# UNITED STATES

# SECURITIES AND EXCHANGE COMMISSION

# Washington, D.C. 20549

# FORM 10-Q

# or

# Commission File Number: 2-67985

`Kansas                                         44-0209330
         (State of incorporation)                   (I.R.S. Employer Identification No.)

        3315 North Oak Trafficway
          Kansas City, Missouri                                  64116-0005
 (Address of principal executive offices)                        (Zip Code)

                   Registrant's telephone number, including area code: 816-459-6000`

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past
90 days.  Yes [X]   No [ ]

# PART I - FINANCIAL INFORMATION

## Item 1. FINANCIAL STATEMENTS

# FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

# CONDENSED CONSOLIDATED BALANCE SHEETS

# (UNAUDITED)

# ASSETS

`1999                  2000
                                                                 --------------        --------------
                                                                      (Amounts in Thousands)
  Accounts receivable - trade................................ $      794,237        $       674,878
  Inventories (Note 2).......................................        840,504                886,780
  Deferred income taxes......................................         49,495                 49,615
  Other current assets.......................................        153,833                111,453
                                                              -----------------     -----------------

        Total Current Assets................................. $    1,838,069        $     1,722,726
                                                              -----------------     -----------------


Investments and Long-Term Receivables (Note 5)...............        329,729                423,632
                                                              -----------------     -----------------


Property, Plant and Equipment:
  Property, plant and equipment, at cost..................... $    1,744,252        $     1,788,902
     Less accumulated depreciation and
     amortization............................................        911,049                960,043
                                                                ---------------        --------------

  Net Property, Plant and Equipment.......................... $      833,203        $       828,859
                                                              -----------------     -----------------


Other Assets                                                  $      256,648        $       276,524
                                                              -----------------     -----------------

Total Assets                                                  $    3,257,649        $     3,251,741
                                                              =================     =================`

# FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

# CONDENSED CONSOLIDATED BALANCE SHEETS

# (UNAUDITED)

# LIABILITIES AND EQUITIES

`1999               2000
                                                                     -------------       -------------
                                                                           (Amounts in Thousands)
Current Liabilities:
    Checks and drafts outstanding....................................  $    76,128        $    99,167
    Short-term notes payable ........................................      546,180            752,299
    Current maturities of long-term debt ............................       44,771             46,027
    Accounts payable - trade.........................................      463,296            368,405
    Other current liabilities........................................      257,255            283,679
                                                                       -------------      ------------

         Total Current Liabilities...................................  $ 1,387,630        $ 1,549,577
                                                                       -------------      ------------

Long-Term Liabilities:
    Long-term borrowings (excluding current maturities)..............      808,413            642,769
    Other long-term liabilities......................................       40,212             39,889
                                                                       -------------      ------------

         Total Long-Term Liabilities.................................      848,625            682,658
                                                                       -------------      ------------

Deferred Income Taxes................................................       63,058             66,485
                                                                       -------------      ------------

Minority Owners' Equity in Subsidiaries..............................       41,009             50,783
                                                                       -------------      ------------

Net (Loss) (Note 1)..................................................          -0-           (11,584)
                                                                       -------------      ------------

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                 27
    Common shares, $25 par value--Authorized
      50,000,000 shares..............................................      508,029            527,728
    Earned surplus and other equities................................      309,229            286,067
                                                                       -------------      ------------

         Total Capital Shares and Equities...........................  $   917,327        $   913,822
                                                                       -------------      ------------



Contingent Liabilities and Commitments (Note 3)



Total Liabilities and Equities.......................................  $ 3,257,649        $ 3,251,741
                                                                       =============      ==================`

# FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

# CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

# (UNAUDITED)

`------------------------------------------
                                                                        May 31                  May 31
                                                                         1999                    2000
                                                                  --------------------     ------------------
                      (Amounts in Thousands)

Sales.........................................................  $       7,823,790        $       8,840,331
Cost of sales.................................................          7,487,634                8,473,560
                                                                --------------------     -------------------

Gross income..................................................  $         336,156        $         366,771
                                                                --------------------     -------------------

Selling, general and administrative expenses..................  $         359,002        $         360,446
                                                                --------------------     -------------------

Other income (deductions):
    Interest expense, net.....................................  $         (54,579)       $         (72,121)
    Other, net (Note 4).......................................             16,247                   33,466
                                                                 --------------------     --------------------
Total other income (deductions)...............................   $         (38,332)       $        (38,655)
                                                                 --------------------     --------------------

Loss before equity in net income of investees, minority owners'
     interest in net (income) of subsidiaries
     and income taxes.........................................   $        (61,178)        $         ( 32,330)

Equity in net income of investees (Note 5)....................              41,413                    33,668

Minority owners' interest in net (income)
    of subsidiaries...........................................             (8,121)                   (15,737)
                                                                 --------------------     --------------------

Loss before income taxes......................................   $        (27,886)        $          (14,399)

Income tax benefit                                                         16,228                      2,815
                                                                 --------------------     --------------------

Net loss                                                         $       (11,658)         $          (11,584)
                                                                 ====================     ====================`

# FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

# CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

`Three Months Ended
                                                               ------------------------------------
                                                                    May 31              May 31
                                                                     1999                2000
                                                               -----------------    ---------------
                       (Amounts in Thousands)

Sales......................................................... $   2,749,892      $     2,991,668
Cost of sales.................................................     2,635,599            2,860,349
                                                               ----------------     ---------------

Gross income.................................................. $     114,293      $       131,319
                                                               ----------------   -----------------

Selling, general and administrative expenses.................. $     123,178      $       122,934
                                                               ................   -----------------

Other income (deductions):
    Interest expense, net..................................... $    (19,540)      $      (23,314)
                      Other, net (Note 4).....................        3,978               38,424
                                                                ----------------   -----------------
Total other income (deductions)............................... $    (15,562)      $        15,110
                                                               ----------------   -----------------

 Income (loss) before equity in net income of investees,
      minority owners' interest in net (income) of subsidiaries
      And income taxes......................................... $    (24,447)      $        23,495

    Equity in net income of investees (Note 5) ...................    16,934                28,609

    Minority owners' interest in net (income)
        of subsidiaries...........................................    (3,975)                (6,352)
                                                                  ----------------   -----------------

    Income (loss) before income taxes.............................   (11,488)                45,752

    Income tax benefit (expense)..................................     4,124                 (8,698)
                                                                  ----------------   -----------------

    Net income (loss).............................................$   (7,364)       $        37,054
                                                                  ================   =================`

# FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

# CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

# (UNAUDITED)

`-------------------------------------------
                                                                        May 31                   May 31
                                                                         1999                     2000
                                                               -------------------       -----------------
                                                                         (Amounts in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................................   $       (11,658)         $      (11,584)
Adjustments to reconcile net loss to net cash provided by
  (used in) operating activities:
      Depreciation and amortization...........................            82,859                  79,337
      Equity in net (income) of investees.....................           (41,413)                (33,668)
      Other...................................................             7,590                 (35,443)
    Changes in assets and liabilities:
       Accounts receivable....................................           (19,594)                119,057
       Inventories............................................           (88,581)                (99,830)
       Other assets...........................................           (33,175)                 59,091
       Accounts payable.......................................           (12,703)                (94,891)
       Other liabilities......................................           (20,302)                 34,035
                                                               -------------------       -----------------
Net cash provided by (used in) operating activities...........   $      (136,977)         $       16,104
                                                               -------------------       -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..........................................   $       (82,036)         $      (73,625)
Distributions from joint ventures.............................            40,557                  17,793
Additions to investments and notes receivable.................           (40,052)                (39,410)
Acquisition of other long-term assets.........................           (23,138)                (27,622)
Proceeds from disposal of investments and notes receivable....            22,707                  67,761
Proceeds from sale of fixed assets............................             2,419                   5,407
Other.........................................................                66                      -0-
                                                               -------------------       -----------------
Net cash used in investing activities......................... $         (79,477)        $       (49,696)
                                                               -------------------       -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of patronage refunds................................. $         (23,714)        $        (6,054)
Payments for redemption of equities...........................            (9,439)                     (9)
Payments of dividends.........................................            (6,004)                 (6,004)
Proceeds from bank loans and notes payable....................         1,023,077               1,055,978
Payments on bank loans and notes payable......................          (899,927)             (1,053,593)
Proceeds from issuance of subordinated debt certificates......            81,348                  51,400
Payments for redemption of subordinated debt certificates.....           (13,240)                (28,830)
Increase of checks and drafts outstanding.....................            58,327                  23,039
Net decrease in demand loan certificates......................            (1,475)                 (1,048)
Other                                                                        167                  (1,287)
                                                               -------------------       -----------------
Net cash provided by financing activities..................... $         209,120         $        33,592
                                                               -------------------       -----------------


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-
                                                               -------------------       -----------------`

# NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

# (UNAUDITED)

## (1) Interim Financial Statements

Unless the context requires otherwise, (i) Farmland,
we, us and our refer 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.

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.

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 or loss 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 or loss 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.

Farmland does not provide for patronage refunds in our interim
financial statements as:

- we  determine  the amount of  members'  income and the amount of  members'  loss only after the end of the
     fiscal year;
- the Board of Directors, in its sole discretion, then determines the amount of
patronage refund, after consideration of member losses (if any), to be paid in
cash and the portion to be paid in Farmland equity (common stock, associate
member common stock and capital credits); and
- the amount of income appropriated to earned surplus is dependent on the amount
of patronage refunds and the handling of members losses (if any).

Therefore, the amount of net loss for the interim period
presented is reflected as a separate item in the accompanying unaudited
Condensed Consolidated Balance Sheet as of May 31, 2000.

## (2) Inventories

`August 31      May 31
                                                       1999         2000

                                                    (Amounts in Thousands)
Finished and in-process products..............  $    719,118    $   801,252
Materials.....................................        54,387         18,122
Supplies......................................        66,999         67,406
                                                -------------   ------------
                                                $    840,504    $   886,780
                                                =============   ============`

On September 1, 1999, we contributed our crude oil and
in-process petroleum inventories to Cooperative Refining, LLC in exchange for an
ownership 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 May 31, 2000, the carrying value of our remaining petroleum
inventories stated under the LIFO method (gasoline and distillates) was $40.6
million, which was approximately $22.2 million less than the market value of
these inventories. Also at May 31, 2000, we had reduced certain LIFO inventory
quantities as compared to quantities held at August 31, 1999. Management expects
that this reduction will continue through our fiscal year-end, resulting in
liquidation of LIFO inventory layers. For both the three months and nine months
ended May 31, 2000, the effect of these layer liquidations was to decrease cost
of goods sold and increase income before income taxes by approximately $2.4
million.

## (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. While
an appeal is possible, the IRS has informed our outside legal counsel that it
will not appeal the decision.

(b) Environmental Matters

Farmland is aware of probable obligations under state and
federal environmental laws at 45 properties. At May 31, 2000, we had an
environmental accrual in our Condensed Consolidated Balance Sheet for probable
and reasonably estimated costs for remediation of contaminated properties of
$12.2 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.

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 $12.0 million of costs in addition to the $12.2 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 May 31,
2000 (and are in addition to the $12.2 million accrual and the $12.0 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) Divestitures

During March 2000, we sold our direct equity interest in
Agriliance resulting in a pre-tax gain of $49.6 million. Also during our third
quarter, management reached an agreement with a third party to sell our pork
processing plant at Dubuque, Iowa. Accordingly, the assets related to this plant
were reduced to the agreed upon selling price and a $7.0 million pre-tax loss
was recognized. The sale of this plant was finalized during June.

Summarized financial information of investees accounted for by
the equity method for the nine months ended May 31, 1999 and May 31, 2000 is as
follows:

`May 31                   May 31
                                                       1999                     2000
                                              -----------------------  -----------------------
                                                          (Amounts in Thousands)
Net sales...................................... $         2,050,391      $          2,909,416
                                              ======================    ======================
Net income..................................... $            73,559      $            107,720
                                              ======================    ======================
Farmland's equity in net income................ $            41,413      $             33,668
                                              ======================    ======================`

- 50%  equity  interests  in  three   manufacturers  of  crop  nutrient  products,   Farmland  Hydro,  L.P.,
     SF Phosphates Limited Company and Farmland MissChem, Limited;
- beginning  January 1, 2000,  an  approximate  50% equity  interest  in UCB LLC,  which in turn holds a 50%
     equity interest in Agriliance LLC, an agronomy distribution and marketing venture;
- during the nine months ended May 31, 1999, a 50% equity  interest in a grain  marketer,  Concourse  Grain,
     LLC;
- during the nine months ended May 31, 2000, an approximate  42% equity  interest in  Cooperative  Refining,
     LLC, which operates two refineries; and
- during the nine months ended May 31, 2000, an approximate  25% equity  interest in  VantagePoint  Network,
     an Internet-based crop management information system.

`---------------------------------------------------------------------------
                                          Combined         Unallocated
                                         Segments      Corporate Expenses         Consolidated
                                       ------------     ---------------      -----------------
Sales & transfers                    $  8,082,799        $          -         $    8,082,799
Transfers between segments               (259,009)                  -               (259,009)
                                     --------------     ---------------      -----------------
Net sales                            $  7,823,790        $          -         $    7,823,790
                                     ==============     ===============      =================

Net income (loss)                    $    110,090        $   (121,748)        $      (11,658)
                                     ==============     ===============      =================


Total assets                         $  2,698,630        $    290,539         $    2,989,169
                                     ==============     ===============      =================`

`CONSOLIDATED SEGMENTS
                                      -------------------------------------------------------------------------
                                         Combined              Unallocated
                                         Segments          Corporate Expenses       Consolidated
                                      ----------------     -------------------     --------------
Sales& transfers                    $   9,862,608           $         -           $   9,862,608
Transfers between segments              (1,022,277)                    -              (1,022,277)
                                       -------------           -----------           -------------
Net sales                            $   8,840,331           $         -           $   8,840,331
                                       =============

Net income (loss)                    $     149,609           $  (161,193)          $     (11,584)
                                       =============           ===========           =============


Total assets                         $   2,914,705           $   337,036           $   3,251,741
                                       =============           ===========           =============

===================================================================================================================`

`INPUT AND OTHER SEGMENTS
                                     -------------------------------------------------------------------------------------
                                         Crop                                                  Other         Total Input
                                      Nutrients &                                           Operating        and Other
                                      Protection          Petroleum           Feed             Units          Segments
                                     --------------    ----------------    ------------     ------------    --------------
Sales &transfers                        $ 845,671           $ 661,025      $ 456,706        $ 284,149       $ 2,247,551
Transfers between segments                 (39,685)                (50)       (18,457)        (101,652)         (159,844)
                                     --------------    ----------------    ------------     ------------    --------------
Net sales                                $ 805,986           $ 660,975      $ 438,249        $ 182,497       $ 2,087,707
                                     ==============    ================    ============     ============    ==============

Net income (loss)                        $  21,515           $    (496)     $  12,717        $   3,406       $    37,142
                                     ==============    ================    ============     ============    ==============


Total assets                             $ 663,813           $ 425,507      $ 128,372        $ 166,110       $ 1,383,802
                                     ==============    ================    ============     ============    ==============`

`INPUT AND OTHER SEGMENTS
                                     -------------------------------------------------------------------------------------
                                         Crop                                                  Other         Total Input
                                      Nutrients &                                      Operating        and Other
                                      Protection          Petroleum           Feed             Units          Segments
                                     --------------    ----------------    ------------     ------------    --------------
Sales& transfers                        $ 768,529         $ 1,018,687       $ 503,307        $ 342,151       $ 2,632,674
Transfers between segments                  (4,247)                            (41,735)         (62,259)         (108,241)
                                     --------------    ----------------    ------------     ------------    --------------
Net sales                                $ 764,282         $ 1,018,687       $ 461,572        $ 279,892       $ 2,524,433
                                     ==============    ================    ============     ============    ==============

Net income (loss)                          $41,642         $    13,087       $  14,389        $     795       $    69,913
                                     ==============    ================    ============     ============    ==============


Total assets                            $  678,962          $  422,203       $ 118,297        $ 122,546       $ 1,342,008
                                     ==============    ================    ============     ============    ==============`

`OUTPUT SEGMENTS
                                  --------------------------------------------------
                                                                          Total
                                  Refrigerated        World              Output
                                     Foods            Grain             Segments
                                  -------------   --------------     ---------------
Sales& transfers                 $  2,801,518    $   3,033,730      $    5,835,248
Transfers between segments             (37,750)         (61,415)            (99,165)
                                  -------------   --------------     ---------------
Net sales                         $  2,763,768    $   2,972,315      $    5,736,083
                                  =============   ==============     ===============

Net income (loss)                 $     49,632    $      23,316      $       72,948
                                  =============   ==============     ===============


Total assets                      $    654,898    $     659,930      $    1,314,828
                                  =============   ==============     ===============`

`OUTPUT SEGMENTS
                                  ----------------------------------------------------
                                                                          Total
                                  Refrigerated        World               Output
                                     Foods            Grain              Segments
                                  -------------   --------------     -----------------
Sales & transfers                 $  3,916,952    $   3,312,982      $      7,229,934
Transfers between segments            (684,459)        (229,577)             (914,036)
                                  -------------   --------------     -----------------
Net sales                         $  3,232,493    $   3,083,405      $      6,315,898
                                  =============   ==============     =================

Net income (loss)                 $     59,533    $      20,163      $         79,696
                                  =============   ==============     =================


Total assets                      $    727,343    $     845,354      $      1,572,697
                                  =============   ==============     =================`

`CONSOLIDATED SEGMENTS
                                   ---------------------------------------------------------------------------
                                           Combined                Unallocated
                                                               Corporate Expenses
                                          Segments                                            Consolidated
                                       ----------------        -------------------         --------------------
Sales & transfers                    $      2,831,103        $                 -         $          2,831,103
Transfers between segments                    (81,211)                         -                      (81,211)
                                     ------------------     ----------------------      -----------------------
Net sales                            $      2,749,892        $                 -         $          2,749,892
                                     ==================     ======================      =======================

Net income (loss)                    $         38,916        $           (46,280)        $             (7,364)
                                     ==================     ======================      =======================


Total assets                         $      2,698,630        $           290,539         $          2,989,169
                                     ==================     ======================      =======================`

`CONSOLIDATED SEGMENTS
                                   ---------------------------------------------------------------------------
                                          Combined                Unallocated
                                                               Corporate Expenses
                                          Segments                                            Consolidated
                                       ----------------        -------------------         --------------------
Sales & transfers                    $      3,739,170        $                 -         $          3,739,170
Transfers between segments                   (747,502)                         -                     (747,502)
                                     ------------------     ----------------------      -----------------------
Net sales                            $      2,991,668        $                 -         $          2,991,668
                                     ==================     ======================      =======================

Net income (loss)                    $        100,338        $           (63,284)        $             37,054
                                     ==================     ======================      =======================


Total assets                         $      2,914,705        $           337,036         $          3,251,741
                                     ==================     ======================      =======================`

`INPUT AND OTHER SEGMENTS
                                    -------------------------------------------------------------------------------------
                                         Crop                                                  Other         Total Input
                                      Nutrients &                                            Operating        and Other
                                      Protection          Petroleum           Feed             Units          Segments
                                     --------------    ----------------    ------------     ------------    --------------
Sales & transfers                       $  337,917           $ 266,926       $ 147,108        $ 105,170        $  857,121
Transfers between segments                 (15,003)                 (1)         (5,812)         (31,574)         (52,390)
                                     --------------    ----------------    ------------     ------------    --------------
Net sales                               $  322,914           $ 266,925       $ 141,296        $  73,596        $  804,731
                                     ==============    ================    ============     ============    ==============

Net income (loss)                       $   15,938           $  (2,915)      $   4,028        $   1,388        $   18,439
                                     ==============    ================    ============     ============    ==============


Total assets                            $  663,813           $ 425,507       $ 128,372        $ 166,110       $ 1,383,802
                                     ==============    ================    ============     ============    ==============`

`INPUT AND OTHER SEGMENTS
                                     -------------------------------------------------------------------------------------
                                         Crop                                                  Other         Total Input
                                      Nutrients &                                        Operating        and Other
                                      Protection          Petroleum           Feed             Units          Segments
                                     --------------    ----------------    ------------     ------------    --------------
Sales&transfers                        $ 332,655           $ 341,917       $ 163.211        $ 129,661        $  967,444
Transfers between segments                  (2,478)                            (14,222)         (16,857)          (33,557)
                                     --------------    ----------------    ------------     ------------    --------------
Net sales                                $ 330,177           $ 341,917       $ 148,989        $ 112,804        $  933,887
                                     ==============    ================    ============     ============    ==============

Net income (loss)                        $  61,571           $  13,562           4,280        $     521        $   79,934
                                     ==============    ================    ============     ============    ==============


Total assets                             $ 678,962           $ 422,203       $ 118,297        $ 122,546       $ 1,342,008
                                     ==============    ================    ============     ============    ==============`

`OUTPUT SEGMENTS
                                  --------------------------------------------------
                                                                          Total
                                  Refrigerated          World            Output
                                     Foods              Grain           Segments
                                  -------------     --------------    --------------
Sales & transfers                 $   971,459        $  1,002,523      $ 1,973,982
Transfers between segments            (14,832)            (13,989)         (28,821)
                                  -------------     --------------    --------------
Net sales                         $   956,627        $    988,534      $ 1,945,161
                                  =============     ==============    ==============

Net income (loss)                 $    14,353        $      6,124      $    20,477
                                  =============     ==============    ==============


Total assets                      $   654,898        $    659,930      $ 1,314,828
                                  =============     ==============    ==============`

`OUTPUT SEGMENTS
                                  --------------------------------------------------
                                                                          Total
                                  Refrigerated          World            Output
                                     Foods              Grain           Segments
                                  -------------     --------------    --------------
Sales &transfers                 $ 1,770,688       $  1,001,038      $  2,771,726
Transfers between segments           (642,005)           (71,940)         (713,945)
                                  -------------     --------------    --------------
Net sales                         $ 1,128,683       $    929,098      $  2,057,781
                                  =============     ==============    ==============

Net income (loss)                 $    20,525       $       (121)     $     20,404
                                  =============     ==============    ==============


Total assets                      $   727,343       $    845,354      $  1,572,697
                                  =============     ==============    ==============`

The information contained in this discussion and in the
unaudited Condensed Consolidated Financial Statements and Accompanying Notes
presented in this Form 10-Q should be read in conjunction with information set
forth in Part II, Items 7 and 8, in Farmlands Annual Report on Form 10-K
for the year ended August 31, 1999.

## 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 certificates payable on demand 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, by the option of Farmland to call for
redemption certain of its outstanding debt securities, and by the option of
holders, under certain circumstances, to request the early redemption of
outstanding debt securities. During the nine months ended May 31, 2000, the
outstanding balance of demand certificates decreased by $1.0 million and the
outstanding balance of subordinated debt securities increased by $22.6 million.

In May 2000, Farmland established a 364 day, $800 million,
revolving credit facility (the Credit Facility) with a syndicate of
banks. The Credit Facility, which replaced our $1.1 billion credit facility,
expires May 9, 2001, and management believes the Credit Facility can be
refinanced at that time.

At May 31, 2000, Farmland had $548.6 million of short-term
borrowings under the Credit Facility. Additionally, $62.3 million of the Credit
Facility was utilized to support letters of credit. Farmland pays commitment
fees under the Credit Facility currently equal to 50 basis points annually on
the unused portion of the credit. Borrowings under the Credit Facility are
secured by a substantial portion of our accounts receivable, inventories and
fixed assets. Interest rates under the credit facility are based on a spread
over the base rate (as defined in the agreement) or a spread over LIBOR. The
Credit Facility contains covenants related to Farmlands ratio of earnings
before interest, taxes, depreciation and amortization to net interest expense,
our ratio of total debt to total capitalization, and our ratio of senior debt to
total capitalization, all as defined in the agreement. In addition to these
financial covenants, our ability to borrow under the Credit Facility may be
restricted based on our level of receivables and inventories. As calculated at
May 31, 2000, availability under the Credit Facility was approximately
$50 million.

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 are
nonrecourse to Farmland or Farmlands other affiliates. At May 31, 2000,
FNBPC had borrowings under this facility of $55.0 million and $17.9 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 and
Farmlands other affiliates. At May 31, 2000, such borrowings totaled
$184.7 million.

Farmland maintains other borrowing arrangements with banks and
financial institutions. Under such agreements, at May 31, 2000, $23.0 million
was borrowed.

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 convert petroleum coke
by-products into fertilizers. During April 2000, the conditions required for
inception of the lease were satisfied, and Farmland became obligated to make
future minimum lease payments with an approximate present value of $225 million.
We anticipate the facilities commissioning and start-up process will be
completed, and the facilities will be commercially operational, by late summer
of 2000.

In the opinion of management, the financing arrangements
described above will provide adequate capital for our operating and capital
plans during the term of such arrangements. The adequacy of capital for our
long-term operating and capital plans will depend on our ability to generate
cash, comply with the covenants of the Credit Facility, and obtain adequate
refinancing when our Credit Facility expires in May 2001. Management believes
such financing can be obtained at that time. Furthermore, alternative financing
arrangements are continuously evaluated.

Operating activities generated $16.1 million of cash during the
nine months ended May 31, 2000. Major uses of cash during the nine months ended
May 31, 2000 include: capital expenditures of $73.6 million; $27.6 million for
the acquisition of other long-term assets; $39.4 million for additions to
investments and notes receivable; and $6.1 million for patronage refunds
distributed from income of the 1999 fiscal year. The major sources of cash were
$67.8 million of proceeds from the sale of investments (primarily from the sale
of our direct interest in Agriliance), $17.8 million of cash distributions from
our ventures, and an increase in the balance of checks and drafts outstanding of
$23.0 million.

## Results of Operations

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.

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 or loss may be volatile as conditions affecting agriculture and
markets for our products change.

The level of operating income in the crop nutrients and
protection, petroleum, and refrigerated foods businesses is, to a significant
degree, attributable to the spread between selling prices and raw material costs
(natural gas in the case of nitrogen-based crop nutrients, crude oil in the case
of petroleum products, and live hogs and cattle in the case of refrigerated
foods). We cannot determine the direction or magnitude to which these factors
will affect our cash flow and net income or loss.

Results of Operations for Nine Months Ended May 31, 2000
Compared to Nine Months Ended May 31, 1999.

For the nine months ended May 31, 2000, our sales were $8.8
billion compared with sales of $7.8 billion for the same period last year. This
increase is primarily due to a $0.4 billion increase in sales of the petroleum
segment and a $0.5 billion increase in sales of the refrigerated foods segment.
For the nine months ended May 31, 2000, Farmland incurred a net loss of $11.6
million compared with a net loss of $11.7 million for the same period last year.
The net loss in the nine months ended May 31, 2000 was comparable to the net
loss in the same period last year primarily as a result of a $49.6 million
pre-tax gain on the sale of our direct equity interest in the Agriliance
venture, offset by start-up costs related to our new gasification plant, the
loss on the anticipated sale of our Dubuque pork processing plant, losses on
grain trading activities, increased interest expense, and a reduction in our
expected tax benefit.

Crop Nutrients and Protection

Sales of the crop nutrients and protection segment decreased $42
million, or approximately 5%, for the nine months ended May 31, 2000 compared
with the same period last year. Sales declined as a result of a decline in unit
volume combined with lower unit selling prices for phosphate-based fertilizers,
partially offset by higher unit selling prices of nitrogen-based fertilizers.
Phosphate market prices have declined due to high levels of inventory present in
this global industry.

The crop nutrients and protection segment had income of $41.6
million for the nine months ended May 31, 2000 compared with income of $21.5
million the same period last year. The $20.1 million increase in income results
primarily from the $49.6 million pre-tax gain on the sale of a portion of our
equity investment in the Agriliance venture to Land OLakes, partially
offset by approximately $19.2 million of start-up costs related to the
gasification plant located in Coffeyville, Kansas.

Petroleum

Sales of the petroleum segment in the nine months ended May 31,
2000 increased $358 million, or approximately 54%, compared with the same period
last year. This increase was primarily attributable to an increase in the
average unit selling price for refined fuels and propane.

Income for the petroleum segment increased $13.6 million for the
nine months ended May 31, 2000 compared with the prior period. Refined product
shortages caused the spread between crude oil costs and refined products selling
prices to strengthen significantly.

Feed

Sales of the feed segment increased $23 million, or
approximately 5%, in the nine months ended May 31, 2000 compared with the prior
year. This increase was primarily due to increased unit sales of feed
ingredients, partially offset by lower unit prices for formula feed. Income for
the feed segment increased $1.7 million for the nine months ended May 31, 2000
compared with the same period last year primarily due to an increase in feed
ingredient, formula feed, and pet/specialty tons and margins.

Refrigerated Foods

Sales in the refrigerated foods segment increased $469 million,
or approximately 17% for the nine months ended May 31, 2000 compared with the
same period last year. This increase is primarily attributable to higher unit
prices for pork and beef products as well as higher beef unit sales volume,
partially offset by lower unit sales volume of pork products.

Income in the refrigerated foods segment for the nine months
ended May 31, 2000 increased $9.9 million, or approximately 20% compared to the
prior period. This increase is primarily attributable to higher margins and unit
volumes on beef products, partly offset by a $7.0 million loss recognized on the
anticipated sale of a pork processing plant, as discussed below.

During our third quarter, management reached an agreement with a
third party to sell our pork processing plant at Dubuque, Iowa. Accordingly, the
assets related to this plant were reduced to the agreed upon selling price and a
$7.0 million pre-tax loss was recognized. The sale of this plant was finalized
during June.

World Grain

Sales of the world grain segment increased $111 million, or
approximately 4%, for the nine month period ended May 31, 2000 compared with the
same period last year primarily as the result of adding a new commodity (sugar)
to our product line, partly offset by the impact of declining grain prices.

World grain segment income for the nine months ended May 31,
2000 decreased $3.2 million compared to the same period last year. This decrease
is primarily attributable to losses recognized to reflect changes in the market
value of open contracts. This decrease was partly offset by improved grain
margins as a result of increased volume plus the capturing of deferred shipment
values, commonly referred to as carry, which is revenue in excess of
the cost of holding grain for deferred execution.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A)
expenses increased $1.4 million, or approximately 0.4%, from the same period
last year. SG&A expenses directly connected to segments decreased
approximately $2.6 million and these expenses have been included in the
determination of business segment income. SG&A expenses not identified to
business segments increased $4.0, million primarily as a result of increased
employee benefit expenses and increased amortization expense.

Interest Expense

Net interest expense increased $17.5 million compared with the
same period last year due both to an increase in average borrowings and to an
increase in the average interest rate.

Tax Benefit

The income tax benefit decreased $13.4 million due to a decrease
in the effective tax rate and in our loss before income taxes. The decrease in
the effective tax rate is a result of our current estimate of annual income
which will be patronage-sourced in 2000 compared to 1999.

Results of Operations for Three Months Ended May 31, 2000
compared to Three Months Ended May 31, 1999.

For the three months ended May 31, 2000, our sales were $3.0
billion compared with sales of $2.7 billion for the same period last year. Net
income for the three months ended May 31, 2000 was $37.1 million compared with a
net loss of $7.4 million for the same period last year, primarily as a result of
a $49.6 million pre-tax gain on the sale of a part of our direct equity interest
in our Agriliance venture, partly offset by start-up costs related to our new
gasification plant and the loss on the sale of our Dubuque pork processing
plant.

Crop Nutrients and Crop Protection

Sales of the crop nutrients and crop protection segment
increased $7 million, or approximately 2%, for the three months ended May 31,
2000 compared with the same period last year. Sales increased as a result of an
increase in nitrogen unit volume, partly offset by decreased phosphate unit
volume and lower phosphate unit selling prices. Phosphate market prices have
declined due to high levels of inventory present in this global industry.

The crop nutrients and crop protection segment had income of
$61.6 million for the three months ended May 31, 2000 compared with income of
$15.9 million the same period last year. The $45.7 million increase in income
results primarily from the gain on the sale of our direct equity investment in
the Agriliance venture to Land OLakes, partially offset by approximately
$9.2 million of start-up costs related to the gasification plant located
Coffeyville, Kansas.

Petroleum

Sales of the petroleum segment in the three months ended May 31,
2000 increased $75 million, or approximately 28%, compared with the same period
last year. This increase was primarily attributable to an increase in the
average unit selling price for refined fuels and propane.

Income for the petroleum segment increased $16.5 million for the
three months ended May 31, 2000 compared with the prior period. Refined product
shortages caused the spread between crude oil costs and refined products selling
prices to strengthen significantly.

Refrigerated Foods

Sales in the refrigerated foods segment increased $172 million,
or approximately 18% for the three months ended May 31, 2000 compared with the
same period last year. This increase is primarily attributable to higher unit
prices for pork and beef products as well as higher beef unit sales volume,
partially offset by lower pork unit sales volume.

Income in the refrigerated foods segment for the three months
ended May 31, 2000 increased $6.2 million, or approximately 43% compared to the
prior period. This increase is primarily attributable to higher margins and unit
volumes on beef products, higher unit volumes on pork products and higher market
values and unit volumes on our hog production business, partly offset by the
$7.0 million pre-tax loss we recognized on the anticipated sale of our Dubuque
plant.

World Grain

Sales of the world grain segment decreased $59 million, or
approximately 6%, for the three month period ended May 31, 2000 compared with
the same period last year primarily as the result of lower grain prices combined
with a decrease in the volume of grain sold.

World grain segment income for the three months ended May 31,
2000 decreased $6.2 million compared to the same period last year. This decrease
is primarily attributable to losses recognized to reflect changes in the market
value of open contracts and were partly offset by improved grain margins as a
result of increased volume plus the capturing of deferred shipment values,
commonly referred to as carry, which is revenue in excess of the
cost of holding grain for deferred execution.

Interest Expense

Net interest expense increased $3.8 million compared with the
same period last year due primarily to an increase in the average interest rate.

## Recent Accounting Pronouncements

Statements of Financial Accounting Standards 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. The financial statement impact of adopting the provisions
of SFAS No. 133 will depend on our market positions as well as market conditions
at the date of adoption. Although adoption of SFAS No. 133 would not have had a
material impact on our financial statements as of May 31, 2000, for the reasons
stated above we are unable to predict the impact, if any, that adoption of the
provisions of SFAS No. 133 will have on our financial statements as of September
1, 2000.

## Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

Farmlands market exposure to derivative transactions,
entered into for the purpose of managing commodity price risk, foreign currency
risk and interest rate risk, has not materially changed since August 31, 1999.
Quantitative and qualitative disclosures about market risk are contained in Item
7A of our Annual Report on Form 10-K for the year ended August 31, 1999.

We are including the following cautionary statement in this
Form 10-Q 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 include 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 made 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, the impact of seasonal demand on the
profitability of the refrigerated foods business, the outcome and consequences
of certain litigations, the perceived future business benefits related to our
feed venture, our ability to fully and timely complete modifications and
expansions with respect to certain manufacturing facilities and the sufficiency
of our arrangements for capital. Discussion containing such forward-looking
statements is found in the material set forth herein under
Managements Discussion and Analysis of Financial Condition and
Results of Operations and Notes to Condensed Consolidated Financial
Statements.

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:

`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 production
               and demand).

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

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

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

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

          9.   The factors  identified in "Business and  Properties - Business -
               Business Risk Factors" included in our Annual Report on Form 10-K
               for the year ended August 31, 1999.`

# PART II - OTHER INFORMATION

## Item 6. Exhibits and Reports on Form 8-K.

The exhibits listed below are filed as part of Form 10-Q for
quarter ended May 31, 2000.

`4.(ii)A              Syndicated Credit Facility between Farmland Industries,  Inc. and various banks
                                    dated May 10, 2000
              10.(iii)A             Employment Agreement between Farmland and H. D. Cleberg dated March 1, 2000
                 27                 Financial Data Schedule`

`FARMLAND INDUSTRIES, INC.
                                                              (Registrant)


                                By:                     /s/  TERRY M. CAMPBELL
                                   -------------------------------------------
                                                           Terry M. Campbell
                                                       Executive Vice President
                                                      and Chief Financial Officer`