UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-Q/A




(Mark One)
 X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
---
ACT OF 1934
For the quarterly period ended December 31, 2002
                               -----------------

                                       OR

     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF THE SECURITIES
----
EXCHANGE ACT OF 1934
For the transition period from                     to
                               -------------------    ------------------------

Commission file number 2-22791
                       -------

                                   AGWAY INC.
                              DEBTOR-IN-POSSESSION
                              AS OF OCTOBER 1, 2002
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


DELAWARE                                                              15-0277720
--------------------------------------------------------------------------------
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)


333 Butternut Drive, DeWitt, New York                                      13214
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)


                                  315-449-6715
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)





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
    -----     -----

Indicated by check mark whether the registrant is an accelerated filer.
Yes        No   X
    ----      -----

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.






        Class                                    Outstanding at March 28, 2003
------------------------                         -------------------------------
Membership Common Stock,                                   96,446 shares
$25 par value per share






                                       1
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


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


Agway is including  the  following  cautionary  statement in this Form 10-Q/A 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,  Agway.  Where  any such  forward-looking
statement  includes a statement  of the  assumptions  or basis  underlying  such
forward-looking   statement,   Agway  cautions  that,  while  it  believes  such
assumptions  or basis to be  reasonable  and makes them in good  faith,  assumed
facts or basis  almost  always vary from  actual  results,  and the  differences
between  assumed  facts or basis and actual  results can be material,  depending
upon the  circumstances.  Certain  factors  that could cause  actual  results to
differ  materially  from those  projected have been discussed in this report and
include the factors  set forth  below.  Other  factors  that could cause  actual
results to differ materially include uncertainties of economic, competitive, and
market conditions and future business  decisions,  all of which are difficult or
impossible  to predict  accurately  and many of which are  beyond  our  control.
Where, in any forward-looking statement, Agway, 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.   The  words  "intend,"   "believe,"  "expect,"  and
"anticipate"  and phrases "it is probable" and "it is possible" or similar words
or phrases identify forward-looking statements.


Background
On  October  1,  2002  (the  "Petition  Date"),  Agway  Inc.  and  five  of  its
subsidiaries   (collectively,   the  "Debtors")  filed  voluntary  petitions  to
reorganize  under Chapter 11 of the United States  Bankruptcy Code (the "Chapter
11 Proceedings") in the United States Bankruptcy Court for the Northern District
of New  York in  Utica,  New York  (the  "Bankruptcy  Court").  The  Chapter  11
Proceedings have been  consolidated  for procedural  purposes only and are being
administered jointly under case numbers 02-65872 through 02-65877 pursuant to an
order of the Bankruptcy Court entered on October 1, 2002. The subsidiaries  that
were included in the Chapter 11 Proceedings were Feed Commodities  International
LLC, Country  Best-DeBerry  LLC,  Country Best Adams,  LLC,  Brubaker  Agronomic
Consulting Service LLC, and Agway General Agency, Inc.

Four wholly  owned Agway Inc.  subsidiaries  ARE NOT  included in the Chapter 11
Proceedings:  Agway Energy  Products LLC,  Agway Energy  Services,  Inc.,  Agway
Energy Services-PA, Inc. and Telmark LLC. In addition, Telmark debenture holders
ARE NOT subject to the Chapter 11  Proceedings.  Cooperative  Milling,  Inc.,  a
company  50%  owned  by Agway  Inc.  was also not  included  in the  Chapter  11
Proceedings. Finally, the Agway dealer stores ARE NOT included in the Chapter 11
Proceedings,  because they are  independently  owned and are not affiliated with
Agway Inc. in any way.

Agway Energy Products is a separate subsidiary which historically has generated,
and is  expected to continue  to  generate,  sufficient  cash to meet its needs.
Agway Energy Products requires short-term borrowings from the Company's lines of
credit to meet  seasonal  and  working  capital  requirements.  Such  short-term
financing  will be made  available  to Agway  Energy  Products  as a  non-debtor
borrower  on an  ongoing  basis  by our  senior  lenders  as part of a  $125,000
Debtor-in-Possession  financing  agreement ("DIP Facility").  The details of the
DIP Facility are  discussed in Note 3 to the  condensed  consolidated  financial
statements. However, Agway Energy Products will continue to operate as it has in
the past and IS NOT included in the Agway Inc. Chapter 11 Proceedings.

Telmark LLC is a separately  financed  subsidiary  with an  appropriate  capital
structure for its  industry.  Telmark LLC will continue to be financed and to be
operated separately from Agway Inc. as it has in the past and IS NOT included in
the Agway Inc.  Chapter 11 Proceedings.  As discussed in Note 1 to the condensed
consolidated  financial  statements,  Telmark  has  entered  into  a  definitive
agreement to sell substantially all of its assets.


                                       2
<PAGE>


                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Chapter 11 Process
Each of the Debtors continues to operate its business and manage its property as
a  Debtor-in-Possession  pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code.  As  Debtors-in-Possession,  the Debtors are  authorized  to operate their
business  but may not engage in  transactions  outside  the  ordinary  course of
business  without the approval of the Bankruptcy  Court.  The  Bankruptcy  Court
entered orders on October 1, 2002 granting  various  initial  requests of Agway,
including  payment of employee wages and salaries on schedule,  continuation  of
Feed and Agronomy customer pre-pay product programs,  and interim access to cash
funding.  Also,  on October  1,  2002,  the  Bankruptcy  Court  entered an order
authorizing  the Company to pay vendors in the ordinary course for all goods and
services  received on or after October 1, 2002. We also agreed to terms of a DIP
Facility  with our present  senior  lender group to provide a $125,000  facility
over a term of 18 months,  which we believe will provide adequate cash resources
for  Agway  to meet  future  operating  requirements  while we  restructure  the
business.  On October 4, 2002, the Bankruptcy Court approved the DIP Facility on
an interim  basis and on October 22,  2002,  approved the  Company's  motion for
final  access to the full amount of the $125,000 DIP  Facility.  Upon  obtaining
final  approval from the Bankruptcy  Court,  the DIP Facility  replaced  Agway's
existing  senior  debt and the  credit  agreement.  See Note 3 of the  condensed
consolidated  financial  statements for terms and conditions including covenants
under the DIP Facility.

On October 9, 2002, the United States Trustee appointed an official committee of
unsecured creditors (the "Creditors'  Committee").  The Creditors' Committee and
its legal  representatives  may take  positions  on matters that come before the
Bankruptcy  Court and, at the  appropriate  time,  will negotiate with Agway the
terms of a plan of reorganization. On October 11, 2002, the Creditors' Committee
filed a motion seeking  reconsideration  of all the first day motions entered by
the Bankruptcy Court on October 1, 2002. The reconsideration  motion has not yet
been  finalized  and it is  possible  that one of the first day  orders  will be
modified.  Agway and the Creditors'  Committee and their respective advisors are
holding discussions in an effort to resolve the reconsideration motion and other
related matters.  The outcome of these discussions  cannot be determined at this
time.

On January 30, 2003,  the  Bankruptcy  Court  granted a motion by the Company to
extend the exclusivity period for filing a plan or reorganization by 120 days to
May 30, 2003. This reserves the right under bankruptcy law for the Company to be
the only party  allowed  to file a plan of  reorganization  with the  Bankruptcy
Court.

At this stage, we cannot predict the impact of the Chapter 11 Proceedings on our
financial  condition  and  results  of  operations.  However,  until  a plan  of
reorganization  is  developed  and  approved  by the  Bankruptcy  Court  and our
creditors,  we will be  prohibited  from paying all  pre-petition  indebtedness,
including principal, interest, and maturities on our outstanding debt securities
and various  other  obligations  or claims  against the Company  such as pending
litigation  and   environmental   claims  without   Bankruptcy  Court  approval.
Accordingly,  the $33,100 maturity and related interest on subordinated debt due
on November 1, 2002 was not paid. Following confirmation by the Bankruptcy Court
of a plan of reorganization,  treatment of our pre-petition  obligations will be
determined by the terms of that plan.

Historically,  the Company  voluntarily  repurchased  certain of its securities,
including its subordinated debentures.  The Company ceased that practice in June
2002 and  initiated  the  Chapter 11  Proceedings  on  October  1, 2002.  To the
Company's  knowledge,   the  Company's  securities  do  not  currently  have  an
established trading market. Fair market value of the Company's securities is not
presently determinable and it is not presently known when such fair market value
will be  determined.  Even  though  the  ultimate  impact  on the  value  of the
Company's  securities  cannot be determined  currently,  it is likely that, as a
result of the Chapter 11 Proceedings, the value of the Company's securities will
be adversely impacted and this impact could be material.





                                       3
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


RESULTS OF OPERATIONS
---------------------
Agway's  continuing  operations net sales and revenues and operating results are
significantly  impacted  by  seasonal  fluctuations  due  to the  nature  of its
operations and the geographic  location of its service area,  which is primarily
the northeastern United States.  Energy generally realizes  significantly higher
net sales and  revenues  in the winter  months due to the higher  demand for its
products from cold winter conditions.  The Agriculture feed business and Country
Products  Group net sales and revenues and operating  results are not materially
impacted by seasonal fluctuations.

On March 6, 2002, the Company announced details of a comprehensive plan designed
to refocus  capital  resources  on four  selected  businesses:  Animal  Feed and
Nutrition (the  principal  operation  within the  Agriculture  segment),  Energy
Products (Energy segment),  Produce, and Agricultural  Technologies  (operations
within  the  Country  Products  Group  segment).  This plan also  disclosed  our
intentions to divest of four business  operations:  Telmark  (Leasing  segment),
Agway  Insurance (the principal  operation  within the Insurance  segment),  and
Agronomy and Seedway  (components of the Agriculture  segment).  After this plan
was announced,  as part of its ongoing  strategic  assessment of remaining Agway
businesses,  including its sunflower  business (an operation included within the
Country Products Group segment),  Agway engaged an investment  advisor to assist
in the exploration of strategic  alternatives  involving the sunflower business.
In June 2002, after reviewing a number of written  indications of interest,  the
Agway Board of Directors affirmed  management's  intentions to actively pursue a
sale of this business. As required by generally accepted accounting  principles,
the financial statements  separately reflect the business operations planned for
divestiture,  or actually divested,  as discontinued  operations for all periods
reported. For further information on the discontinued operations,  refer to Note
4 of the condensed consolidated financial statements.

To date,  significant progress has been made regarding all divestiture plans. On
August 28, 2002,  Agway announced the completion of the sale of its wholly owned
insurance  subsidiary,  Agway  Insurance  Company,  to United Farm Family Mutual
Insurance  Company.  On September  16,  2002,  Agway  completed  the sale of its
sunflower  business  (an  operation  historically  included  within the  Country
Products  Group segment) to Cenex Harvest  States  Cooperatives.  On December 3,
2002,  Agway  announced  the  completion of the sale of its Agronomy and Seedway
businesses and related assets to GROWMARK. On December 23, 2002, Agway and Wells
Fargo Financial Leasing,  Inc., ("Wells Fargo") announced that they had signed a
definitive  agreement  regarding the sale of substantially  all of the assets of
Telmark to Wells Fargo.  Pursuant to a letter agreement amongst Agway,  Telmark,
Wells Fargo and the unsecured  creditors'  committee for Agway Inc.'s Chapter 11
Proceedings  (Creditors'   Committee),   the  parties  have  agreed  to  auction
procedures and to amend certain  provisions of the  definitive  agreement at the
request of the  Creditors'  Committee in  conjunction  with  Agway's  Chapter 11
Proceedings.  The auction procedures set forth in the definitive  agreement,  as
amended in accordance with the letter agreement, were approved by the Bankruptcy
Court on February  5, 2003.  The auction is  scheduled  to be held on  Thursday,
February  27, 2003 at 2 p.m. and a hearing to confirm the  successful  bidder is
set for 3 p.m. on that same day. On February 6, 2003,  Agway filed a motion with
the Bankruptcy  Court for approval of the sale in accordance with the definitive
agreement  as amended by the letter  agreement.  The  Creditors'  Committee  has
reserved the right to object to the sale in the event it  concludes  the sale is
not in the best  interest  of Agway's  creditors.  If the sale to Wells Fargo is
uncontested,  management  expects  the sale to close on or about  March 1, 2003,
subject to  satisfaction  of customary  closing  conditions  as set forth in the
agreement. A copy of the definitive agreement, as amended, along with the letter
agreement  reflecting  changes to be made to the  definitive  agreement  and the
Bankruptcy  Court order  authorizing  and  scheduling  an auction and hearing to
consider approval of proposed sale resulting from the auction,  were attached as
exhibits to an 8-K filing on February 6, 2003.





                                       4
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Amounts in the  following  narrative  have been  rounded to the nearest  hundred
thousand.

Consolidated Results
--------------------
Consolidated  continuing  operations  net sales and  revenues  of  $259,600  and
$448,500 for the three- and six-month  periods ended December 31, 2002 increased
$30,200 (13%) and $17,500 (4%), respectively, as compared to the same periods in
the prior year.  The  increases  in both the three- and  six-month  periods were
substantially  the result of increased  sales in Energy as more fully  discussed
below.

The  consolidated  final net losses of $11,900  and  $34,700  for the three- and
six-month  periods ended December 31, 2002  increased  $8,400 (232%) and $20,900
(150%),  respectively,  as compared to the same periods in the prior year.  This
increase in losses includes the following (increases) decreases:
<TABLE>
<CAPTION>
                                                                             Periods
                                                                      Ended December 31, 2002
                                                                 --------------------------------
                                                                   Three Months     Six Months
                                                                 --------------   ---------------
<S>                                                              <C>              <C>
Net discontinued operations....................................  $     (13,200)   $      (15,000)
Pre-tax continuing operations..................................          6,000             1,900
Reorganization expenses........................................         (3,000)           (3,000)
Change in continuing operations taxes..........................          1,800            (4,800)
                                                                 --------------   ---------------
     Increase in final net loss................................  $      (8,400)   $      (20,900)
                                                                 ==============   ===============
</TABLE>


Consolidated pre-tax earnings from continuing operations of $6,600 for the three
months  ended  December 31, 2002 have  increased  $6,000 and the pre-tax loss of
continuing  operations of $10,900 for the six months ended December 31, 2002 has
decreased $1,900. The improvements in both periods are due to increased earnings
in Energy and in Agriculture that were offset by increased  corporate costs. The
Country Products Group earnings declined in the three-month  period but improved
over the six-month  period as compared to the prior year. Net corporate costs of
$4,800 and $11,100 have increased $2,900 (155%) and $7,200 (183%), respectively,
as  compared  to the same  periods in the prior  year.  The net  corporate  cost
increases  are  primarily  related to a reduction  in the pension  income and an
increase in  professional  services  compared  to the same  periods in the prior
year. The pension plan amendments made last fiscal year, as previously disclosed
in the Agway Form 10-K as of June 30,  2002,  have reduced  pension  income from
historical levels. The professional service expense increase related to services
rendered in connection with the Chapter 11 Proceedings.  The increased loss from
discontinued operations is more fully discussed below.


Agriculture
-----------
Total  Agriculture  sales and revenues of $58,300 and $114,500 for the three and
six months  ended  December  31, 2002  decreased  by $500 (1%) and $3,700  (3%),
respectively, as compared to the same periods in the prior year.

The feed business sales and revenues decreased $900 (2%) and $3,300 (3%) for the
three and six months ended December 31, 2002. The decline was  substantially the
result of  reduced  volumes  in  manufactured  dairy and  poultry  feeds.  These
reductions  are a result of the overall  general  decrease  in the farm  economy
compared to the same periods in the prior year.  Additionally,  sales  decreased
$1,300  (100%) for the six months ended  December 31, 2002 as a result of closed
Agriculture farm stores that were part of the planned business realignment which
began in  mid-fiscal  2001.  The  declines in sales  noted above were  partially
offset by increased  tested  specific  pathogen  free  ("TSPF")  heifer  rearing
service  revenues  of  $400  (21%)  and  $900  (28%)  for  the  three-  and  six
month-periods  ended  December 31, 2002 compared to the same period in the prior
year from the  result  of  increased  utilization  of the  facilities  this year
compared to the same periods in the prior year.




                                       5
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Agriculture (continued)
-----------------------
Agriculture  pre-tax loss of $200 and $900 for the three- and six-month  periods
ended December 31, 2002 decreased $900 (82%) and $1,100 (55%), respectively,  as
compared to the same  periods in the prior year.  The  decrease in pre-tax  loss
resulted from a combination of factors. For the six-month period, Agway received
a royalty  payment of $900 for the use of Agway's  name in  connection  with the
sale  of  agricultural  products.   Additionally,   there  was  a  reduction  in
administration expenses for the three- and six-month periods ending December 31,
2002 from the  impact of the  planned  closing  of  Agriculture  locations.  The
pre-tax loss for the TSPF heifer rearing facilities decreased $200 (21%) for the
three months and remained the same for the six-month  period ended  December 31,
2002. The decrease in the three-month  period was a result of an increase in the
utilization of the  facilities,  along with an increase in service  revenue fees
earned per heifer. The above improvements were partially offset by a decrease in
pre-tax  results  within the feed  business of $500 and $1,500 for the three and
six months, respectively.  These reductions consisted of a negotiated settlement
of $900 reported in the second quarter of the prior year. Additionally,  for the
six-month  period ended  December  31,  2002,  there was an increase in bad debt
expense of $600 due to the  bankruptcy of a dairy  customer,  and an increase in
interest  expense of $200  compared  to the prior year as a result of  increased
working capital in the current year.

Country Products Group
----------------------
Country Products Group (CPG) total sales and revenues of $23,400 and $58,400 for
the three and six months ended  December 31, 2002  decreased  $10,900  (32%) and
$10,300 (15%), respectively,  as compared to the same periods in the prior year.
Sales in CPG ongoing  operations  decreased $7,900 (25%) and $4,300 (7%) for the
three and six months ended December 31, 2002 and sales  decreased  $2,800 (100%)
and $6,000 (87%) for the three and six months  ended  December 31, 2002 from the
closing or selling of a number of CPG business  operations.  A decrease in sales
in the  continuing  operations  of the Produce  Group of $8,100 (27%) and $4,600
(8%), for the three and six months ended December 31, 2002, resulted principally
from a decrease in the volume of potatoes and empire  sweet onions sold.  Potato
volume was down due to competitive  conditions and empire sweet onion volume was
down due to a planned  reduction in acres  planted.  The above decrease in sales
were partially offset by an increase in sales in CPG Nutrients of $200 (18%) and
$300 (15%) for the three and six months ending December 31, 2002, as compared to
the prior year.

CPG  pre-tax  loss of $1,100  for the  three  months  ended  December  31,  2002
increased $500 (86%) over the same period in the prior year. Pre-tax earnings of
$500  increased  $1,500 (150%) for the six months ended  December 31, 2002.  The
ongoing CPG operations generated pre-tax losses of $1,100 and $500 for the three
and six months ended December 31, 2002.  These losses were primarily a result of
decreased  produce  sales  mentioned  above in both  the  three-  and  six-month
periods.  In the three-month  period,  we also incurred a decrease in margins in
potatoes due to  competition in the market.  Additionally,  Apex Bag was sold in
August  2002  generating  a gain on the  sale of  $1,000  which  created  a $800
favorable variance in the pre-tax earnings for the six months ended December 31,
2002. The remaining  combination of closed business  locations and operations to
be divested  generated pre-tax income for the six months ended December 31, 2002
of $100 compared to a pre-tax loss of $100 in the prior year.




                                       6
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Energy
------
Energy  sales and revenues of $178,500 and $277,100 for the three and six months
ended   December  31,  2002,   increased   $41,300  (30%)  and  $31,100   (13%),
respectively,  as compared to the same periods in the prior year.  Overall sales
dollar  increases  from liquid  product volume were $13,200 (10%) and $800 (0%),
respectively,  as  compared to the same  periods in the prior  year.  The volume
increases were primarily the result of higher  wholesale  volumes in heating oil
and propane,  which are a result of colder  winter  weather in the  Northeast as
compared  to the same  periods in the prior  year.  The  heating oil and propane
volume  increases were partially  offset by a decrease in volume for power fuels
(gasoline and diesel).  The generally weaker economic conditions compared to the
same periods in the prior year have  lowered the demand for power  fuels.  Sales
dollar increases relating to price in liquid products,  substantially the result
of an increase in commodity prices during the three- and six-month periods, were
$22,200 (16%) and $20,200 (8%), respectively, as compared to the same periods in
the prior year.  Additionally,  sales and revenues from the electric and natural
gas marketing  business  improved  $4,600 (3%) and $5,300 (2%) for the three and
six months ended  December 31, 2002.  These  increases are primarily a result of
increase volume in these businesses.  Finally, the heating,  ventilation and air
conditioning  installation and service increased sales by $1,300 (1%) and $4,800
(2%) for the three and six months ended December 31, 2002,  compared to the same
periods in the prior year.

Energy  pre-tax  earnings of $12,700 and $600 for the three and six months ended
December 31, 2002, increased $8,600 (208%) and $6,500 (110%),  respectively,  as
compared to the same periods in the prior year.  Overall  gross  margin  dollars
increased  $11,100 (23%) and $9,600 (12%)  primarily  from the  increased  sales
mentioned  above.  Pre-tax  earnings were  partially  offset from an increase in
operating  expenses  of $2,900 (7%) and $4,000 (5%) for the three and six months
ended  December 31,  2002.  These  increases  resulted  from higher  payroll and
insurance costs.  These items were partially offset from a reduction in interest
expense of $400 (27%) and $900 (27%) for the three and six months ended December
31,  2002,  as  compared  to the same  periods  in the prior year as a result of
reduced working capital.

Discontinued Operations
-----------------------
The  following   discussion   represents  the  operational  results  of  Agway's
discontinued operations for the three and six months ended December 31, 2002 and
2001, respectively.
<TABLE>
<CAPTION>
                                                              Three Months Ended
                          --------------------------------------------------------------------------------------------
December 31, 2002            Leasing      Insurance         Sunflower     Agronomy(1)      Other (2)         Total
-----------------         -------------  -----------     --------------  ------------   -------------   --------------
<S>                       <C>            <C>             <C>             <C>            <C>             <C>
Total sales & revenue     $      21,883  $         0     $            0  $     9,951    $           0   $      31,834
Pre-tax earnings (loss)
from operations.......    $       6,393  $         0     $          359  $    (6,457)   $         894   $       1,189

December 31, 2001
-----------------
Total sales & revenue     $      23,314  $     7,217     $       10,999  $    19,827    $           6   $      61,363
Pre-tax earnings (loss)
from operations.......    $       6,490  $       461     $          110  $    (6,585)   $      (3,388)  $      (2,912)

</TABLE>


                                       7
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Discontinued Operations (continued)
-----------------------------------
<TABLE>
<CAPTION>
                                                              Six  Months Ended
                         ----------------------------------------------------------------------------------------
December 31, 2002           Leasing      Insurance     Sunflower     Agronomy(1)      Other (2)        Total
-----------------        -------------  -----------  ------------   -------------   ------------   --------------
<S>                      <C>            <C>          <C>            <C>             <C>            <C>
Total sales & revenue    $      44,179  $     4,806  $     10,352   $      40,068   $          0   $       99,405
Pre-tax earnings (loss)
from operations.......   $      12,523  $       108  $       (485)  $     (13,269)  $     (1,908)  $       (3,031)

December 31, 2001
-----------------
Total sales & revenue    $      45,832  $    14,292  $     21,258   $      55,482   $         (1)  $      136,863
Pre-tax earnings (loss)
from operations.......   $      11,789  $       789  $        190   $     (13,948)  $     (6,546)  $       (7,726)
</TABLE>

(1)      Includes the  Agronomy,  Seedway,  and Brubaker  Consulting  businesses
         formerly part of the Agriculture business segment.

(2)      The Other column  includes the  elimination of  intercompany  sales and
         revenues between discontinued  operations  components and other pre-tax
         earnings  (loss) impacts of the  discontinued  operations,  principally
         interest allocated to the net investment in discontinued operations.

Leasing (Telmark)
----------------
Leasing total revenues of $21,900 and $44,200 for the three and six months ended
December  31,  2002  decreased  $1,400  (6%) and $1,600  (4%)  compared to total
revenues of $23,300 and $45,800, respectively, for the same periods in the prior
year.  The decrease in revenues is primarily due to a lower average  income rate
on the outstanding portfolio caused by lower interest rates.

Pre-tax  earnings from  continuing  operations of $6,400 and $12,500,  decreased
$100 (2%) for the three months ended  December 31, 2002 and increased  $700 (6%)
for the six months ended December 31, 2002. The increase in pre-tax earnings for
the six months  ended  December  31,  2002 is  primarily  due to  overall  lower
interest rates on the outstanding debt compared to the prior year. Additionally,
a decrease in the  provision for credit  losses  contributed  to the increase in
pre-tax earnings.  Telmark's  allowance for credit losses is based on a periodic
review of the collection  history of past leases,  current credit practices,  an
analysis of delinquent accounts, and current economic conditions.

Insurance
---------
Agway  Insurance  Company  net  revenues  of $0 and $4,800 for the three and six
months ended  December  31,  2002,  decreased  $7,200  (100%) and $9,500  (66%),
respectively,  as  compared  to the same  periods in the prior  year.  The Agway
Insurance  Company was sold on August 28,  2002 to United Farm Mutual  Insurance
Company,  and therefore,  there was no activity for the three-month period ended
December 31, 2002.  For the  six-month  period,  the decrease in sales is due to
only two  months  of  activity  prior to the  date of sale in the  current  year
compared to six months of activity in the same period in the prior year.


Pre-tax earnings of the Agway Insurance Company of $0 and $100 for the three and
six months ended December 31, 2002 decreased $500 (100%) and $700 (86%) compared
to the same periods in the prior year due principally to the sale of the company
noted above.





                                       8
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Sunflower (Operation of the Country Products Group)
--------------------------------------------------
The Sunflower operation was previously a component of the Country Products Group
segment.  Total sales and revenue of $0 and $10,400 for the three and six months
ended  December 31, 2002,  decreased  $11,000  (100%) and $10,900  (51%) for the
three- and six-month periods,  respectively,  as compared to the same periods in
the prior year. The sunflower  operation was sold on September 16, 2002 to Cenex
Harvest States Cooperative.

Sunflower's  pre-tax earnings of $400 increased $300 (226%) for the three months
ended  December  31,  2002,  compared to the same period in the prior year.  The
pre-tax loss of $500 was a deterioration of $700 (350%) from pre-tax earnings of
$200 for the six months ended  December 31, 2002, as compared to the same period
in the prior year.

Discontinued Agriculture Components
-----------------------------------
Agronomy,  Seedway and Brubaker Consulting services were all previously reported
as part of the  Agriculture  segment.  Total  sales and  revenue of $10,000  and
$40,100 for the three and six months ended  December 31, 2002  decreased  $9,900
(50%) and $15,400 (28%), respectively, compared to the same periods in the prior
year.  The  decrease in sales  resulted  from a decrease in sales in Agronomy of
$7,000  (49%) and $9,600  (23%),  a decrease in sales in Seedway of $2,600 (49%)
and $5,200  (40%) and a decrease  in sales in  Brubaker  of $300 (100%) and $700
(100%) for the three- and six-month periods ended December 31, 2002, compared to
the sales in Agronomy, Seedway, and Brubaker,  respectively,  during in the same
periods  in the prior  year.  Sales  decreased  for the  three-month  period due
principally  to the sale of the  agriculture  components  on December 3, 2002 to
GROWMARK  Inc,  therefore  only  reporting  two  months of sales in the  current
quarter.  In addition,  the decreases in sales for the six months ended December
31, 2002 are  attributable  to dryer than normal  conditions that existed in the
summer of 2002 which  caused a reduction  in the number of acres  planted by our
customers.  When normal summer  conditions  exist,  many customers that purchase
both the Agronomy and Seedway products are able to plant a second crop; however,
due to the  drought  conditions  in the  summer of 2002,  this  second  planting
generally  did not occur.  The Brubaker  Consulting  operation  was shut down in
fiscal 2001.


Agriculture's discontinued components pre-tax loss of $6,500 decreased $100 (2%)
for the three  months ended  December 31, 2002.  Pre-tax loss of $13,300 for the
six months ended  December  31, 2002  decreased  $700 (5%)  compared to the same
period in the prior  year.  The  decrease  in pre-tax  losses for the six months
ended  December  31,  2002 is  related to a  reduction  in  expenses  related to
packaging and distribution of Agronomy related  products.  These reductions were
partially  offset by inventory  write-downs  of seasonal seed products that were
not sold due to the adverse weather conditions noted above.







                                       9
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

As discussed in more detail below, due to the Company's  projected level of cash
from  operations  and the  status  of its  previously  announced  plan to divest
certain of its businesses, the Company determined in the quarter ended September
30, 2002 that it would have difficulty in satisfying its anticipated  short-term
and long-term  liquidity  needs. As described in more detail below,  the Company
agreed to terms of a DIP Facility with its then existing  lender group and filed
for an order of protection under Chapter 11 of the United States Bankruptcy Code
on October 1, 2002.  It is  currently  expected  that the DIP  Facility  will be
sufficient  to meet the  liquidity  needs of the  Company  during the Chapter 11
Proceedings.

At this stage, we cannot predict the impact of the Chapter 11 Proceedings on our
financial  condition  and  results  of  operations.  However,  until  a plan  of
reorganization  is  developed  and  approved  by the  Bankruptcy  Court  and our
creditors,  we will be  prohibited  from paying all  pre-petition  indebtedness,
including principal, interest, and maturities on our outstanding debt securities
and various  other  obligations  or claims  against the Company  such as pending
litigation  and   environmental   claims  without   Bankruptcy  Court  approval.
Accordingly,  the $33,100 maturity and related interest on subordinated debt due
on November 1, 2002 was not paid. Following confirmation by the Bankruptcy Court
of a plan of reorganization,  treatment of our pre-petition  obligations will be
determined by the terms of that plan.

Cash Flows for Six Months Ended December 31, 2002 and 2001
During the six months ended December 31, 2002 and 2001, cash generated from sale
of  discontinued  operations and from sale of assets was a major source of funds
to finance capital  improvements,  redemption of debt,  redemption of stock, and
shareholder  dividends.  During the six months ended December 31, 2002, the cash
flows generated also provided for increased  working  capital needs.  During the
six months ended December 31, 2001,  reduced  working capital  provided  another
major source of funds.
<TABLE>
<CAPTION>

                                              December 31,           December 31,             Increase
                                                 2002                    2001                (Decrease)
                                            ---------------         --------------         ---------------
<S>                                         <C>                     <C>                    <C>
Net cash flows provided by (used in):
     Continuing operating activities......  $      (41,228)         $      34,794          $      (76,022)
     Investing activities of continuing
       operations.........................          95,842                 (4,655)                100,497
     Financing activities of continuing
       operations.........................         (37,991)               (62,807)                 24,816
     Discontinued operating activities....          (4,930)                32,668                 (37,598)
                                            ---------------         --------------         ---------------
Net increase (decrease) in cash
     and equivalents......................  $       11,693          $           0          $       11,693
                                            ===============         ==============         ===============
</TABLE>




Cash Flows from Continuing Operating Activities
Cash flows from  continuing  operations  for the three months ended December 31,
2002 used cash of $41,200,  compared to generation  cash of $34,800 for the same
period in the prior year. The  fluctuations in continuing  operations cash flows
are  substantially  the  result of  fluctuations  in the cash  required  to fund
working  capital.  Due to the  commodities  used in our Energy  and  Agriculture
businesses,  inventory,  receivables and payables are significantly  impacted by
changes in the commodity  prices.  The increased energy commodity prices and the
colder  winter  weather in the Northeast  during the quarter ended  December 31,
2002, as compared to the same period in the prior year, has increased the use of
cash in the Energy business to fund working capital. Additionally, cash used for
pre-petition  services associated with the contingency planning which ultimately
resulted  in the Chapter 11  Proceedings,  as well as  post-petition  Chapter 11
reorganization  activities,  totaled $4,200 during the six months ended December
31, 2002.



                                       10
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


LIQUIDITY AND CAPITAL RESOURCES (continued)
-------------------------------------------

Cash Flows from Investing Activities of Continuing Operations
Capital  expenditures  required  cash of $5,900 and $3,500 for the three  months
ended  December  31,  2002 and  2001,  respectively.  The  increase  in  capital
expenditures  in the  current  year  reflects  a decline in the amount of Energy
assets  leased  under  operating  leases.  Cash  flows  used in  investing  were
partially  funded by cash  generated  from the  proceeds  from the  disposal  of
property and  equipment,  which amounted to $2,700 and $500 for the three months
ended  December  31,  2002 and  2001,  respectively.  Additionally,  the sale of
certain  discontinued  operations  generated  cash of $99,100 for the six months
ended December 31, 2002.

Cash Flows from Financing Activities of Continuing Operations
For the three months ended December 31, 2002,  the financing  obligations of the
Company,  including short-term notes payable and subordinated  debentures,  were
reduced  principally  through  net  cash  proceeds  received  from  discontinued
operations  activities,  principally sale of assets.  The following  details the
Company's current financing activities:

 Agway Senior Debt
 As more  fully  described  below,  as a  result  of the  Company's  Chapter  11
 Proceedings,  the Agway Senior Debt Agreement ("Senior Debt") has been replaced
 by the DIP Facility.  During the first quarter  ended  September 30, 2002,  the
 Company had available  under its Senior Debt, an asset-based  revolving line of
 credit for up to  $150,000  pursuant to the terms of a credit  agreement  dated
 March 28, 2001 between Agway Inc., certain subsidiaries, and a syndicated group
 of lenders  (the "Credit  Agreement").  During the first  quarter,  we sold the
 Agway Insurance Company and the Sunflower division of our CPG segment for gross
 proceeds  of  approximately  $42,100,  which  had the  impact of  reducing  the
 commitment  level from $150,000 to $125,000.  The Credit Agreement had a number
 of financial covenants which had restricted capital spending and required us to
 maintain minimum levels of earnings before interest, taxes,  depreciation,  and
 amortization (EBITDA), as defined in the Credit Agreement and minimum ratios of
 EBITDA to fixed  charges and interest of Senior  Debt.  Prior to June 30, 2002,
 this Credit Agreement had been amended three times in response to violations of
 financial covenants. In connection with those amendments, those violations were
 waived.  As of  September  30,  2002,  Agway was in  default  under the  Credit
 Agreement,  and it was necessary to obtain a waiver  regarding  those  covenant
 violations.  Those covenant  violations were permanently waived on November 14,
 2002,  and as a result,  Agway no longer has any  obligations  under the Credit
 Agreement.  The Senior  Debt was  collateralized  by a variety  of our  assets,
 including the outstanding  limited  liability  company  membership  interest of
 Telmark.  Interest rates were  determined as either prime rate plus 2.5% or the
 London Interbank Offered Rate (LIBOR) plus 4%.

 On  October  22,  2002,  the   Bankruptcy   Court  granted  Agway  and  certain
 subsidiaries  including the non-debtor borrowers,  final approval to enter into
 an 18-month  term DIP Facility of $125,000  with its  existing  lenders to fund
 working capital  requirements of the Debtors during the Chapter 11 Proceedings,
 and to fund the working capital requirements of the non-debtor borrowers.

 The DIP Facility line is collateralized  by a variety of our assets,  including
 the pledge of the limited liability company membership  interest in Telmark. As
 in the former Credit Agreement, interest rates are determined, at the option of
 Agway,  as either  prime rate plus 2.5% or the London  Interbank  Offered  rate
 (LIBOR) plus 4%. The amount  available to Agway under this  asset-based line of
 credit is the lesser of the  "collateral  borrowing base" or the $125,000 upper
 limit of the line of credit.




                                       11
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


LIQUIDITY AND CAPITAL RESOURCES (continued)
-------------------------------------------
Cash Flows from Financing Activities of Continuing Operations (continued)

 Agway Senior Debt (continued)
 In the event of the sale of certain assets, as defined in the DIP Facility, the
 upper limit of the line of credit will decrease from $125,000 to $100,000.  The
 collateral  borrowing  base  consists of certain of Agway's  eligible  accounts
 receivable,  inventory and cash collateral (as defined in the DIP Facility). In
 addition,  the  collateral  borrowing  base  includes  other assets  pledged as
 collateral up to the lesser of $25,000 or $125,000  less the eligible  accounts
 receivable  and  inventory.  In the event  that a sale of  certain  assets,  as
 defined in the DIP Facility,  is not completed on or before  December 31, 2002,
 the $25,000  additional  collateral  borrowing  base related to those assets is
 reduced by $10,000 and is further reduced by $5,000 in each succeeding month to
 zero by March 31,  2003 in the event the assets  are not sold by then.  At that
 time,  the collateral  borrowing base will consist solely of eligible  accounts
 receivable,  inventory  and cash  collateral.  The sale of  certain  assets  as
 defined in the DIP, however, had not been completed as of January 31, 2003, and
 therefore, the additional collateral borrowing base related to those assets has
 been reduced by $15,000.  As of January 31, 2003,  Agway had $78,400  available
 under the DIP Facility.

 On December 3, 2002, Agway announced the completion of the sale of its Agronomy
 and Seedway  business  to GROWMARK  Inc.  for gross  proceeds of  approximately
 $57,000,  which reduced to zero the outstanding  revolving  credit balance with
 our  secured  lender and  provided  $15,000 of cash  collateral  to support the
 Company's  outstanding  letters of credit as required  per the terms of the DIP
 Facility.

 The DIP Facility has a number of financial covenants which restrict our capital
 spending and require us to maintain minimum levels of earnings before interest,
 taxes,  depreciation,  amortization,  and restructuring  charges,  as well as a
 maximum level of restructuring charges. As of December 31, 2002, the Company is
 in compliance with all covenants with regard to the DIP Facility.

 Agway Subordinated Debt
 Agway previously  registered with the Securities and Exchange  Commission (SEC)
 to offer debentures and money market  certificates to the public. As previously
 disclosed,  since March 6, 2002, the Company  temporarily  suspended its active
 capital  raising  efforts  through the sale of Company  securities  pending the
 filing of certain financial information related to its decision to sell certain
 subsidiaries. However, due to the unexpected failed sale of Telmark in May 2002
 and the related uncertainty caused by the failed sale, Agway did not recommence
 its  active  capital  raising  efforts  even  though  the  relevant   financial
 information  had  been  filed.  At this  stage,  we do not  expect  to sell any
 additional  securities in the near future,  if at all. The debentures and money
 market certificates are unsecured and subordinated to all senior debt of Agway.
 Furthermore, as a result of the Chapter 11 Proceedings, payment of interest and
 maturities  on  these  securities  are  prohibited.  Accordingly,  the  $33,100
 maturity of subordinated debt due on November 1, 2002 was not paid.

Cash Flows from Discontinued Operating Activities
The increase in cash flows from discontinued  operations  activities for the six
months  ending  December 31, 2002  compared to the same period in the prior year
resulted  from the sale of the Agronomy and Seedway  businesses  and sale of our
investment in CF Industries and Allied Seed LLC.




                                       12
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


LIQUIDITY AND CAPITAL RESOURCES (continued)
-------------------------------------------
Cash Flows from Discontinued Operating Activities (continued)

Telmark
Virtually all of the cash flows from operations have  historically been invested
in growth of the Telmark  lease  portfolio,  repayment of debt and  dividends to
Agway.  Telmark has been  successful in arranging its past  financing  needs and
believes  that its  current  financing  arrangements  are  adequate  to meet its
operating  requirements  through  March 31,  2003.  Due to the  ongoing  process
relating to the potential sale of Telmark and to Agway's Chapter 11 Proceedings,
there can be no assurance  that Telmark will be able to obtain future  financing
in amounts,  or on terms,  that are  favorable.  Telmark's  inability  to obtain
financing  and continue its  operations  would  adversely  impact its ability to
provide dividends to Agway or meet any of its obligations to Agway.

Surety Liquidity Risk
In July  2002,  our  surety  provider  ("Surety")  issued  cancellation  notices
relative to $23,900 of surety bonds supporting our insurance programs.  This has
no impact on our insurance coverage, but it does give our insurance carriers the
right to demand payment of the collateral  amount provided by the bonds from the
issuer of the bonds.  If our Surety  chooses to pay cash to our insurers  rather
than reissue bonds, our Surety would have a right to make a claim against us for
such amounts in the Chapter 11 Proceedings.  Because of the cancellation notices
issued,  our  insurers  have a right to make  demand on our  Surety  for  $4,625
starting  late  September  2002 and for $6,000  starting  late October  2002. We
dispute the right of the Surety to cancel the remaining $13,275 at this time but
recognize  their right to cancel coverage in the spring of 2003 at the scheduled
renewal dates.

On October 11, 2003,  one of our  insurers  charged  Agway $355 for  retroactive
premium  adjustments  for prior years' claims in accordance with our contractual
arrangements and $100 to fund a claim payment account.  Because the charges were
related to pre-petition  claim years, the bills were stayed and Agway was unable
to pay it at this time. The insurance  carrier made claim against Agway's Surety
for these amounts. In addition,  due to the cancellation notices sent by Agway's
Surety  referred  to above,  one of Agway's  insurance  providers  made a demand
against the Surety in the amount of $7,500.  In response to these demands and in
anticipation  of  further  demands  by other  insurance  providers  relative  to
cancelled  bonds, on January 29, 2003, the Surety filed a suit demanding  $3,176
against Agway Energy Products,  LLC, Agway Energy  Services,  Inc., Agway Energy
Services-Pa,  Inc. and Telmark, LLC. The complaint alleges that these non-debtor
subsidiaries of Agway are  indemnitors  under an indemnity  agreement  signed by
Agway Inc. in relation to the surety bonds against which demands are being made.
It is too early to determine the merits of these claims and the impact,  if any,
on the financial statements.  Agway's and these subsidiaries'  anticipated claim
losses are fully  reserved on a  discounted  basis by Agway and are  included in
Liabilities  Subject to  Compromise.  The  resolution  of this Surety claim will
determine,  to some degree,  the timing of when cash gets paid and how much gets
paid relative to these claims.



                                       13
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


CRITICAL ACCOUNTING POLICIES
----------------------------

Critical  accounting  policies  are  those  accounting  policies  that  are very
important to the  portrayal of the  Company's  financial  condition  and results
which require  management's  most  difficult,  subjective or complex  judgments,
often as a result of the need to make estimates about the effect of matters that
are inherently uncertain.  The Company believes the following to be critical and
could result in materially  different  amounts being  reported  under  different
conditions or using different assumptions.

Financial Reporting by Entities in Reorganization Under the Bankruptcy Code
SOP 90-7 requires that  pre-petition  liabilities that are subject to compromise
be  segregated  in Agway's  unaudited  Condensed  Consolidated  Balance Sheet as
"Liabilities  Subject  to  Compromise"  and that  revenues,  expenses,  interest
income,  realized gains and losses, and provisions for losses resulting from the
reorganization of the Debtors be reported  separately as  reorganization  items,
except for those revenues and expenses  required to be reported as  discontinued
operations, in the unaudited Condensed Consolidated Statements of Operations.

Disposal of Long-Lived Assets/Discontinued Operations
With  the  announcement  of our  March  6,  2002  plan,  our  ongoing  strategic
assessment,  and our  adoption of SFAS No. 144,  we are  required to  separately
report the combined  results of  businesses  that we are taking steps to sell as
discontinued  operations  and to  immediately  recognize  any  estimated  losses
directly  related  to the  sales  of those  businesses.  Actual  gains,  if any,
realized on sale of discontinued operations are not reported until realized. The
results  of  operations  of  all   discontinued   businesses   are  reported  in
discontinued  operations  in the  periods  in  which  they  occur.  Discontinued
business operations results are reported in the income statement, net of tax, in
earnings (loss) from operations of discontinued  operations.  The recognition of
any  estimated  losses  directly  related to the sales of these  businesses  are
reported in the income  statement,  net of taxes,  in gain (loss) on disposal of
discontinued operations.  The estimation of any loss on disposal,  including the
direct costs to sell, is dependent on numerous factors that continuously  change
as we  proceed in our  negotiations  to sell these  operations.  This  creates a
situation   where  our   estimate  can  change   frequently   and  could  differ
significantly from period to period.

Commodity Instruments
SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities,"
requires  that all  derivative  instruments  be recorded on the balance sheet at
their fair value.  Changes in the fair value of  derivatives  are recorded  each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge  transaction and, if it is, the type
of hedge transaction.  For fair-value hedge transactions in which the Company is
hedging  changes  in fair  value of an  asset,  liability,  or firm  commitment,
changes in the fair value of the derivative  instrument are generally  offset in
the income  statement by changes in the hedged item's fair value.  For cash-flow
hedge  transactions,  in which the  Company is hedging the  variability  of cash
flows  related  to  a  variable-priced   asset,   liability,   or  a  forecasted
transaction, changes in the fair value of the derivative instrument are reported
in other comprehensive income. The gains and losses on the derivative instrument
that are reported in other comprehensive  income are reclassified as earnings in
the periods in which earnings are impacted by the  variability of the cash flows
of the hedged item.  The  ineffective  portion of all hedges are  recognized  in
current-period earnings.





                                       14
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


CRITICAL ACCOUNTING POLICIES (continued)
---------------------------------------

Commodity Instruments (continued)
The  Company's  Energy  segment  enters into a  combination  of  exchange-traded
futures and options  contracts and, in certain  circumstances,  over-the-counter
options  (collectively  "derivatives")  to manage the price risk associated with
future purchases of the commodities used in its operations,  principally heating
oil and propane.  Energy has fair value hedges  associated  with its fixed price
purchase  contracts  and cash  flow  hedges  for its  variable  priced  purchase
contracts.  The derivatives are specifically matched in volume and maturity with
the various  purchase  commitments of the business and generally expire within a
year.  Under SFAS No. 133, the value of option contracts that Energy enters into
has two components:  time and intrinsic  value. The intrinsic value is the value
by which the option is in the money.  The  remaining  amount of option  value is
attributable  to time  value.  Energy  does not include the time value of option
contracts in its assessment of hedge effectiveness and therefore records changes
in the time value component of its options currently in earnings.

In the Agriculture  segment,  the purchase of corn, soy complex, and oats, which
can be sold  directly  as  ingredients  or  included  in feed  products  sold by
Agriculture,  creates price risk for this business. Agriculture intends to match
its purchase and sales contracts whenever possible to hedge price risk; however,
exchange-traded  commodity  instruments are used principally to manage the price
risk associated with unmatched commodity purchases or sales. Agriculture matches
all  derivative  contracts  with their  underlying  purchase  or sale  contract;
however, due to the differences in the changes in the commodity cash price at an
Agriculture  location  versus the  Chicago  Board of Trade,  a highly  effective
hedging  relationship  (as  defined  by SFAS No.  133)  has not  been  achieved.
Therefore, the derivatives used in Agriculture are marked to market currently in
earnings.

Liability for Self-Insurance
The Company is primarily self-insured for workers compensation, general and auto
liability and certain group health and welfare costs. Self-insurance liabilities
are  actuarially  calculated  based on claims  filed and an  estimate  of claims
incurred but not yet reported. Projection of losses concerning these liabilities
is  subject  to a high  degree  of  variability  due to  factors  such as  claim
settlement patterns, litigation trends, legal interpretations,  future levels of
health care costs and the selection of discount rates.

Employee Benefit Plans
The   actuarial   determination   of  Agway's   obligations   and   expense  for
Company-sponsored  pension  and  postretirement  benefits  is  dependent  on the
Company's  selection  of  assumptions  including  the  discount  rate,  expected
long-term  rate of return on plan  assets,  rates of  compensation  increase and
health  care  cost  trend  rate.  Significant  differences  between  our  actual
experience or significant  changes in our assumptions may materially  affect our
pension income and net periodic postretirement obligation expense.

Revenue Recognition
We record revenue from product sales when the goods are shipped,  title and risk
of loss passes to the  customer,  and when  collection  is  reasonably  assured.
Revenue from service contracts is accounted for when the services are provided.




                                       15
<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                        AGWAY INC. (DEBTOR-IN-POSSESSION)
                          AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


CRITICAL ACCOUNTING POLICIES (continued)
----------------------------------------

Income Taxes
Agway is subject to income  taxes on all  income not  distributed  to patrons as
patronage  refunds  and  provides  for  income  taxes  in  accordance  with  the
provisions of SFAS No. 109,  "Accounting  for Income Taxes." Under the liability
method specified by SFAS No. 109,  deferred tax assets and liabilities are based
on the  difference  between the financial  statement and tax basis of assets and
liabilities  as measured by the tax rates that are  anticipated  to be in effect
when these differences  reverse. The deferred tax provision generally represents
the net change in the assets and  liabilities  for  deferred  tax.  The  Company
records a valuation allowance when it is necessary to reduce deferred tax assets
to amounts for which  realization  is more likely than not.  The  provision  for
income taxes has been allocated between  continuing and discontinued  operations
for all years presented.

Environmental Remediation Costs
Agway accrues for losses associated with environmental  remediation  obligations
when such losses are probable and reasonably  estimable.  Accruals for estimated
losses from environmental  remediation  obligations  generally are recognized no
later than  completion  of the remedial  feasibility  study.  Such  accruals are
adjusted as further  information  develops  or  circumstances  change.  Costs of
future expenditures for environmental remediation obligations are not discounted
to their present value. Recoveries of environmental remediation costs from other
parties (primarily other PRPs and state  environmental  funds) are considered in
determining the Company's accrual for these losses.









                                       16
<PAGE>



SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                                       AGWAY INC.
                                       -----------------------------------------
                                                      (Registrant)





Date       March 31, 2003                        /s/ PETER J. O'NEILL
         -------------------          ------------------------------------------
                                                   Peter J. O'Neill
                                                Senior Vice President,
                                                  Finance & Control
                                           (Principal Financial Officer and
                                               Chief Accounting Officer)








                                       17
<PAGE>




               CERTIFICATIONS UNDER NEW EXCHANGE ACT RULES 13A-14
               --------------------------------------------------

                     AND 15D-14 OF THE EXCHANGE ACT OF 1934
                     --------------------------------------

I, Donald P. Cardarelli, certify that:

1.   I have reviewed this quarterly report on Form 10-Q/A  for  the period ended
     December 31, 2002 of Agway Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  Designed  such  disclosure  controls  and  procedures  to  ensure  that
         material  information   relating  to  the  registrant,   including  its
         consolidated  subsidiaries,  is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     b)  Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  Presented  in  this  quarterly   report  our   conclusions   about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the Evaluation Date;

4.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)  all  significant  deficiencies  in the design or  operation of internal
         controls  which  could  adversely  affect the  registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  registrant's  auditors any material  weaknesses in
         internal controls; and

     b)  any  fraud, whether or not material,  that involves management or other
         employees  who have a  significant  role in the  registrant's  internal
         controls; and

5.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date:    March 31, 2003
         ---------------

         /s/  Donald P. Cardarelli
         -------------------------
         Donald P. Cardarelli
         President and Chief Executive Officer





                                       18
<PAGE>



               CERTIFICATIONS UNDER NEW EXCHANGE ACT RULES 13A-14
               --------------------------------------------------

                     AND 15D-14 OF THE EXCHANGE ACT OF 1934
                     --------------------------------------

I, Peter J. O'Neill, certify that:

1.   I have reviewed this quarterly report on Form 10-Q/A for  the  period ended
     December 31, 2002 of Agway Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  Designed  such  disclosure  controls  and  procedures  to  ensure  that
         material  information   relating  to  the  registrant,   including  its
         consolidated  subsidiaries,  is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     b)  Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  Presented  in  this  quarterly   report  our   conclusions   about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the Evaluation Date;

4.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)  all  significant  deficiencies  in the design or  operation of internal
         controls  which  could  adversely  affect the  registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  registrant's  auditors any material  weaknesses in
         internal controls; and

     b)  any fraud, whether or  not material,  that involves management or other
         employees  who have a  significant  role in the  registrant's  internal
         controls; and

5.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date:    March 31, 2003
         --------------

         /s/  Peter J. O'Neill
         ---------------------
         Peter J. O'Neill
         Senior Vice President, Finance and Control



                                       19