corporate Secretary
shall notify the directors elect of their election and of
the time and place of the next regular meeting of the Board,
at which the new Board will be organized and the members of
the Board will take the oath required by law, after which
the Board will appoint committees and the executive officers
of the Association, and transact such other business as may
properly come before the meeting; provided, however, that if
the organization meeting of the Board shall be held
immediately following the annual meeting of shareholders, no
notice thereof shall be required except an announcement
thereof at the meeting of directors.

Section 2.6 - Regular Meetings. The regular meetings
of the Board of Directors shall be held, without notice
except as provided for the organization meeting, on the
third Wednesday of each month at the main banking house in
Kansas City, Jackson County, Missouri. When any regular
meeting of the Board falls upon a holiday, the meeting shall
be held on the next banking day, unless the Board shall
designate some other day. A regular monthly meeting of the
Board may, by action of the Board at its preceding meeting,
be postponed to a later day in the same month.

Section 2.7 - Special Meetings. Special meetings of
the Board may be called by the Corporate Secretary on
direction of the President or of the Chairman of the Board,
or at the request of three (3) or more directors. Each
member of the Board shall be given notice, by telegram,
letter, or in person, stating the time, place and purpose of
such meeting.

Section 2.8 - Quorum. Except when otherwise provided
by law, a majority of the directors shall constitute a
quorum for the transaction of business at any meeting, but
a lesser number may adjourn any meeting, from time to time,
and the meeting may be held, as adjourned, without further
notice. Section 2.9 - Voting. A majority of the
directors present and voting at any meeting of the Board
shall decide each matter considered. A director may not
vote by proxy.

Section 2.10 - Compensation of Directors. The
compensation to be paid the directors of the Association for
their services shall be determined from time to time by the
Board.

ARTICLE III

Committees Appointed by the Board

Section 3.1 - Standing Committees. The standing
committees of this Association shall be the Management
Committee, Executive Committee, the Officers' Salary
Committee, the Discount Committee, the Bond Investment
Committee, the Trust Policy Committee, the Bank Examining
Committee and the Trust Auditing Committee. The members of
the standing committees shall be appointed annually by the
Board of Directors at its organization meeting, or, on
notice, at any subsequent meeting of the Board, to serve
until their respective successors shall have been appointed.
The President and the Chairman of the Board shall be, ex
officio, members of all standing committees except the Bank
Examining Committee and the Trust Auditing Committee. Each
standing committee shall keep minutes of its meetings,
showing the action taken on all matters considered. A
report of all action so taken shall be made to the Board,
and a copy of such minutes shall be available for
examination by members of the Board.

Section 3.2 - Management Committee. The Management
Committee shall consist of such executive officers of the
Association as shall be designated by the Board. One of the
members of the Committee shall be designated by the Board as
Chairman. The Committee may adopt policies (not
inconsistent with policies and delegations of authority
prescribed by these By-Laws or by the Board) with respect to
the executive and administrative functions of the
Association, and in general, it shall coordinate the
performance of such functions in and among the various
departments of the Association, assisting and advising the
executive officers or department heads upon matters referred
to it by such officers or department heads. The Committee
shall make reports and recommendations to the Board upon
such policies or other matters as it deems advisable or as
may be referred to it by the Board, and shall have such
other powers and duties as may be delegated or assigned to
it by the Board from time to time. The secretary of the
Committee may be designated by the Board, or, in default
thereof, by the Committee, and may but need not be a member
thereof.

Section 3.3 - Executive Committee. The Executive
Committee shall consist of such executive officers of the
Association as shall be designated by the Board. One of the
members of the Committee shall be designated by the Board as
Chairman. The Committee shall carry out such
responsibilities and duties as the Management Committee
shall delegate to it, from time to time.

Section 3.4 - Officers' Salary Committee. The
Officers' Salary Committee shall consist of such directors
and officers of the Association as may be designated by the
Board. It shall study and consider the compensation to be
paid to officers of the Association and shall make
recommendations to the Board with respect thereto and with
respect to such other matters as may be referred to it by
the Board.

Section 3.5 - Discount Committee. The Discount
Committee shall consist of such directors and officers as
shall be designated by the Board of Directors. It shall
have the power to discount and purchase bills, notes and
other evidences of debt; to buy and sell bills of exchange;
to examine and approve loans and discounts; and to exercise
authority regarding loans and discounts held by the
Association. At each regular meeting of the Board, the
Board shall approve or disapprove the report filed with it
by the Discount Committee and record its actions in the
minutes of its meeting. The powers and authority conferred
upon the Discount Committee by this Section may, with the
approval of the Board of Directors, be assigned or delegated
by it, to officers of the Association, subject to such
limits and controls as the Committee may deem advisable.

Section 3.6 - Bond Investment Committee. The Bond
Investment Committee shall consist of such directors and
officers as shall be designated by the Board of Directors.
It shall have power to buy and sell bonds, to examine and
approve the purchase and sale of bonds, and to exercise
authority regarding bonds held by the Association. At each
regular meeting of the Board, the Board shall approve or
disapprove the report filed with it by the Bond Investment
Committee and record its action in the minutes of its meeting.

Section 3.7 - Trust Policy Committee. The Trust Policy
Committee shall consist of such directors and officers of
the Association as shall be designated by the Board of
Directors. Such committee shall have and exercise such of
the Bank's fiduciary powers as may be assigned to it by the
Board, with power to further assign, subject to its control,
the exercise of such powers to other committees, officers
and employees. The action of the Trust Policy Committee
shall, at all times, be subject to control by the Board.

Section 3.8 - Bank Examining Committee. The Bank
Examining Committee shall consist of such directors of the
Association as shall be designated by the Board, none of
whom shall be an active officer of the Association.
It shall make suitable examinations at least once during
each period of twelve (12) months of the affairs of the
Association or cause a suitable audit to be made by
auditors responsible only to the Board of Directors.
The result of such examinations shall be reported in
writing, to the Board at the next regular meeting thereafter
and shall state whether the Association is in a sound and
solvent condition, whether adequate internal controls and
procedures are being aintained, and shall recommend to the
Board such changes as the Committee shall deem advisable.
The Bank Examining Committee, with the approval of the Board
of Directors, may employ a qualified firm of certified public
accountants to make an examination and audit of the Association.
If such a procedure is followed, the annual examination of
directors, will be deemed sufficient to comply with the
requirements of this section of the By-Laws.

Section 3.9 - Trust Auditing Committee. The Trust
Auditing Committee shall consist of such directors of the
Association as shall be designated by the Board, none of
whom shall be an active officer of the Association. At
least once during each calendar year, and within fifteen (15)
months of the last such audit, the Trust Auditing Committee
shall make suitable audits of the Trust Departments or cause
suitable audit to be made by auditors responsible only to the Board
of Directors, and t such time shall ascertain whether the
Departments have been administered in accordance with law,
the Regulations of the Comptroller and sound fiduciary
practices. As an alternative, in lieu of such periodic
audits, the Board may elect to adopt an adequate continuous
audit system.

Section 3.10 - Other Committees. The Board may
appoint, from time to time, from its own members or from
officers of the Association, or both, other committees of
one or more persons for such purposes and with such powers
as the Board may determine.

Section 3.11 - Compensation of Committee Members. The
Board shall determine the compensation to be paid to each
member of any committee appointed by it for services on
such committee, but no such compensation shall be paid to
any committee member who shall at the time be receiving a
salary from the Association as an officer thereof.

ARTICLE IV

Officers and Employees

Section 4.1 - Chairman of the Board. The Board of
Directors shall appoint one of its members (who may, but
need not, be President of the Association) as Chairman of
the Board. He shall preside at all meeting of the Board of
Directors and shall have general executive powers and such
further powers and duties as from time to time may be
conferred upon, or assigned to, him by the Board of
Directors. He shall be, ex officio, a member of all
standing committees except the Bank Examining Committee and
the Trust Auditing Committee.

Section 4.2 - President. The Board of Directors shall
appoint one of its members to be the President of this
Association. The President shall be the chief executive
officer of the Association, except as the Board of Directors
may otherwise provide, and shall have and may exercise any
and all other powers and duties pertaining to such office.
He shall also have and may exercise such further powers and
duties as from time to time may be conferred upon, or
assigned to, him by the Board of Directors. He shall be, ex
officio, a member of all standing committees except the Bank
Examining Committee and the Trust Auditing Committee.

Section 4.3 - Chairman of the Executive Committee. The
Board of Directors may appoint a Chairman of the Executive
Committee, who shall have general executive powers and shall
have and may exercise such further powers and duties as from
time to time may be conferred upon, or assigned to, him by
the Board of Directors.

Section 4.4 - Vice Presidents. The Board of Directors
shall appoint one or more Vice Presidents. Each Vice President
shall have such powers and duties as may be assigned to him
by the Board and may be given such descriptive or functional
titles as the Board may designate.

Section 4.5 - Trust Officers. The Board of Directors
shall appoint one or more Trust Officers. Each Trust
Officer shall have such powers and duties as may be assigned
to him by the Board of Directors in accordance with the
provisions of Article V. The Trust Officers may be given
such descriptive or functional titles as the Board may
designate.

Section 4.6 - Corporate Secretary. The Board of
Directors shall appoint a Corporate Secretary. The
Corporate Secretary shall be responsible for the minutes
book of the Association, in which he shall maintain and
preserve the organization papers of the Association, the
Articles of Association, the By-Laws, minutes of regular and
special meetings of the shareholders and of the Board of
Directors, and reports by officers and committees of the
Association to the shareholders and to the Board of
Directors. He shall attend all meetings of the shareholders
and of the Board of Directors and shall act as the clerk of
such meetings and shall prepare and sign the minutes of such
meetings. He shall have custody of the corporate seal of
the Association and of the stock transfer books, except as
given to the Comptroller's Department or the Corporate Trust
Department to act as transfer agent and registrar of the
Association's capital stock, and of such other documents and
records as the Board of Directors shall entrust to him. The
Secretary shall give such notice of meetings of the
shareholders and of the Board of Directors as is required by
law, the Articles of the Association and the By-Laws. In
addition, he shall perform such other duties as may be
assigned to him from time to time by the Board of Directors.
The Assistant Secretaries shall render the Corporate
Secretary such assistance as he shall require in the
performance of his office. During his absence or inability
to act, the Assistant Secretaries shall be vested with the
powers and perform the duties of the Corporate Secretary.

Section 4.7 - Cashier. The Board of Directors may
appoint a Cashier. He shall have such powers and shall
perform such duties as may be assigned to him by resolution
of the Board of Directors.

Section 4.8 - Comptroller. The Board of Directors shall
appoint a Comptroller. The Comptroller shall institute and
maintain the accounting policies and practices established by
the Board of Directors. He shall maintain, or cause to be
maintained, adequate records of all transactions of the
Association. He shall be responsible for the preparation of
reports and returns to taxing and regulatory authorities, and
at meetings of the Board of Directors shall furnish true and
correct statements of condition and statements of operations
of the Association and such further information and data, and
analyses thereof, as the Board of Directors may require. He
shall have custody of the Association's insurance policies.
In addition, the Comptroller shall perform such other duties
as may be assigned to him, from time to time by the Board of
Directors. The Assistant Comptroller(s) shall render the
Comptroller such assistance as he shall require in the
performance of the duties of his office and, during his
absence or inability to act, the Assistant Comptroller(s), in
the order designated by the Board of Directors, shall be
vested with the powers and perform the duties of the
Comptroller.

Section 4.9 - Auditor. The Board of Directors shall
appoint an Auditor of the Association. He shall see that
adequate audits of the Association are currently and regularly
made and that adequate audit systems and controls are
established and maintained. He shall examine each department
and activity of the Association and may inquire into
transactions affecting the Association involving any officer
or employee thereof. The Board, however, may, in lieu of
appointing an Auditor, assign the duties thereof to the
Auditor of the parent company of the Association.

Section 4.10 - Other Officers. The Board of Directors
may appoint one or more Assistant Vice Presidents, one or more
Assistan Trust Officers, one or more Assistant Secretaries,
one or more Assistant Cashiers, and such other officers and
Attorneys-In-Fact as from time to time may appear to the Board
of Directors to be required or desirable to transact the
business of the Association. The power to appoint such
assistant or the additional officers may be delegated to the
Chairman of the Board or the President, or to such other
executive officer or officers as the Board may designate, but
the power to appoint any officer of the Audit Department or
any Assistant Secretary may not be so delegated. Any officer
and Attorney-In-Fact appointed as herein provided shall
exercise such powers and perform such duties as pertain to his
office or as may be conferred upon or assigned to him by the
Board of Directors of by the officer authorized to make such
appointment.

Section 4.11 - Tenure of Office. The Chairman of the
Board and the President shall hold office for the current year
for which Board of Directors of which they are members was
elected, unless either of them shall resign, become
disqualified or be removed, and any vacancy occurring in
either of such offices shall be filled promptly by the Board
of Directors. All other officers of the Association shall
serve at the pleasure of the Board of Directors.

Section 4.12 - Compensation of Officers. The
compensation of the officers of the Association shall be
fixed and may be altered, from time to time, by the Board of
Directors or, in the case of officers appointed by another
officer, as authorized by Section 4.10 of this Article, by
the officer or officers making such appointment, subject to
the supervisory control of, and in accordance with the
policies established by, the Board.

Section 4.13 - Combining Offices. The Board of
Directors, in its discretion, may combine two or more
offices and direct that they be filled by the same
individual, except that (a) the office of Corporate
Secretary shall not be combined with that of the Chairman of
the Board or of the President and (b) the office of Auditor
shall not be combined with any other office.

Section 4.14 - Succession. During the absence of the
Chairman of the Board, or such other officer designated as
Chief Executive Officer, all of the duties pertaining to his
office under these By-Laws and the resolutions of the Board
of Directors shall, subject to the supervisory control of
the Board, devolve upon, and be performed by, the officers,
successively, who are next in the order of authority as
established by the Board of Directors from time to time, or,
in the absence of an order of authority so established, in
the order of Chairman of the Board, President and Chairman
of the Executive Committee as may be applicable in the
particular case.

Section 4.15 - Clerks and Agents. Any one of the
Chairman of the Board, President or Chairman of the
Executive Committee, or any officer of the Association
authorized by them, may appoint and dismiss all or any
clerks, agents and employees and prescribe their duties
and the conditions of their employment, and from time
to time fix their compensation.

Section 4.16 - Requiring Bond. The Board of Directors
shall require such officers and employees of the Association
as it shall designate to give bond, of suitable amount, with
security to be approved by the Board, conditioned for the
honest and faithful discharge by each such officer or
employee of his respective duties. In the discretion of the
Board, such bonds may be in blanket form and the premiums may
be paid by the Association. The amount of such bonds,
form of coverage, and the company acting as surety therefor,
shall be reviewed by the Board of Directors each year.

ARTICLE V

Administration of Trust Powers

Section 5.1 - Trust Department. Organization. There
shall be one or more departments of the Association which
shall perform the fiduciary responsibilities of the Association.

Section 5.2 - Management of Department. The Board of
Directors shall be responsible for the management and
administration of the Trust Department or Departments, but
is may assign or delegate such of its powers and authority
to the Trust Policy Committee and to such other committees
and officers of the Association as it may deem advisable.

Section 5.3 - Department Heads. The Board of Directors
shall designate one of the Trust Officers as the chief
executive of each Trust Department. His duties shall be
to manage, supervise and direct all activities of such
Department, subject to such supervision as may be vested
in the Trust Policy and other committees. He shall do,
or cause to be done, all things necessary or proper in
carrying on the business of such Department in accordance
with provisions of law, applicable regulations and policies
established by authority of the Board. He shall act
pursuant to opinions of counsel where such opinion is deemed
necessary. He shall be responsible for all assets and
documents held by the Association in connection with
fiduciary matters, in such Department, except as otherwise
provided in this Article V.

Section 5.4 - Custody of Securities. The Board of
Directors shall designate two or more officers or employees
of the Association to have joint custody of the investments
of each trust account administered by the Trust Department
or Departments.

Section 5.5 - Trust Department Files. There shall be
maintained in each Trust Department files containing all
fiduciary records necessary to assure that it fiduciary
responsibilities have been properly undertaken and
discharged.

Section 5.6 - Trust Investments. Funds held in a
fiduciary capacity shall be invested in accordance with the
instrument establishing the fiduciary relationship and
governing law.
Where such instrument does not specify the character and
class of investments to be made and does not vest in the
Association a discretion in the matter, funds held pursuant
to such instrument shall be invested in investments in which
corporate fiduciaries may invest under the laws of the State
of Missouri and the decisions of its courts.

ARTICLE VI

Stock and Stock Certificates

Section 6.1 - Transfers. Shares of the capital stock
of the Association shall be transferable only on the books of
the Association, and a transfer book shall be kept in which all
transfers of stock shall be recorded.

Section 6.2 - Stock Certificates. Certificates of
stock shall bear the signatures of (i) the Chairman of the
Board, the President or any Vice President, and (ii) the
Secretary, Cashier, any Assistant Secretary, or any other
officer appointed by the Board of Directors for that
purpose; and the seal of the Association shall be impressed,
engraved, or printed thereon. Such signatures may be manual
or engraved, printed or otherwise impressed by facsimile
process; but if both of the required signatures are by
facsimile then such certificates shall be manually
countersigned by the person or persons thereunto authorized
by the Board of Directors. Certificates bearing the
facsimile signature of an authorized officer may be validly
issued even though the person so named shall have ceased to
hold such office at the time of issuance. Each certificate
shall recite on its face that the stock represented thereby
is transferable only upon the books of the Association upon
the surrender of such certificate properly endorsed.

Section 6.3 - Closing Transfer Books or Fixing Record
Date. The Board of Directors shall have power to close the
transfer books of the Association for a period not exceeding
thirty (30) days preceding the date of any meeting of
shareholders, or the date of payment of any dividend, or the
date of allotment of rights, or the date when any change or
conversion of exchange of shares shall go into effect;
provided, however, that in lieu of closing the said transfer
books, the Board of Directors may fix, in advance, a date,
not exceeding thirty (30) days preceding the date of any
such event, as record date for the determination of the
shareholders entitled to notice of, and to vote at, any such
meeting (and any adjournment thereof), or entitled to
receive payment of any such dividend or allotment of such
rights, or to exercise rights in respect of any such change,
conversion or exchange of shares, and in such case, only
such shareholders as shall be shareholders of record at the
close of business on the date of closing the transfer books
or on the record date so fixed shall be entitled to notice
of, and to vote at, such meeting (and any adjournment
thereof), or to receive payment of such dividend or
allotment of such rights, or to exercise such rights, as the
case may be.

ARTICLE VII
Corporate Seal

Section 7.1 - Authority to Affix. The President, the
Corporate Secretary, the Cashier, and any Assistant
Secretary or other officer designated by the Board of
Directors, shall have authority to affix the corporate seal
on any document requiring such seal, and to attest the same.
The seal shall be substantially in the following form:

ARTICLE VIII

Miscellaneous Provisions

Section 8.1 - Fiscal Year. The fiscal year of the
Association shall be the calendar year.

Section 8.2 - Execution of Instruments. All
agreements, indentures, mortgages, deeds, conveyances,
transfers, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies and
other instruments or documents may be signed,
executed, acknowledged, verified, delivered or accepted on
behalf of the Association by the Chairman of the Board, the
President, any Vice President, or the Cashier; and, if in
connection with the exercise of fiduciary owers of the
Association, by any of said officers or by any authorized
officer of the Trust Department or Departments. Any such
instruments may also be executed, acknowledged, verified,
delivered, or accepted on behalf of the Association in
such other manner and by such other officers as the Board
of Directors may from time to time direct. The provisions
of this Section are supplementary to any other provisions of
these By-Laws.

Section 8.3 - Banking Hours. The Association shall be
open for business on such days and during such hours as may
be prescribed by resolution of the Board of Directors.
Unless and until the Directors shall prescribe other and
different banking hours, this Association's main office
shall be open for business from 9:30 o'clock a.m. to 2:00
o'clock p.m. of each day, except Fridays when the hours
shall be from 9:30 o'clock a.m. to 6:00 o'clock p.m., and
except that the Association shall be closed on Saturdays and
Sundays, and, with the approval of the Board on days
recognized by the laws of the State of Missouri as public
holiday.

ARTICLE IX

By-Laws

Section 9.1. - Inspection. A copy of the By-Laws, with
all amendments thereto, shall at all times be kept in a
convenient place at the main office of the Association and
shall be open for inspection to all shareholders during
banking hours.

Section 9.2 - Amendments. The By-Laws may be amended,
altered or repealed by vote of a majority of the entire
Board of Directors at any meeting of the Board, provided
that ten (10) days' written notice of the proposed change
has been given to each Director. No amendment may be made
unless the By-Laws, as amended, is consistent with the
requirements of the laws of the United States and with the
provisions of the Articles of the Association. A certified
copy of all amendments to the By-Laws shall be forwarded to
the Comptroller of the Currency immediately after adoption.

10-1-94

T-l Exhibit 6
Consent of Trustee

Pursuant to Section 32l(b) of the Trust Indenture Act
of l939, UMB Bank, National Association, a national bank
organized under the laws of the United States, hereby
consents that reports of examinations by the Comptroller of
the Currency, of the Federal Deposit Insurance Corporation,
and any other federal, state, territorial or district
authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.

UMB BANK, NATIONAL ASSOCIATION

BY: Frank C. Bramwell, Senior Vice
President
Frank C. Bramwell, Senior Vice
President

Date: December 8, 1999

T-1 Exhibit 7

Legal Title of Bank: UMB BANK, N.A. Call Date: 6/30/97
ST-BK: 29-2668 FFIEC 032
Address: P. O. Box 419226
Page RC-1
City, State Zip: KANSAS CITY, MO 64141-6226
FDIC Certificate No.: /1/3/6/0/1

Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Bank for September 30, 1998

All schedules are to be reported in thousands of dollars.
Unless otherwise indicated,
report the amount outstanding as of the last business day of
the quarter.

Schedule RC--Balance Sheet

<TABLE>
<CAPTION>
Dollar Amounts in Thousands RCON Bil Mil Thou

<S> <C> <C> <C>
1. Cash and balance due from depository institutions:
a. Noninterest-bearing balances and currency and coin 0081 572,869
b.Interest-bearing balances <F2> 0071 2,234

2. Securities /////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A 1754 598,406
b. Available-for-sale securities (from Schedule RC-B, column D 1773 1,740,866
3. Federal funds sold and securities purchased under agreements to resell: 1350 201,874
4. Loans and lease financing receivables: /////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCON 2122 1,449,605 /////////////////
b. LESS: Allowance for loan and lease losses . . . . . . . . . . RCON 3123 17,722 /////////////////
c. LESS: Allocated transfer risk reserve . . . . . . . . . . . . RCON 3128 0 /////////////////
d. Loans and leases, net of unearned income, /////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 2,151,301
5. Trading assets (from Schedule RC-D) 3545 72,923
6. Premises and fixed assets (including capitalized leases) 2145 197,162
7. Other real estate owned (from Schedule RC-M) 2150 363
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 0
9. Customers' liability to this bank on acceptances outstanding 2155 9,345
10. Intangible assets (from Schedule RC-M) 2143 24,963
11. Other assets (from Schedule RC-F) 2160 141,829
12. Total Assets (sum of items 1 through 11) 2170 5,714,135

LIABILITIES
13. Deposits /////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E) 2200 4,118,147
(1) Noninterest-bearing <F1> . . . . . . . . . . RCON 6631 740,423 /////////////////
(2) Interest-bearing . . . . . . . . . . . . . RCON 6636 2,308,028 /////////////////
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs /////////////////
(1) Non-interest-bearing /////////////////
(2) Interest-bearing /////////////////
14. Federal Funds purchased and securities sold under agreements to repurchase: /////////////////
a. Federal funds purchased 2800 830,196
15. a. Demand notes issued to the U. S. Treasury 2840 1,106
b. Trading liabilities (from Schedule RC-D) 3548 48
16. Other borrowed money: /////////////////
a. With original maturity of one year or less 2332 150,000
b. With original maturity of more than one year 2333 0
17. Mortgage indebtedness and obligations under capitalized leases 2910 0
18. Bank's liability on acceptances executed and outstanding 2920 9,345
19. Subordinated notes and debentures 3200 0
20. Other liabilities (from Schedule RC-G) 2930 136,554
21. Total liabilities (sum of items 13 through 20) 2948 5,245,396
/////////////////
22. Limited-life preferred stock and related surplus 3282 0
EQUITY CAPITAL /////////////////
23. Perpetual preferred stock and related surplus 3838 0
24. Common stock 3230 16,500
25. Surplus (exclude all surplus related to preferred stock) 3839 124,322
26. a. Undivided profits and capital reserves 3632 331,805
b. Net unrealized holding gains (losses) on available-for-sale securities 8434 (3,888)
27. Cumulative foreign currency translation adjustments /////////////////
28. Total equity capital (sum of items 23 through 27) 3210 468,739
29. Total liabilities, limited-life preferred stock, and equity capital /////////////////
(sum of items 21, 22 and 28) 3300 5,714,135
<F1>
Includes cash items in process of collection and unposted debits.
<F2>
Includes time certificates of deposit not held for trading.
</F>

</TABLE>

Exhibit 25B

FORM T - 1

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)

COMMERCE BANK, NATIONAL ASSOCIATION
(exact name of trustee as specified in its charter)

NATIONAL BANKING ASSOCIATION
(State of incorporation if not a national bank)

44-0206815
(I.R.S. employer identification No.)
1000 WALNUT STREET, KANSAS CITY, MISSOURI
(Address of principal executive offices)

64106
(Zip Code)

William E. Ekey
922 Walnut Street, Kansas City, MO 64106 (816) 234-2102
(Name, Address and telephone number of agent for service)

Farmland Industries, Inc.
(Exact name of obligator as specified in its charter)
Kansas
(State or other jurisdiction of incorporation or organization)

44-0209330
(I.R.S. Employer Identification No.)
3315 North Oak Trafficway, Kansas City, Missouri
(Address of principal executive offices)

64116
(Zip Code)
Subordinated Debt Securities
(Title of the indenture securities)

ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Kansas City,
Kansas City, Missouri
Federal Deposit Insurance Corporation
Washington, D.C.

(b) Whether it is authorized to exercise corporation trust
powers.
Yes. As authorized by the Comptroller of the Currency,
effective June 30, 1972. Previously organized as a trust
company under the Laws of the State of Missouri.

ITEM 2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
If the obligor or any underwriter for the obligor is an affiliate
of the trustee, describe each such affiliation.
NONE

ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting
securities of the trustee:
As of November 30, 1999

___________________________________________________________________________
COL. A. COL. B.
Title of class Amount Outstanding

Capital Stock - par $20 900,000 Shares
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
If the trustee is a trustee under another indenture under which
any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, furnish the following information:
(a) Title of the securities outstanding under each such
other indenture.
FARMLAND INDUSTRIES, INC.
(F.K.A. Consumers Cooperative Association)
Subordinated Capital Investment Certificates (under Indenture dated
July 29, 1974) 9%, due 15 years from date of issue(18th Indenture)

and
Subordinated Capital Investment Certificates (under Indenture dated
November 29, 1976) 9-1/2%, due 20 years from date of issue (21st Indenture)
and

Subordinated Capital Investment Certificates (under Indenture dated
October 24, 1978, as amended by Supplemental Indenture dated December 21,
1978) 9-1/2%, due 20 years from date of issue (23rd Indenture)
and

Subordinated Capital Investment Certificates (under Indenture dated
October 24, 1979) 10-1/2%, due 25 years from date of issue (26th Indenture)
and

Subordinated Capital Investment Certificates (under Indenture dated
November 8, 1984) due 5 years from date of issue (34th Indenture)
and

Subordinated Capital Investment Certificates (under Indenture dated
November 8, 1984) due 10 years from date of issue (35th Indenture)
and

Subordinated Capital Investment Certificates (under Indenture dated
November 8, 1984) due 20 years from date of issue (36th Indenture)
and

Subordinated Monthly Income Capital Investment Certificates
(under Indenture dated November 8, 1984) due 10 years from date
of issue (37th Indenture)
and

Subordinated Individual Retirement Account Certificates (under
Indenture dated November 8, 1984) due 10 years from date of issue
(38th Indenture)
and

Subordinated Monthly Income Capital Investment Certificates
(under Indenture dated November 11, 1985) due 5 years from date
of issue (39th Indenture)
and

Subordinated Debenture Bonds, Series A-H (under subordinated
Indenture dated as of December 4, 1997) (41st Indenture)
(b) A brief statement of the facts relied upon as a basis
for the claim that no conflicting interest within the
meaning of Section 310 (b) (1) of the Act arises as a
result of the trusteeship under any such other
indenture, including a statement as to how the
securities will rank with the securities issued under
such other indenture.
The securities issued, or to be issued, under the
indentures named herein are wholly unsecured and rank
equally with each other without priority.

[The remainder of this page was intentionally left blank.]

ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH
OBLIGOR OR UNDERWRITERS.
If the trustee or any of the directors or executive officers of he
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor,
identify each such person having any such connection and state the nature of
each such connection.
H. D. Cleberg, President and CEO of Farmland Industries, Inc. is a
director of Commerce Bank of Kansas City, N.A.

ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
Furnish the following information as to the voting securities of
the trustee owned beneficially by the obligor and each director, partner
and executive officer of the obligor.
As of November 30, 1999

___________________________________________________________________________
COL. A. COL. B. COL. C. COL. D.
Amount Percentage of voting
Name of Title of owned securities represented by
owner class beneficially amount given in Col. C.

NONE

ITEM 7. VOTING SECURITIES OWNED BY UNDERWRITERS OR THEIR OFFICIALS.
Furnish the following information as to the voting securities
of the trustee owned beneficially by each underwriter for the
obligor and each director, partner, and executive officer or
each underwriter.
As of November 30, 1999

___________________________________________________________________________
COL. A. COL. B. COL. C. COL. D.
Amount Percentage of voting
Name of Title of Owned securities represented
owner class beneficially by amount given in Col. C.

NONE

ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Furnish the following information as to the securities of the
obligor owned beneficially or held as collateral security for
obligations in default by the trustee.
As of November 30, 1999

___________________________________________________________________________
COL. A. COL. B. COL. C. COL. D.
Whether the Amount owned Percent of
securities are beneficially or held as class represented
Title of voting or non- collateral security for by amount given
class voting securities obligations in default in Col. C.

NONE

ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
If the trustee owns beneficially or holds collateral security
for obligations in default any securities of an underwriter
for the obligor, furnish the following information as to each
class of securities of such underwriter any of which are so
owned or held by the trustee.
As of November 30, 1999

__________________________________________________________________________
COL. A. COL. B. COL. C. COL. D.
Amount owned beneficially Percent of
Name of issuer or held as collateral class represented
and Amount security for obligations by amount given
title of class outstanding in default by trustee in Col. C.

NONE
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting securities or the obligor
or (2) is an affiliate, other than a subsidiary or the obligor, furnish the
following information as to the voting securities of such person.
As of November 30, 1999

___________________________________________________________________________
COL. A. COL. B. COL. C. COL. D.
Amount owned beneficially Percent of
Name of issuer or held as collateral class represented
and Amount security for obligations by amount given
title of class outstanding in default by trustee in Col. C.

NONE

ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A
PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF
THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such person
any of which are so owned or held by the trustee.
As of November 30, 1999

NONE
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE
Except as noted in the instructions, if the obligor is indebted to
the trustee, furnish the following information:
__________________________________________________________________________ COL.
A. COL. B. COL. C
Nature of Indebtedness Amount Outstanding Date Due

Equipment Lease $ 34,352 7/1/01
Unsecured Line of Credit 1,215,592 12/29/99
Unsecured Line of Credit 2,625,000 12/09/99
Unsecured Line of Credit 1,400,000 12/06/99
Unsecured Line of Credit 1,519,432 1/04/00

ITEM 13. DEFAULTS BY THE OBLIGOR
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default
There is not currently, nor has there been a default with
respect to the securities under the indentures.
(b) If the trustee is a trustee under another indenture under which
any other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether thee has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
There has been no default under any of the securities for
which the Trustee is a Trustee under any other indenture.

ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS
If any underwriter is an affiliate of the trustee, describe each
such affiliation.

No underwriter is an affiliate of the trustee.
ITEM 15. FOREIGN TRUSTEE
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be qualified
under the Act.
Not applicable.

ITEM 16. LIST OF EXHIBITS:
1. A copy of the articles of association of the trustee as
now in effect.
2. A copy of the certificate of authority of the trustee to
commence business, if not contained in the articles of
association.
3. A copy of the authorization of the trustee to exercise
corporate trust powers.
4. A copy of the existing By-Laws of the trustee or instruments
corresponding thereto.
5. A copy of each indenture referred to in Item 4 hereof.
6. The consents of the trustee required by Section 321(b)
of the Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of the
supervising examining authority.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Commerce Bank, National Association, a banking association organized
and existing under the laws of the United States, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Kansas City, and State of Missouri, on the 13th
day of December, 1999

COMMERCE BANK,
NATIONAL ASSOCIATION

By /s/William E. Ekey
William E. Ekey
Vice-President
EXHIBIT 1

COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT
ARTICLES OF ASSOCIATION

FIRST. The title of this Association shall be Commerce Bank, National
Association.

SECOND. The main office of the Association shall be in the City of Kansas
City, County of Jackson, State of Missouri. The general business of the
Association shall be conducted at its main office and its branches.

THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five shareholders, the exact number of
Directors within such minimum and maximum limits to be fixed and determined from
time to time by resolution of a majority of the full Board of Directors or by
resolution of the shareholders at any annual or special meeting thereof. Unless
otherwise provided by the laws of the United States, any vacancy in the Board of
Directors for any reason, including an increase in the number thereof, may be
filled by action of the Board of Directors.

FOURTH. The annual meeting of the shareholders for the election of
Directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office or such other place as the Board
of Directors may designate, Board of Directors may designate, on the day of
each year specified therefor in the By-Laws, but if no election is held on
that day, it may be held on any subsequent day according to the provisions of
law; and all elections shall be held according to such lawful regulations as
may be prescribed by the Board of Directors.

Nominations for election to the Board of Directors may be made by the Board
of Directors or by any shareholder of any outstanding class of capital stock of
the bank entitled to vote for election of directors.

FIFTH. The authorized amount of capital stock of this Association shall be
100,000 shares of common stock of the par value of one hundred dollars ($100.00)
each; but said capital stock may be increased or decreased from time to time, in
accordance with the provisions of the laws of the United States.

No holder of shares of the capital stock of any class of the corporation
shall have any preemptive or preferential right of subscription to any shares of
any class of stock of the corporation, whether now or hereafter authorized, or
to any obligations convertible into stock of the corporation, issued or sold,
nor any right of subscription to any thereof other than such, if any, as the
Board of Directors, in its discretion, may from time to time determine and at
such price as the Board of Directors may from time to time fix.

The Association, at any time and from time to time, may authorize and issue
debt obligations, whether or not subordinated, without the approval of the
shareholders.

SIXTH. The Board of Directors shall appoint one of its members President
of this Association, who shall be Chairman of the Board, unless the Board
appoints another director to be the Chairman. The Board of Directors shall have
the power to appoint one or more Vice Presidents; and to appoint a Cashier and
such other officers and employees as may be required to transact the business of
this Association.

The Board of Directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all By-Laws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.

SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of Kansas City,
Missouri, without the approval of the shareholders, and shall have the power to
establish or change the location of any branch or branches of the Association to
any other location without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency.

EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.

NINTH. The Board of Directors of this Association, or any shareholder
owning, in the aggregate, not less than 25 per cent of the stock of this
Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall
be given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting to each shareholder of record at his address as shown
upon the books of this Association.

TENTH. This Association shall, to the fullest extent permissible under The
General and Business Corporation Law of Missouri, (a) indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, other than an action by or in the right
of the corporation, by reason of the fact that such person is or was a director,
officer or employee of this Association, or is or was serving at the request of
this Association as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Association, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, and (b) indemnify any person who was or is a party or is
threatened to be made a party to any threatened pending or completed action or
suit by or in the right of the Association to procure a judgment in its favor by
reason of the fact that such person is or was a director, officer or employee of
the Association or is or was serving at the request of the Association as a
director, officer or employee of another corporation against expenses and
amounts paid in settlement actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Association, and indemnification shall be made in the event of
negligence or misconduct in the performance of duties to the corporation only to
the extent that the court in which the action or suit was brought determines
upon application that the person is fairly and reasonably entitled to indemnity
for such expenses; provided, however, that no such indemnification shall be
available to any person against expenses or civil money penalties arising from
final orders in an administrative proceeding or action instituted by an
appropriate bank regulatory agency assessing such civil money penalties or
requiring affirmative action by an individual or individuals in the form of
payments to this Association; and, provided further, that all advances to an
officer, director or employee to indemnify such party against expenses incurred
in an action instituted by the Comptroller of the Currency shall be made subject
to reimbursement if a final order is entered assessing civil money penalties or
requiring payments to be made to this Association and before any advances are
made the Board of Directors of this Association in good faith has determined in
writing that all the following conditions are met:
1. The officer, director or employee has a substantial likelihood of
prevailing on the merits;
2. In the event the officer, director or employee does not prevail, he or she
will have the financial capability to reimburse this Association; and
3. Payment of expenses by this Association will not adversely affect the
Association's safety and soundness;
and provided further, the Association may purchase insurance covering the
liability of its directors, officers, or employees, and pay the premiums
therefor, to the extent authorized under The General and Business Corporation
Law of Missouri, except that any such insurance shall exclude insurance coverage
for a formal order assessing civil money penalties against a bank director or
employee.

ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.

SECTION 10

This Agreement shall be ratified and confirmed by the affirmative vote of
shareholders of each of the merging banks owning at least two-thirds of its
capital stock outstanding at a meeting to be held on the call of the directors;
and the Merger shall become effective at the time specified in a merger approval
to be issued by the Comptroller of the Currency of the United States.

EXHIBIT 2

COPY OF THE CHARTER

EXHIBIT 3

COPY OF THE AUTHORIZATION OF THE TRUSTEE
TO EXERCISE CORPORATE TRUST POWERS

EXHIBIT 4

COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE
OR INSTRUMENTS CORRESPONDING THERETO
COMMERCE BANK, N.A., Kansas City, Missouri
By-Laws as amended thru November 30, 1999

BY-LAWS OF
COMMERCE BANK, NATIONAL ASSOCIATION
KANSAS CITY, MISSOURI

By-Laws as amended January 9, 1998

COMMERCE BANK, NATIONAL ASSOCIATION
KANSAS CITY, MISSOURI

ARTICLE I
STOCKHOLDERS' MEETING ARTICLE I
STOCKHOLDERS' MEETING
SECTION 1.1 STOCKHOLDERS' ANNUAL MEETINGSECTION 1.1 STOCKHOLDERS' ANNUAL
MEETING. The annual meeting of the stockholders of this Association for the
election of directors and the transaction of other business shall be held at the
offices of the Association in Kansas City, Missouri, on the third Tuesday of
February in each year, and shall be convened by the Chairman of the Board or the
President at the hour of ten o'clock A.M., or in lieu thereof the stockholders
may elect such directors and transact such other business by executing a
written document evidencing their unanimous consent thereto and causing
such written document to be filed in the official records of this
Association by the Secretary.

SECTION 1.2 SPECIAL MEETINGS OF STOCKHOLDERSSECTION 1.2 SPECIAL
MEETINGS OF STOCKHOLDERS. Special meetings of the stockholders may be called by
the Chairman of the Board or the President at any time, and shall be called
whenever so directed by resolution of the Board of Directors, or whenever
stockholders holding a majority of the capital stock issued and outstanding,
request either of them in writing so to do.

SECTION 1.3 NOTICESECTION 1.3 NOTICE. Notice of each annual and each
special meeting of stockholders shall be given by the Secretary as required by
law; provided, that notice of any meeting of stockholders may be waived by any
stockholder executing a written waiver of notice either before, during or after
such meeting. The execution of a document evidencing the unanimous consent of
all stockholders shall constitute the waiver of any notice required for the
taking of such action.

SECTION 1.4 VOTESSECTION 1.4 VOTES. Each share of stock shall
entitle its owner to one vote, and in case of election for Directors, each
stockholder shall have the right to cast as many votes in the aggregate as shall
equal the number of shares held by such stockholder, multiplied by the number of
directors to be elected, and may cast the whole number of votes, in person or by
proxy, for one candidate or distribute them among two or more.

SECTION 1.5 PROXIESECTION 1.5 PROXIES. Stockholders may vote at any
meeting of the stockholders by proxies duly authorized in writing; provided,
however, that each proxy shall be valid only for the specific meeting of
stockholders specified therein and at any adjournments of such meeting, and,
provided further, that no officer or employee of this Association shall act as
proxy. Proxies shall be dated and shall be filed with the records of the
meeting.

ARTICLE II
DIRECTORSARTICLE II DIRECTORS

SECTION 2.1 BOARD OF DIRECTORSSECTION 2.1 BOARD OF DIRECTORS. The
affairs of this Association shall be controlled and managed by a Board of
Directors (hereinafter referred to as the "Board") consisting of not less than
five nor more than twenty-five shareholders, the exact number within such
minimum and maximum limits to be fixed and determined from time to time by
resolution of a majority of the full Board or by resolution of the shareholders
at any meeting thereof; provided, however, that a majority of the full Board may
not increase the number of directors to a number which: (i) exceeds by more than
two the number of directors last elected by shareholders where such number was
fifteen or less; and (ii) exceeds by more than four the number of directors last
elected by shareholders where such number was sixteen or more, but in no event
shall the number of directors exceed twenty-five.

In addition the Board may appoint, from time to time, one or more
Advisory Directors to serve in advisory capacities only without the power
of final decision in matters concerning the business of this Association;
and the Board delegates to the Chairman, Vice Chairman or President the
power and authority to appoint, from time to time, one or more Advisory
Directors to serve in advisory capacities in the various market regions of
this Association and to establish compensation for such Advisory Directors.
Advisory Directors shall be subject to the same requirements relating
to retirement as other directors. Advisory Directors may also serve in an
advisory capacity on any committee; provided, that an Advisory Director may
not fill any committee position which, according to these By-Laws, must be
filled by a regular member of the Board.

SECTION 2.2 RETIREMENT OF DIRECTORSSECTION 2.2 RETIREMENT OF
DIRECTORS. No person shall be elected a director of this Association who
shall have attained the age of 70 years, and each person serving as a
director of this Association upon attaining the age of 70 years shall be
deemed to have submitted his resignation as a director of this Association
with such resignation to become effective on the day such director attains
the age of 70 years. Notwithstanding the foregoing, a director who is also
an officer of this Association shall retire from the Board on the date he
shall resign, retire or otherwise terminate his services as an officer of
this Association. The election or re-election by mistake or otherwise of a
director in violation of the aforesaid policy shall not, ipso facto, void
such election or re-election or nullify any actions such person might take
as a director.

SECTION 2.3 BOARD MEETINGSSECTION 2.3 BOARD MEETINGS. Regular
meetings of the Board shall be held at the office of the Association in Kansas
City, Missouri, or such other place as the Board shall determine, either within
or without the State of Missouri at the hour of 9:00 in the morning, on the
second Monday of each month, if not a legal holiday, and if the same be a legal
holiday, then on the first day following which is not a legal holiday. No
notice shall be required for any such regular monthly meetings of the Board, and
any and all business may be transacted thereat. Meetings of the Board or any
Committee of the Board may be conducted in a manner such that members of the
Board may participate by means of conference video or similar communications
equipment whereby all persons participating in the meeting can see and hear each
other, and participation in this manner shall constitute presence in person at
the meeting.

At the first regular meeting of the Board following a stockholders meeting
at which directors are elected, the Board shall first proceed with the
organization of the new Board and shall elect and appoint such officers as these
By-Laws or the Board may prescribe.

SECTION 2.4 SPECIAL BOARD MEETINGSSECTION 2.4 SPECIAL BOARD MEETINGS.
Special meetings of the Board may be held at any time on the call of the
Chairman of the Board, the Chairman of the Executive Committee, if one be
elected, or the President, or any three (3) directors.

SECTION 2.5 NOTICE OF BOARD MEETINGSSECTION 2.5 NOTICE OF BOARD
MEETINGS. While no notice shall be required for any regular meeting of the
Board, nevertheless, the Secretary, for the information of the directors, shall
mail to each director a written or printed notice specifying the time and place
of such meeting, addressed to him at his last known business address (postage
prepaid), not less than twenty-four (24) hours before the hour fixed for the
meeting. Except in the case of special meetings called by reason of emergency,
as hereinafter provided, notice of the time and place of special meetings shall
be given by the Secretary, in writing, delivered to, or by telephone message
communicated to, or by prepaid telegram deposited in the telegraph office at
Kansas City, Missouri, addressed to each director not less than twenty-four
(24) hours before the hour fixed for the meeting. Such notices and
communications may be addressed to or communicated to such director at his last
known place of business or residence, and shall be sufficient if delivered to,
addressed to, or communicated to, such place of business or residence. If in
the opinion of the Chairman of the Board, or the President, and of three
directors, the matters to be presented at such special meeting are so urgent in
their character as to constitute an emergency requiring a shorter notice, and
they shall so certify in writing, notice of such meeting may be given in the
same manner as hereinbefore provided, but shall be sufficient if given at
least one (l) hour before the hour fixed for the meeting. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at a
special meeting.

SECTION 2.6 QUORUM. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law, but a lesser
number may adjourn any meeting from time to time and the meeting may be held, as
adjourned, without further notice.

SECTION 2.7 VACANCIES. When any vacancy occurs among the directors the
remaining members of the Board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the Board or at a special meeting called for that purpose.

SECTION 2.8 COMPENSATION OF DIRECTORS. The compensation of Directors
and Advisory Directors of this Association for services shall be established by
the Board; provided that no such compensation shall be paid to any director who
shall at the time be receiving a salary from the Association, the parent of the
Association or any other subsidiary of the parent, as an officer thereof,
without express order from the Board.

ARTICLE III
COMMITTEES
SECTION 3.1 EXECUTIVE COMMITTEE. The Executive Committee shall consist
of five (5) directors, of whom the Chairman of the Board, the Chairman of the
Executive Committee, if one be so elected, and the President shall be members
and such other members of the Board as may be appointed, from time to time, by
the Chairman of the Board with the approval of the Board.

The Executive Committee shall have, and exercise, all the powers of the
Board during the intervals between meetings of the Board, including the power to
control the conduct of the Association's business, and full power to appoint
committees and prescribe their duties, and to direct the actions of all
officers, agents and employees of the Association.

The Executive Committee shall meet at the office of the Association on such
days and at such hour as meetings of such Committee may be called, from time to
time, by any three members thereof, or by the Chairman of the Executive
Committee, the Chairman of the Board, or the President. Notices of meetings
shall be given in the same manner as is provided for in the case of special
emergency meetings of the Board. Three (3) members of the Executive Committee
shall constitute a quorum for the transaction of business. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at any
meeting of the Committee.

Minutes of the meetings of the Executive Committee shall be recorded in
chronological order in the same Minute Book of the Association in which the
minutes of the meetings of the stockholders and of the Board are recorded, and
shall be approved at the next succeeding meeting of the Board as the report of
that committee to the Board, together with any special report that said
Committee may wish to make to the Board not contained in said minutes.

SECTION 3.2 OTHER COMMITTEES. From time to time the Board may create
such other committees, consisting of such persons, as the Board may determine to
be necessary or desirable and may fix the powers and duties of any such
committee.

SECTION 3.3 COMPENSATION OF COMMITTEE MEMBERS. The compensation of
committee members for service shall be established by the Board for each meeting
attended; provided, that no such compensation shall be paid to any committee
member who shall at the time be receiving a salary from the Association, the
parent of the Association or any other subsidiary of the parent, as an officer
thereof, without express order from the Board.

ARTICLE IV
OFFICERS

SECTION 4.1 EXECUTIVE OFFICERS. The executive officers of this
Association shall be the Chairman of the Board, the Vice Chairman of the Board,
if one or more is so elected, the Chairman of the Executive Committee, if one be
so elected, the President, the Executive Vice Presidents and the Secretary. Any
person may hold two or more offices except the offices of President and
Secretary.

SECTION 4.2 CHAIRMAN OF THE BOARD. The Board shall elect one of its
members to be Chairman of the Board. He shall preside at all meetings of the
Board and shall supervise the establishment of policies adopted or approved by
the Board. He shall have general executive powers, including, by way of
illustration, the power to fix remuneration of officers, agents and employees;
to employ and dismiss any officer, agent or employee; and to assign officers,
agents and employees to duties in the various areas of the Association, as well
as the specific powers conferred by these By-Laws and shall also have and may
exercise such further powers and duties as may from time to time be conferred
upon, or assigned to him by the Board.

SECTION 4.3 VICE CHAIRMAN OF THE BOARD. The Board may elect one or more
of its members to the office of Vice Chairman of the Board. In the absence of
the Chairman, any Vice Chairman may preside at any meeting of the Board. The
Vice Chairman of the Board shall assist the Chairman of the Board in
establishing policies adopted or approved by the Board. A Vice Chairman of the
Board shall have such general executive powers as may be assigned by the
Chairman as well as specific powers conferred by these By-Laws, and shall also
have and may exercise such further powers and duties as may from time to time be
conferred upon or assigned to him by the Board

SECTION 4.4 CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Board may elect
one of its members to the office of Chairman of the Executive Committee, and
such officer shall preside over all meetings of the Executive Committee. In the
absence of the Chairman or any Vice Chairman of the Board, the Chairman of the
Executive Committee shall preside at any meeting of the Board. The Chairman of
the Executive Committee shall have such general executive powers as may be
assigned by the Chairman as well as specific powers conferred upon or assigned
to him by the Board.

SECTION 4.5 PRESIDENT. The Board shall elect one of its members to be
President of the Association. In the absence of the Chairman, any Vice
Chairman, or Chairman of the Executive Committee, the President shall preside at
any meeting of the Board. The President shall have such general executive
powers as may be assigned by the Chairman, and shall have and may exercise any
and all other powers and duties pertaining by law, regulation, or practice, to
the office of President, or imposed by these By-Laws, and shall also have and
may exercise such further powers and duties as may from time to time be
conferred upon or assigned to him by the Board.

SECTION 4.6 VICE PRESIDENT. The Board shall elect one or more Vice
Presidents and may classify one or more of such Vice Presidents so elected as
Executive Vice President, Senior Vice President or otherwise as the Board may
deem appropriate. The office of Executive Vice President shall be deemed
executive offices of the Association and the persons holding such office shall
be authorized to participate in the major policy making functions of the Asso-
ciation and shall additionally have such powers and duties as imposed by the
By-Laws or assigned or conferred from time to time by the Board, the Chairman of
the Board, a Vice Chairman or the President. Each Executive Vice President
shall have and may exercise any and all powers and duties pertaining to the
office of Executive Vice President as imposed by these By-Laws and shall also
have and may exercise such further powers and duties as may from time to time be
conferred upon or assigned to him by the Board, the Chairman of the Board, a
Vice Chairman or the President.

SECTION 4.7 SECRETARY. The Board shall elect a Secretary (who may also
be designated as Cashier) who shall be the Secretary of the Board and of the
Association. He shall attend the meetings of stockholders, the Board, and the
Executive Committee and keep minutes of said meetings and shall have custody of
the corporate records of the Association. He shall have custody of the seal of
the Association and shall have authority to affix the same to any instrument
executed on behalf of the Association and also to attest the same. He shall
also attend to the giving of all notices required by these By-Laws to be given
and shall have and may exercise any and all other powers and duties pertaining
by law, regulation or practice or imposed by these By-Laws or as may be assigned
to him, from time to time, by the Board. The Board may elect one or more
Assistant Secretaries, from time to time, as may appear to be Board to be
required or desirable to transact the business of the Association.

SECTION 4.8 GENERAL COUNSEL. The Board shall elect a General Counsel
who shall have charge of the legal business of the Association and shall appear
or provide for proper appearances for the Association in suits and proceedings
to which it is a party. He shall advise the Board, Executive Committee,
Chairman of the Board, President and other officers of the Association
concerning the affairs of the Association when by them requested. He shall also
have such other powers and duties as may be imposed by these By-Laws.

SECTION 4.9 CONTROLLER. The Board shall elect a Controller who shall
receive and take care of all monies, securities and evidences of indebtedness
belonging to the Association, keep full and complete accounts of receipts and
disbursements, and make reports thereof to the Executive Committee and the Board
as often as may be requested. He shall, under the direction of the Chairman of
the Board, a Vice Chairman, or the President, perform such other duties
pertinent to his office as they may require.

SECTION 4.10 OTHER OFFICERS. The Board may also elect, from time to time,
one or more individuals as "Officers" or "Corporate Officers" of this
Association and with respect to such Officers or Corporate Officers, the Board
may permit the additional use of community, market, group or division title by
such Officers or Corporate Officers. All such titles above the level of vice
president shall be approved by the Board. All titles of vice president and
below shall be conferred according to procedures adopted by the Director of
Human Resources. Such title designation shall not be deemed as conferring any
additional responsibility or authority on any such individual beyond that
approved in these By-Laws or by resolution of the Board.

SECTION 4.11 BONDS. All officers shall be bonded with such security and
approved in such manner as the Board or the Executive Committee may from time to
time direct.

SECTION 4.12 TENURE OF OFFICE. The officers of this Association shall be
elected by the Board annually at the annual meeting of the Board and such
officers as shall be elected to such offices shall continue in office for one
year and until their successors shall be elected, unless such officer shall
resign, become disqualified, or be removed. Persons may be elected officers or
be promoted to a different office at any meeting of the Board; provided, that
such person so elected shall continue in office only until the next annual
meeting of the Board at which all officers are to be elected or re-elected,
unless any such person shall resign, become disqualified, or be removed. The
Board shall have the power to remove any officer at any time and, in addition,
may designate by resolution, officers who shall have the authority to dismiss
any officer, agent or employee.

ARTICLE V
POWERS AND DUTIES OF OFFICERS

SECTION 5.1 REPRESENTATION. The Chairman of the Board, any Vice
Chairman, the President, the General Counsel, and such other officer or officers
of the Association as may be empowered so to do by the Board, or any one of
them, shall have power to act for, appear in behalf of, and represent this
Association before all Departments and Courts of the United States of America,
and any State, Territory or Possession thereof, and to execute general or
special powers of attorney for litigation in favor of lawyers, solicitors,
agents, or any other legal representatives, granting to them such powers and
authorization, whether ordinary or extraordinary, and with or without
limitation, which any such officer may deem advisable, including the power to
settle in or out of court, or to submit to arbitrators or other adjustment, any
question in which this Association may be interested; and to employ counsel and
direct the taking of any legal action in reference to any of the foregoing, or
any other matter or thing touching the interest of the Association.

SECTION 5.2 REAL ESTATE CONVEYANCES. All transfers and conveyances of
real estate, including releases of mortgages, deeds of trust and other real
estate interests held, or purportedly held, by the Association, may without any
further order of the Board be executed and delivered by the Chairman of the
Board, any Vice Chairman, the President, or any Executive Vice President and
such other Officers of the Association as the Board, by resolution, may appoint,
sealed with the corporate seal of the Association and, if required, attested by
the Secretary or one of the Assistant Secretaries of the Association.

SECTION 5.3 VOTING OF SECURITIES. Unless otherwise ordered by the Board
or the Executive Committee, the Chairman of the Board, any Vice Chairman, the
President, any Executive Vice President, or such other Officers of this full
power and authority in behalf of the Association to attend, and to act and to
vote at any meeting of the stockholders of any corporation in which the
Association may hold stock, in its own capacity or in any fiduciary capacity,
and in connection with such meeting each of said officers shall possess and may
exercise in behalf of the Association any and all rights and powers incident to
the ownership of such stock, including the power to sign proxies therefor;
provided, that any proxy granted with respect to stock held in a fiduciary
capacity shall be limited to a single meeting and shall either be limited to
voting for trustees or directors or shall direct how such proxy holder shall
vote.

SECTION 5.4 FORECLOSURE OF COLLATERAL. The Chairman of the Board, any
Vice Chairman, the President, and any Executive Vice President, and such other
Officers of this Association as the Board, by resolution, shall appoint, shall
each have power and authority for and on behalf of this Association to request,
order or direct the foreclosure of any mortgage, deed of trust or other security
agreement in favor of the Association held or owned by the Association (or held
by this Association in trust) securing a loan or loans or other obligations and
to exercise any or all of the options and powers inuring to this Association
under the provisions of such mortgages, deeds of trust or security agreements or
under the terms of the note or notes thereby secured, including the power and
authority to appoint and designate a successor trustee or trustees as
substitutes for the trustee or trustees named in any such mortgage or deed of
trust.

SECTION 5.5 REFUSAL TO SERVE AS TRUSTEE. The Chairman of the Board, any
Vice Chairman, the President, and any Executive Vice President, or such Officers
as the Board, by resolution, shall appoint, shall each have power and authority
to act for the Association in refusing or declining to act as trustee under any
mortgage or deed of trust securing a loan on real or personal property in which
this Association is named or designated as trustee, and/or to resign as such
trustee, and to make, execute and deliver in the name of, and for and in behalf
of the Association, appropriate instruments, in writing, evidencing such refusal
or declination to so act or such resignation.

SECTION 5.6 AUTHENTICATION OF SECURITIES. The Chairman of the Board,
any Vice Chairman, the President, any Executive Vice President, or such Officers
as the Board, by resolution shall approve, shall each have authority to
countersign or authenticate bonds or certificates on behalf of this Association
as Trustee, and to sign, in behalf of this Association as Trustee,
authentications or certifications of this Association as Trustee under any
mortgage, deed of trust or other agreement securing an issue of bonds,
debentures, notes or other obligations of any corporation, association or
individual, or as registrar or transfer agent, and also certificates of deposit
for stock, bonds, debentures, notes or other obligations, interim certificates
and trust certificates. The Chairman of the Board, any Vice Chairman, the
President, any Executive Vice President, and such Officers as the Board, by
resolution, shall appoint, or the Secretary and any Assistant Secretary shall
each have authority to countersign or authenticate bonds or certificates on
behalf of this Association where this Association is the direct purchaser of the
issue and to execute any closing documents required for the purchase of such
bonds.

SECTION 5.7 TRUST DIVISION. The Chairman of the Board shall assign an
Officer who shall have and may exercise, subject to the control of the Chairman,
a Vice Chairman or the President, general supervision over the Trust Division.
Such Officer together with such other Officers designated by the Board and
assigned to the Trust Division and each of them, may represent the Association
in any of the business of said division. All securities and funds held by the
Association in a fiduciary capacity and the accounts of each trust or other
fiduciary relationship shall be held separate and apart from those of every
other and entirely separate and apart from the assets of the Association, and
such securities shall be subject to the joint control of two Officers or, if
designated by the Officer having general supervision of the Trust Division,
employees of the Trust Division.

SECTION 5.8 TRUSTS. The Chairman of the Board, any Vice Chairman, the
President, any Executive Vice President, the Officer having general supervision
of the Trust Division, or such other Officers as the Board may designate within
the Trust Division shall each have authority, for and on behalf of this
Association, to accept or reject any and all trusts or other fiduciary duties or
responsibilities which may be offered to this Association, and in connection
therewith to execute, on behalf of this Association, all trust agreements or
other appropriate instruments and the Secretary, or any Assistant Secretary of
this Association, is authorized to affix the seal of this Association to any
such trust agreement or other instrument which has been duly signed by any such
officer.

SECTION 5.9 SUBSTITUTION OF ATTORNEY-IN-FACT. Whenever this Association
has been, or may be appointed Attorney-in-Fact, with power of substitution in
and about the transfer of shares of capital stock, bonds or other instruments
commonly referred to as securities of any corporation or other entity, the
Chairman of the Board, any Vice Chairman, the President, or any Executive Vice
President or such other Officers as the Board shall, by resolution, designate,
may substitute, by a proper written instrument, an attorney-in-fact to act in
the place and stead of this Association in and about such transfer.

SECTION 5.10 PURCHASE OR TRANSFER OF SECURITIES. The Chairman of the
Board, any Vice Chairman, the President, and any Executive Vice President, the
Controller or such other Officers as the Board shall, by resolution, designate,
shall each have authority for and in behalf of the Association, and in its name,
to sell, assign and transfer, or to purchase or otherwise acquire, directly or
through a cash account of this Association established or maintained with a
brokerage firm selected by such person, any and all shares of the capital stock,
bonds, or other instruments commonly referred to as securities, and notes,
mortgages and deeds of trust issued by any corporation or other entity and held
or to be held by this Association in its own capacity or in any fiduciary
capacity; and the Chairman of the Board, any Vice Chairman or the President may
designate, in writing, from time to time, such other officers or employees as
shall be authorized to exercise the powers granted by this Section.

SECTION 5.11 BANKING RELATIONSHIPS. The Chairman of the Board, any Vice
Chairman and the President shall each have authority for and in behalf of the
Association to designate from time to time institutions with which this
Association may maintain checking or other depository accounts, safekeeping
accounts, clearing accounts or such other form of account as may be deemed
necessary or appropriate for the conduct of the Association's business, whether
any such account shall be in the name of this Association or in the name of this
Association in any custodial or fiduciary capacity, and to designate from time
to time such individuals, who may be officers or employees of this Association,
as shall be authorized to effect transactions with respect thereto, and with
respect to any and all accounts or transactions with the Federal Reserve Bank ,
including, without limitation, the signing of checks, drafts or other orders
with respect to any depository account to effect the deposit or withdrawal of
funds, securities, instruments or other documents held in or subject to any such
account, including delivery instructions with respect to any safekeeping,
clearing or other form of account, and any such transactions as may be effected
by a designated individual shall include authority to effect transfers of funds,
securities, instruments or other documents subject to any such account by wire
or telephone instruction.

ARTICLE VI
STOCK

SECTION 6.1 STOCK CERTIFICATES--TRANSFERRED. The capital stock of this
Association shall be represented by certificates signed by the Chairman of the
Board, any Vice Chairman, the President, or any Executive Vice President, and
attested by the Secretary or an Assistant Secretary, with the corporate seal
affixed, and shall be transferable only on the books of the Association, in
person or by attorney duly authorized according to law; and when stock is
transferred, the certificate therefor shall be returned to the Association and
canceled, and new certificate issued.

SECTION 6.2 STOCKHOLDERS RECOGNIZED. Until stock shall be transferred,
as provided in Section 6.l, no person shall be recognized by this Association as
the owner of said stock, except the person to whom the same was issued, and in
whose name the same stands on the books of the Association, except as provided
by law in case of executor, administrator, guardian or trustee.

SECTION 6.3 RECORD DATE. With respect to each meeting of stockholders,
each declaration and payment of a dividend or distribution, or each declaration
and grant of allotment of rights, the Board may fix a date preceding the date on
which such event affecting the rights of any stockholder shall occur as a record
date for the determination of the stockholders entitled to notice of and to vote
at any such meeting or entitled to receive payment of any such dividend or to
any such allotment of rights or to exercise the rights in respect of any change,
conversion or exchange of capital stock, and in such case such stockholders and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to notice of and to vote at such meeting or to receive payment
of such dividend or to receive such allotment of rights or to exercise such
rights, as the case may be, notwithstanding any transfer of any stock on the
books of the Association after any such record date fixed as aforesaid. Any
such date as may be fixed by the Board as the record date shall not precede the
date of any meeting of stockholders, the date for the payment of any dividend or
the date for allotment of rights or the date when any change, conversion or
exchange of capital stock shall go into effect by more than fifty days. If the
Board shall not have set a record date for the determination of its stockholders
entitled to participate in the event for which a record date be established, the
date on which notice of the meeting is mailed or the date such dividend is
declared or other right announced shall be the record date for such
determination of stockholders so entitled to participate.

ARTICLE VII
MISCELLANEOUS

SECTION 7.1 FISCAL YEAR. The fiscal year of this Association shall end
on the 31st day of December in each year, and at the close of each fiscal year
it shall be the duty of the Board to cause a complete and accurate statement of
the financial condition of the Association to be made forthwith from the books
thereof, a copy of which shall be submitted to the stockholders at the annual
meeting.

SECTION 7.2 SEAL. The Association shall have a corporate seal which
shall have inscribed around the upper circumference thereof "Commerce Bank" and
around the lower circumference thereof "National Association" and elsewhere
thereon shall bear the word "Seal".

SECTION 7.3 BUSINESS HOURS. The main office and all other facilities of
the Association shall be open for the transaction of business on such days and
during such hours as the Board or the Executive Committee may in its discretion
determine. The Board of Directors, or the Executive Committee, however, may in
its discretion change said hours and days, or close the office entirely,
whenever the interests of the Association will be best served thereby, or
circumstances shall render the same proper.

SECTION 7.4 AMENDMENTS. The Board shall have the power to make, alter,
amend, or repeal the By-Laws of this Association from time to time.
Exhibit 5

COPIES OF INDENTURE

Exhibit 5
Page 1
COPIES OF INDENTURE

Copies of the Indentures referred to in Item 4 hereof have heretofore been filed
with the Securities and Exchange Commission under the Securities Act of 1933 and
the Securities Exchange Act of 1934 as Exhibits to the Registration Settlements
of the Farmland Industries, Inc. (formerly Consumers Cooperative Association).
The copies of Indentures listed in this Exhibit 5 hereof are hereby incorporated
by reference to the Exhibits to the Registration Statements which are listed as
items (a) through (k) as follows:
(a) Trust Indenture dated July 29, 1974, as amended January 29, 1982
(Form S-1, No. 2-51757 effective October 22, 1974)
9%, 15-Year Subordinated Capital Investment Certificates
(b) Trust Indenture dated November 29, 1976, as amended January 29,
1982. (Form S-1, No. 2-55767 effective January 10, 1977).
9-1/2%, 20-Year Subordinated Capital Investment Certificates
(c) Trust Indenture dated October 24, 1978, as amended December 21,
1978. (Form S-1, No. 2-63106)
9-1/2% 20-Year Subordinated Capital Investment
Certificates
(d) Trust Indenture dated October 24, 1979, as amended January 29,
1982. (Form S-1, No. 2-66090 effective January 3, 1980).
10-1/2%, 25-Year Subordinated Capital Investment
Certificates
(e) Trust Indenture dated November 8, 1984.
(Form S-1, No. 2-94400 effective December 31, 1984).
5-Year Subordinated Capital Investment Certificates
(f) Trust Indenture dated November 8, 1984.
(Form S-1, No. 2-94400 effective December 31, 1984).
10-Year Subordinated Capital Investment Certificates
(g) Trust Indenture dated November 8, 1984.
(Form S-1, No. 2-94400 effective December 31, 1984).
20-Year Subordinated Capital Investment Certificates
(h) Trust Indenture dated November 8, 1984
(Form S-1, No. 2-9440 effective December 31, 1984)
10-Year Subordinated Monthly Income Capital Investment
Certificates
(i) Trust Indenture dated November 8, 1984
(Forms S1, No. 2-94400 effective December 31, 1984)
10-year IRA Certificates
(j) Trust Indenture dated November 11, 1985
(Form S-1, No. 33-1970, effective December 3, 1985)
5-Year Subordinated Monthly Income Capital Investment
Certificates
(k) Subordinated Indenture dated as of December 4, 1997
(Form S-1, No. 333-40759, effective December 15, 1997)
Exhibit 6

CONSENTS OF THE TRUSTEE REQUIRED
BY SECTION 321(B) OF THE ACT
Exhibit 6

CONSENT OF THE TRUSTEE

Pursuant to Section 321(b) of the Trust Indenture Act, Commerce
Bank, National Association, hereby consents to the release of reports of
examinations by Federal, State, Territorial or District authorities to the
Securities and Exchange Commission upon request therefor. Dated this 13th day
of December, 1999.

COMMERCE BANK,
NATIONAL ASSOCIATION, Trustee

By: /s/ William E. Ekey
William E. Ekey, Vice-President

EXHIBIT 7

COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE
PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS
OF THE SUPERVISING EXAMINING AUTHORITY

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COMMERCE BANK N.A. (KANSAS CITY)
STATEMENT OF CONDITION
SEPTEMBER 30, 1999

ASSETS
Loans, less allowance for loan losses of 102,110,000 $ 6,286,990,000
Investment Securities:
US Government and Federal Agency obligations $843,202,000
Obligation of states and political subdivisions 33,990,000
Other securities 995,896,000 1,873,088,000
Federal funds sold and securities purchased under
agreements to resell 167,836,000
Trading account securities 21,720,000
Net earning assets $8,349,634,000
Cash and due from banks 530,610,000
Land, buildings and equipment 172,129,000
Customers' acceptance liability 2,405,000
Other assets 218,683,000

Total Assets $9,273,461,000

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $1,440,886,000
Savings and interest bearing demand 4,463,879,000
Time 1,915,535,000 $7,820,300,000

Federal funds purchased and securities sold under 591,937,000
agreements to repurchase
Accrued expenses and other liabilities 149,106,000

Acceptances outstanding 2,405,000
Total Liabilities $8,563,748,000

Stockholders' equity:
Capital stock 10,000,000
Capital surplus 539,013,000
Undivided profits 160,700,000
Total Stockholder's equity 709,713,000

Total liabilities and stockholders' equity $9,273,461,000
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