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

                                   FORM 10-Q

  /X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

      For the quarterly period ended October 31, 1998

                                      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 33-99834
                              --------------------

                          DAKOTA GROWERS PASTA COMPANY
             (Exact name of registrant as specified in its charter)

                                 NORTH DAKOTA
                       (State or other jurisdiction of 
                        incorporation or organization)

                               ONE PASTA AVENUE
                           CARRINGTON, NORTH DAKOTA
                   (Address of principal executive offices)
                                  45-0423511
                     (IRS Employer Identification Number)

                                     58421
                                  (Zip Code)

                                (701) 652-2855
             (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
   (Former name, former address and former fiscal year, if changed since last
                                    report)

     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, and (2) has been subject to such filing
requirements for the past 90 days.

                         Yes  /X/                    No

     The number of shares outstanding of the issuer's classes of common
stock was 1,103 shares of membership stock, par value $125.00, and 7,356,059
shares of equity stock, par value $2.50, outstanding as of December 15, 1998.






FINANCIAL STATEMENTS

                          DAKOTA GROWERS PASTA COMPANY
                           CONSOLIDATED BALANCE SHEETS
                     (in thousands, except share information) 

                                                    October 31,  July 31,
                                                       1998        1998
                                                    ----------- -----------
                                                          (unaudited)
                                    ASSETS
Current assets:
   Cash and cash equivalents ......................   $   184     $   182 
   Trade accounts receivable, less allowance for
     cash discounts and doubtful accounts of
     $29 and $174 .................................    12,031      12,404
   Other receivables ..............................       949         742
                                                    ----------- -----------
   Total receivables ..............................    12,980      13,146
   Inventories ....................................    24,026      21,935
   Prepaid expenses ...............................     4,197       3,915
                                                    ----------- -----------
      Total current assets ........................    41,387      39,178
Property and equipment
   In service .....................................    95,257      89,030
   Construction in process ........................     3,788       5,463
   Accumulated depreciation .......................   (15,022)    (13,518)
                                                    ----------- -----------
      Net property and equipment ..................    84,023      80,975

Investment in St. Paul Bank for Cooperatives ......     2,086       2,086

Other assets ......................................     2,230       2,298
                                                    ---------- -----------
      Total assets ................................  $129,726    $124,537
                                                    =========== ===========























The accompanying notes are an integral part of these financial statements.

                                       2<PAGE>

                          DAKOTA GROWERS PASTA COMPANY
                           CONSOLIDATED BALANCE SHEETS
                    (in thousands, except share information)

                                                    October 31,  July 31,
                                                       1998        1998
                                                    ----------- -----------
                                                          (unaudited)

                      LIABILITIES AND MEMBERS' INVESTMENT
Current liabilities:
   Notes payable and current portion of long-term
     debt .........................................   $10,209     $ 4,033
   Accounts payable ...............................     5,802       5,748
   Excess outstanding checks over cash on deposit .     1,711       2,336
   Accrued grower payments ........................       841       1,354
   Accrued dividends ..............................     7,404
   Accrued liabilities ............................     3,989       2,894
                                                    ----------- -----------
      Total current liabilities ...................    29,956      16,365

Commitments and contingencies .....................
Long-term debt, net of current portion ............    63,207      66,056
Deferred income taxes .............................     4,900       4,900
Other long-term liabilities .......................        88          88
                                                    ----------- -----------
      Total liabilities ...........................    98,151      87,409
                                                    ----------- -----------
Preferred stock:
   Redeemable preferred stock:
     Series A, 6%, cumulative $100 par value,      
       issued 500 and 1,000 shares, respectively ..        50         100
     Series B, 2% non-cumulative, $100 par value,
       issued 525 and 1,525, respectively .........        53         153
                                                    ----------- -----------
      Total preferred stock .......................       103         253
                                                    ----------- -----------
Members' investment:
   Convertible preferred stock:
      Series D, 6% non-cumulative, $100 par value,
     issued 23,038 shares..........................     2,304       2,304
   Membership stock, $125 par value, issued 1,103
     and 1,101 shares, respectively ...............       137         137
   Equity stock, $2.50 par value, issued 7,356,059
     shares .......................................    18,390      18,390
   Additional paid in capital .....................     4,101       4,101
   Accumulated allocated earnings .................     4,895       2,914
   Accumulated unallocated earnings ...............     1,645       9,029
                                                    ----------- -----------
      Total members' investment ...................    31,472      36,875
                                                    ----------- -----------
      Total liabilities and members' investment ...  $129,726    $124,537
                                                    =========== ===========






The accompanying notes are an integral part of these financial statements.

                                       3<PAGE>

                          DAKOTA GROWERS PASTA COMPANY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                (in thousands) 
    
                                                     Three Months Ended
                                                         October 31,     
                                                       1998        1997
                                                    ----------- -----------
                                                          (unaudited)
Net revenues (net of discounts and allowances of
   $4,450 and $1,721, respectively ................   $31,508     $22,852

Cost of product sold ..............................    25,878      17,486
                                                    ----------- -----------
      Gross proceeds ..............................     5,630       5,366

Marketing, general and administrative expenses ....     2,367         809
                                                    ----------- -----------
      Operating proceeds ..........................     3,263       4,557

Other income (expense):
   Interest and other income ......................         2          36
   Interest expense, net ..........................   ( 1,264)    (   556)
                                                    ----------- -----------
Income before income taxes ........................     2,001       4,037

Income taxes expense ..............................                      
                                                    ----------- -----------
Net income from patronage and non-patronage
   business .......................................     2,001       4,037
Dividends on preferred stock ......................        65           5
                                                    ----------- -----------
Earnings from patronage and non-patronage business
  available for members ...........................   $ 1,936     $ 4,032
                                                    =========== ===========

Average equity shares outstanding .................     7,356       7,356
Fully diluted average equity shares outstanding ...     7,805       7,411 

Earnings from patronage and non-patronage
   business per average equity share outstanding:

   Basic ..........................................   $   .26     $   .55
                                                    =========== ===========
   Fully Diluted ..................................   $   .26     $   .55
                                                    =========== ===========













The accompanying notes are an integral part of these financial statements.

                                       4



                          DAKOTA GROWERS PASTA COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
     
                                                     Three Months Ended
                                                         October 31,      
                                                       1998        1997
                                                    ----------- -----------    
                                                          (unaudited)
Cash flows from operating activities:
   Net Income .....................................  $  2,001    $  4,037 
   Add (deduct) non-cash items:
     Depreciation and amortization ................     1,674         877
     Non-cash portion of patronage dividend .......   (    67)    (    36)
     Interest capitalized .........................   (    57)    (    77)
     Loss on retirement of assets .................         7
   Changes in assets and liabilities:
     Trade receivables ............................   (   373)    (   406)
     Accounts receivable from growers .............               ( 1,089)
     Other receivables ............................   (   207)    (    80)
     Inventories ..................................   ( 2,091)    (   912)
     Prepaid expenses and other assets ............   (   324)    ( 1,560)
     Accounts payable .............................        54       1,657
     Excess outstanding checks over cash on deposit   (   625)    ( 2,457)
     Grower payables ..............................   (   513)        253
     Other accrued liabilities ....................     1,137     (    94)
                                                    ----------- -----------
      Net cash from (used in) operating activities      1,362         925
                                                    ----------- -----------
Cash flows from investing activities:
   Purchases of property and equipment ............   ( 4,522)    ( 2,113)
   Lease improvements, packaging development and
     purchase of other assets .....................   (    15)   (   191)
                                                    ----------- -----------
     Net cash used in investing activities.........   ( 4,537)   ( 2,304)

Cash flows from financing activities:
   Net issuance of short-term debt ................     3,350     ( 2,200)
   Issuance of long-term debt .....................                 5,800    
   Payments on long-term debt .....................   (    23)    (    14)
   Preferred stock retired ........................   (   150)    (    50)
   Dividends on preferred stock ...................               (     5)
                                                    ----------- -----------
      Net cash from financing activities ..........     3,177       3,531 
                                                    ----------- -----------
Net increase (decrease) in cash and cash
  equivalents .....................................         2       2,152
Cash and cash equivalents, beginning of period ....       182           5
                                                    ----------- -----------
Cash and cash equivalents, end of period ..........  $    184    $  2,157
                                                    =========== ===========

Non-cash investing and financing activities:
   Declaration of patronage distribution ..........  $  7,339    $  4,745
   Declaration of preferred dividends .............        65           5
                                                    ----------- -----------   
                                                     $  7,404    $  4,750  
                                                    =========== ===========   

The accompanying notes are an integral part of these financial statements.

                                       5<PAGE>

                         DAKOTA GROWERS PASTA COMPANY
                    NOTES TO CONDENSED FINANCIAL STATEMENTS

   The following notes should be read in conjunction with the notes to
financial statements for the year ended July 31, 1998, as filed in the
Company's Form 10-K.

   NOTE 1.  ORGANIZATION - Dakota Growers Pasta Company ("the Company" or "the
Cooperative") is organized as a farmers' cooperative for purposes of
manufacturing food for human consumption from durum and other grain products. 
Net proceeds are allocated to patrons who are members on the basis of their
participation in the cooperative.

The ownership of membership stock, which signifies membership in the
Cooperative, is restricted to producers of agricultural products.  The
ownership of equity stock is restricted to members of the Cooperative. 
Preferred stock may be held by persons who are not members of the Cooperative.

   NOTE 2.  FINANCIAL STATEMENT PRESENTATION - The financial information
included herein as at October 31, 1998, and for the three month period ended
October 31, 1998 and 1997, is unaudited and, in the opinion of the Company,
reflects all adjustments (which include only normal recurring accruals)
necessary for a fair presentation of the financial position as of those dates
and the results of operations for those periods.  The information in the
Balance Sheet at July 31, 1998, was derived from the Company's audited annual
report for 1998.  Reclassifications may have been made consistent with current
presentation.  Such reclassifications have no effect of the net result of
operations.

The financial information included herein as of October 31 and July 31, 1998
and for the three month period ended October 31, 1998 includes the
consolidated balances and results of operations of Dakota Growers and its
wholly-owned subsidiary, which was acquired on February 23, 1998 and disclosed
in NOTE 3.  The Company has eliminated intercompany balances, and intercompany
sales and purchases, from the consolidated balances and results.

   NOTE 3.  ACQUISITION - On February 23, 1998, Dakota Growers Pasta Company
acquired 100% of the outstanding stock of Primo Piatto, Inc., a Minnesota-
based pasta manufacturer, for cash, the assumption of debt and the issuance of
convertible preferred stock.  Primo's physical assets consist of two pasta
production facilities and a distribution center located in the Minneapolis,
Minnesota metropolitan area.  The Company has accounted for this acquisition
by the purchase method.  The details of the acquisition are more fully
described in the Company's Form 10-K for the year ended July 31, 1998.

   NOTE 4.  INVENTORIES - Inventories of $24,026,000 at October 31, 1998,
include raw materials of $4,667,000 and finished goods and by-products of
$19,359,000.  At July 31, 1998, inventories of $21,935,000 included raw
materials of $4,120,000 and finished goods and by-products of $17,815,000.

   NOTE 5.  PATRONAGE BUSINESS - The Company's business is conducted on a
cooperative basis.  The Company calculates income from patronage sources based
on income derived from bushels of durum delivered by members.  Non-patronage
income is derived from the resale of spring wheat flour purchased from non-
members and blended with other flours, the resale of pasta purchased from non-
members, the resale of semolina purchased from non-members, interest income on
invested funds and any income taxes assessed on non-member business.  For the
three months ended October 31, 1998 and 1997, net income allocable to
patronage business was $1,971,000 and $3,983,000, respectively.


                                       6



   NOTE 6.  EARNINGS AND DIVIDENDS - The Company allocates its patronage
earnings and patronage distributions based on patronage business (bushels of
durum delivered, which approximates one bushel of durum per equity share). 
For presentation purposes, it has calculated basic net income per share by
dividing earnings from patronage and non-patronage business available for
members (net income less preferred dividends) by the weighted average number
of equity shares outstanding during the period.  

The Company has outstanding convertible preferred stock and stock options for
convertible preferred stock.  Fully diluted earnings per share have been
calculated for the assumed conversion of these dilutive securities.  Because
the Company's stock is only traded in a small secondary market through private
transactions, the Company has assumed the proceeds from the exercise of stock
options would reduce debt and, thus, interest expense.

A qualified patronage allocation of $7,338,000, $1.00 per bushel delivered by
members, was authorized by the Board of Directors in October 1998 and
distributed in November 1998.  Additionally, $1,981,000, $.27 per bushel, was
allocated to the members but neither distributed nor qualified for income tax
purposes.  A qualified patronage allocation of $4,745,000, $1.00 per bushel,
was authorized by the Board of Directors in October 1997 and distributed in
November 1997.  Additionally, $2,501,000, $.527 per bushel, was allocated to 
the members but neither distributed nor qualified for income tax purposes.

   NOTE 7.  INCOME TAXES - The Company is a non-exempt cooperative as defined 
by Section 1381 (a)(2) of the Internal Revenue Code.  Accordingly, net margins
from business transacted with member patrons which are allocated, qualified
and paid as prescribed in Section 1382 of the code will be taxable to the
members and not to the Company.  Net margins and member allocations are 
determined on the basis of accounting used for financial reporting purposes.  
To the extent that net margins are not allocated and paid as stated above or
arise from business done with non-members, the Company shall have taxable
income subject to corporate income tax rates.  Cooperative organizations have
8 1/2 months after their fiscal year-end to make such allocations in the form
of written notices of allocation or cash.

The Company has not established any provision for income taxes for the nine
months ended October 31, 1998.
  






















                                       7<PAGE>

  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
   
   Forward-Looking Statements
   
      The following discussion contains forward-looking statements.  Such
   statements are subject to risks and uncertainties, including those
   discussed in the Company's 1998 Form 10-K under "Risk Factors", that
   could cause actual results to differ materially from those anticipated. 
   The Company cautions readers not to place undue reliance on such
   forward-looking statements.
   
   Results of Operations
   
   Comparison of the Three Months ended October 31, 1998 and 1997
   
      For the quarter ended October 31, 1998, the Company's earnings
   totaled $1.9 million.  While down as anticipated from the $4.0 million
   earned last year, these results exceeded forecasted expectations by over
   8%.
   
      Pasta sales volumes continue to increase, up 47% over last year, and
   net revenues from pasta sales increased by 54% for the period.  The net
   earnings impact of these increased pasta sales was $1.9 million.  Most
   of the sales increase was in private label retail, where we estimate we
   now have an industry-leading market share of 37%.
   
      The increase in private label retail sales resulted in additional
   costs associated with higher inventories.  In comparing quarters, we
   incurred $0.6 million of increased transfer freight and storage and
   handling costs moving this inventory to forward distribution centers. 
   It has also led to the enhancement of our sales and sales service team,
   resulting in $0.4 million of additional costs.
   
      In February 1998, we acquired additional retail manufacturing
   facilities in the Minneapolis, Minnesota area.  This acquisition was in
   response to increasing customer demand, and has allowed us to meet
   customer product requirements internally, and thus control our own
   quality and service levels.  It also provides us with capacity for the
   continuing growth of our existing customers and for future marketing
   efforts.  While providing these benefits, there is a period impact of
   the lower utilization of these facilities. Staffing for administrative,
   quality assurance, sanitation, engineering and maintenance are adequate
   for a much higher utilization.  We estimate the cost of under-utilizing
   this experienced staff at $1.4 million for the quarter.  The
   depreciation and interest associated with the new facilities totaled an
   additional $0.8 million.  These costs were partially offset by an
   estimated $0.6 million savings from reducing our outside purchases of
   pasta.
   
      Our existing milling operations are not sufficient to meet the
   current semolina requirements for pasta manufacturing, causing us to
   have a portion of our members' durum to be toll milled by a third party. 
   We estimate that the earnings impact of this toll milling was $0.3
   million for the quarter.  A reduction in the livestock feeding industry
   and increased competition from other sources of feed lowered the price
   we were able to realize from the sale of by-products of our durum
   milling operations.  This price decline had an estimated $1.2 million
   impact on net revenues for the quarter.
   

                                       8


   
      As we entered the new fiscal year, we had durum and flour purchase
   commitments that were high relative to the market price of pasta, the
   result of an extremely favorable conclusion to the durum-growing season
   and changes in the pasta industry resulting in excess capacity and
   competitiveness in the pasta market.  As previously disclosed, these
   conditions were exactly opposite from those experienced in the first
   half of last fiscal year.  We estimate that this impact on the first
   quarter of fiscal 1999 compared to last year was $1.8 million, almost
   entirely offsetting the $2.1 million benefit derived from the balance of
   our durum purchases.
      
      Overall cost of sales were up $8.4 million, due to increased sales
   and the increase resulting from the fixed costs of quality assurance,
   sanitation, engineering, maintenance and depreciation associated with
   the lower utilization of pasta assets.
      
      Marketing, general and administrative expenses (MG&A), at 7.5% of net
   revenues were more than double the 3.5% of net revenues last year.  Most
   of the impact was due to the factory administration impact of the lower
   utilization of pasta assets and enhancement of sales and sales support
   costs.  A change in the member durum delivery mechanism resulted in a
   reduction of $200,000 in cash available to the Company, most of which is
   kept by the members.  The enhancement of our information technology
   department to focus on the Year 2000 issue, electronic data interchange
   and the installation of a technology support structure to drive the new
   ERP software system added approximately $70,000 in MG&A expense.
      
      Interest expense increased $0.7 million, primarily due to the debt
   issued for the acquisition of the Minnesota facilities.  Debt
   restructuring in July and August reduced our average interest rates,
   resulting in savings of $73,000 for the quarter.
         
      We continue to anticipate that the conditions discussed above will
   exist, although to a lesser degree, through the second quarter of fiscal
   1999, resulting in earnings that will be slightly less than earnings in
   the second quarter of fiscal 1998.  The higher durum commitments will be
   completed during the second quarter, and with the completion of our mill
   expansion in March 1999 and continued growth in sales, we are guardedly
   optimistic of the results for the latter half of fiscal year 1999.
   
   Liquidity and Capital Resources
   
      The opening line in Dakota Growers' Mission Statement reads "Dakota
   Growers Pasta Company was founded on the dream to provide farmers with
   the means to secure a future for themselves and their families."  In
   keeping true to this statement, we attempt to return as much of our
   earnings back to our members annually as possible, balanced with
   financial responsibility for ongoing obligations and future growth
   opportunities.  Our liquidity requirements include the construction or
   acquisition of manufacturing facilities and equipment and the expansion
   of working capital to meet our growth requirements, as well as a fair
   return to our members.  We meet these liquidity requirements from cash
   provided by operations, sales of equities and outside debt financing.
   
      Operations generated $1.4 million in cash for the quarter ended
   October 31, 1998, up from the $0.9 million generated last year.  For the
   twelve months ended October 31, 1998, our fixed charge coverage, the
   measurement of the number of times each year we earn enough to cover
   fixed charges, was at 3.7x, well above the 2.0x requirement of our loan
   agreements.  
                                 
                                       9


   
      Cash used in investing activities totaled $4.5 million, primarily for
   mill expansion.  In fiscal year 1998, we entered into agreements for an
   estimated $10.5 million mill expansion project and an estimated $1.3
   million ERP software replacement project.  As of October 31, 1998, $4.6
   million had been expended on these projects.
   
      In October 1998, the Board of Directors, consistent with past
   practice, declared a qualified patronage allocation and distribution of
   $1.00 per bushel delivered by members in fiscal year 1998.  This
   distribution was made on November 16, 1998.
   
      On November 19, 1998, our stock offering was declared effective by
   the Securities and Exchange Commission.  The first two phases of this
   offering, which are restricted to existing members, will run through
   January 6, 1999.  Through this offering, we are targeting to raise
   between $12.4 million and $24.9 million for the mill expansion, to
   replace the working capital expended in fiscal year 1998 for pasta
   expansion construction projects and to re-enhance our financial position
   which was reduced by the issuance and assumption of debt associated with
   the acquisition of the Minnesota facilities.  Through the purchase of
   equity stock, our members are also committing to providing up to 1
   bushel of milling quality durum to the Company per equity share owned. 
   If the entire offering is sold, we will have enough durum commitments to
   run all mills, including the third mill currently under construction, at
   capacity.  We believe that cash generated by operations, borrowings and
   net proceeds from the sale of at least 50% of the shares in this
   offering will be adequate to meet the minimum capital and liquidity
   requirements for the foreseeable future.
    
      In the event that we do not receive at least 50% of the maximum
   proceeds from this offering, we will be required to consider other
   alternatives which would provide access to the capital necessary for our
   continued activities and growth.  These strategies could include
   deferral or reduction of capital expenditures, retaining a higher level
   of annual earnings than has been historical practice, the issuance of
   additional debt financing, searching for equity investments from
   institutional investors, the use of alternative business structures and
   entering into joint ventures with either strategic or financial goals.
   
      We have utilized outside financing on a short-term basis to fund
   operations and expansion projects until permanent financing is issued. 
   Short-term financing is provided by the St. Paul Bank for Cooperatives
   (Bank).  In late November 1998, the short-term line of credit with the
   Bank was increased to $15.0 million.  Borrowings against the line are
   secured by cash, receivables and inventories.  For the quarter ended
   October 31, 1998, short-term debt increased by $3.4 million
   
      Our long-term financing requirements are currently provided by the
   Bank and through Senior Secured Notes held by institutional investors. 
   The Senior Secured Notes were issued on August 11, 1998.  The various
   debt agreements obligate us to maintain or achieve certain amounts of
   equity and certain financial ratios.  
   
      With the October 1998 declaration of patronage distributions, our net
   ownership ratio fell below the 40% requirement of the Bank's loan
   agreement.  While retention of 1998 earnings would have allowed us to
   remain in compliance with the net ownership requirement, the Board of
   Directors believed that such retention would deny the members the
   opportunity to assess their individual financial situation in making 


                                      10



   investment decisions in the stock offering.  We asked for and received a 
   waiver from the Bank for the net ownership noncompliance.  If we are unable 
   to raise a minimum of $10.0 million in the stock offering by January 6,     
   1999, we will be required to implement a unit retain program, withholding a 
   portion of our durum payments to our members until compliance is achieved. 
   
      As of October 31, 1998, we meet our debt agreement requirements for
   working capital, net worth and cash flow to fixed charges ratio.  Our
   funded debt to cash flow is at 4.2:1, outside our requirement to
   maintain a 4.0:1 ratio through July 31, 1999.  With the use of proceeds
   from the stock offering and projected results for the second quarter, we
   anticipate this ratio to be below the 4.0:1 requirement by January 1999. 
   
   
   Year 2000
   
      Many computer and other software and hardware systems currently are
   not, or will or may not be, able to read, calculate or output correctly
   using dates after 1999, and such systems will require significant
   modification in order to be year 2000 compliant.  This issue may have a
   material adverse effect on our operations and financial performance
   because computer and other systems are integral parts of our, and our
   suppliers' and customers', manufacturing and distribution activities, as
   well as our accounting, sales and other information systems.  In the
   event of failure or miscalculation, we will have to divert financial
   resources and personnel to address this issue.
   
      We are in the process of reviewing our computer and other hardware
   and software systems, and have begun upgrading systems that are
   identified as not being year 2000 compliant.  The ERP system (software
   and hardware), along with the critical pasta production equipment has
   been tested, and either replaced or modified to be year 2000 compliant
   at this time.  We anticipate all existing critical information and
   processing systems will be year 2000 compliant by the end of fiscal year
   1999.  We have alternate plans in the event any critical system
   upgrading that is necessary is not completed on time.  We believe these
   alternate plans are sufficient to meet our internal needs.
   
      Although we are not aware of any material operational impediments
   associated with making any necessary upgrades to our computer and other
   hardware and software systems to be year 2000 compliant, we cannot make
   any assurance that the upgrade of our computer systems will be free of
   defects or that our alternate plans will be sufficient to meet our
   needs.  If such risks materialize, we could experience material adverse
   consequences to our operations and financial performance, substantial
   costs, or both.
   
      We have begun contacting our significant suppliers and customers as
   part of our year 2000 compliance action plan, to identify any potential
   year 2000 compliance issues with them.  We are currently unable to
   anticipate the magnitude of the operational or financial impact of year
   2000 compliance issues with our suppliers and customers.
   
      We expect to incur up to $500,000 during fiscal year 1999 to resolve our 
   year 2000 compliance issues.  All expenses incurred in connection with      
   becoming year 2000 compliant will be expensed as incurred, other than       
   acquisitions of new software or hardware, which will be capitalized.

 

                                 
11



                                 Part II


Item 6.  Exhibits and Reports on Form 10-Q

   (a)  Exhibits
        
        EXHIBIT
          NO.                        DESCRIPTION
        -------                      -----------
          10.1   Loan Agreement in the aggregate amount of $55,950,000.00      
                 dated November 24, 1998, between the Company and St. Paul     
                 Bank for Cooperatives.
       
          10.2   Nonnegotiable Note of Dakota Growers Pasta Company in the     
                 principal amount of $15,000,000.00 dated November 24, 1998.

          27     Financial Data Schedule, which is submitted electronically
                 to the Securities and Exchange Commission for information
                 only and not filed.  

   (b)  Reports on Form 8-K
        
        None





































                                      12<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.







                                          Dakota Growers Pasta Company

Date:  December 14, 1998                  /s/   Timothy J. Dodd
       ----------------                   ----------------------------------
                                          Timothy J. Dodd (President and
                                          General Manager, and Principal
                                          Executive Officer)

Date:  December 14, 1998                  /s/   Thomas P. Friezen
       ----------------                   ----------------------------------
                                          Thomas P. Friezen (Vice President,
                                          Finance and Principal Financial
                                          and Accounting Officer)




































                                      13<PAGE>

                        



Exhibit 10.1 
380313                                              Date Approved 11/24/98


                         ST. PAUL BANK FOR COOPERATIVES

                                Loan Agreement

Borrower:                                           Application No. S-27434

DAKOTA GROWERS PASTA COMPANY
CARRINGTON, NORTH DAKOTA

     New Loans                           Present Loans

$15,000,000.00 - Seasonal Loan      $12,000,000.00 - Term Loan
                                    [12,000,000.00] - Letter of Credit
Commitment                                       13,000,000.00 - Term Loan   
                                     15,950,000.00 - Construction Term Loan   
                                     -------------
                                    $40,950,000.00

           Total Loans
          ------------ 
        $15,000,000.00 - Seasonal Loan, Note No. 24340
         12,000,000.00 - Term Loan, Note No. 39181NP*
        [18,000,000.00] - Letter of Credit Commitment, Note No. 39182NP*/**
         13,000,000.00 - Term Loan, Note No. 3061     
         15,980,000.00 - Construction Term Loan, Note No. 35062
         -------------
        $55,950,000.00 - Total

*NP indicates a non-patronage note.
**Note No. 39182NP will only be used to repay Note No. 39181NP.  The maximum
total indebtedness hereunder will not exceed $55,950,000.00.

The St. Paul Bank for Cooperatives (the "Bank") and Borrower agree to the
above loans (the "Loans") to the Borrower.  The Borrower's present
indebtedness to the Bank and/or commitments outstanding (entitled Present
Loans in the above heading) are consolidated and are made subject to all the
terms and conditions of this loan agreement.

I.    PURPOSE
      The proceeds of the Loans shall be used as follows:
      A.  The Seasonal Loan shall be used for general operating purposes.
      B.  Term Loan, Note No. 39181NP, was used to finance Term Loan, Note No. 
          39180.
      C.  Letter of Credit Commitment, Note No. 39182NP shall be used in the   
          event that the Bank of North Dakota draws on the letter of credit in 
          its favor in accordance with the terms and conditions thereof.
      D.  Term Loan, Note No. 33061, was used to finance the construction of   
          the pasta plant.
      E.  Construction Term Loan, Note No. 35062, was used to finance the mill 
          and pasta line expansion (the "Project"). 



                                      14



II.   NOTES AND SECURITY
      Advances under this loan agreement, together with any existing           
      indebtedness of the Borrower to the Bank, shall be evidenced by a        
      promissory note or notes acceptable to the Bank, and shall be secured to 
      the extent of all collateral presently held by the Bank, including but   
      not limited to all real estate mortgages and security agreements.

      All property under lien to the Bank as security for the Loans shall be   
      collateral for all indebtedness of the Borrower to the Bank. 

III.  LIMITATION ON ADVANCES
      A.  The total Seasonal Loan outstanding under this or any loan agreement 
          between the Bank and the Borrower shall not exceed the amount shown  
          in the above heading.
      B.  Advances on the Seasonal Loan shall not exceed the sum of the 
          following collateral values based on collateral reports to be        
          submitted monthly (or more often at Borrower's discretion) in such   
          form as required by the Bank:
  
          1.  Eighty percent (80%) of accounts receivable acceptable to the    
              Bank and not older than forty-five (45) days from the date of    
              invoice.
          2.  Sixty-five percent (65%) of the net market value (market value   
              less selling expenses) of owned inventories of grain, semolina,  
              flours, millfeeds, and finished pasta.
          3.  Fifty percent (50%) of supply inventories.
      C.  Advances on Letter of Credit Commitment, Note No. 39182NP shall      
          support a letter of credit issued by the Bank in favor of Bank of    
          North Dakota following submission of satisfactory letter of credit   
          application.  The letter of credit shall be issued in an amount not  
          to exceed $12,000,000.

IV.   INTEREST
      A.  All Seasonal Loan balances hereunder shall bear a rate of interest   
          per annum (which is 7.69% as of July 23, 1998), which rate may vary  
          from time to time based on the Bank's cost of funds (the "Applicable 
          Rate"); provided, however, the fixed amounts (as defined in the      
          "FIXED RATE SEASONAL ADVANCES AND MATURITIES" section of this loan   
          agreement) shall bear such rates of interest as described in the     
          statements.  Variable rate balances (i.e., balances other than fixed 
          amounts) under this Paragraph A shall be subject to Paragraph D of   
          this Section IV commencing August 1, 1998.
      B.  Through July 31, 1998, all outstanding Term Loan balances, excluding 
          Note Nos. 39181NP and 39182NP, shall bear interest at a variable     
          rate of interest per annum (which is 8.14% as of July 23, 1998),     
          which rate may vary from time to time based on the Bank's cost of    
          funds; provided, however, the fixed amounts (as defined in the       
         "CUSTOMER MANAGED FIXED RATE TERM ADVANCES AND MATURITIES" section    
         of this loan agreement) shall bear such rates of interest as          
         described in the statements.
      C.  Commencing August 1, 1998, all outstanding Term Loan balances,       
          excluding Note Nos. 39181NP and 39182NP, shall bear interest at a    
          variable rate of interest per annum (which is 8.04% as of July 23,   
          1998); which rate may vary from time to time based on the Bank's     
          cost of funds (the "Applicable Rate"); provided, however, the fixed  
          amounts (as defined in the "CUSTOMER MANAGED FIXED RATE TERM         
          ADVANCES AND MATURITIES" section of this loan agreement) shall bear  
          such rates of interest as described in the statements.  Variable     
          rate balances (i.e., balances other than fixed amounts) under this   
   

                                      15



          Paragraph C shall be subject to Paragraph D of this Section IV       
          commencing August 1, 1998.
      D.  This paragraph applies to (and only to) variable rate Seasonal and   
          Term Loan balances (excluding balances under Note Nos. 39181NP and   
          39182NP) commencing August 1, 1998.  During any time that the        
          Borrower is not in compliance with the current ratio and debt        
          service coverage ratio conditions (as defined in Section IX.,        
          paragraphs D and F, respectively, and measured at the times          
          specified therein), all such variable rate balances shall bear       
          interest at a rate 60 basis points (0.60%) above the respective      
          Applicable Rate.  During any time that the Borrower is in compliance 
          with such current ratio and debt service coverage ratio conditions,  
          the interest rate shall be increased or decreased (or, as            
          applicable, not changed) in accordance with the following Incentive  
          Interest Rate Matrix based on Net Ownership Ratio (as defined in     
          Section IX, Paragraph E and measured at the times specified          
          therein):

                       Incentive Interest Rate Matrix
          -------------------------------------------------------------------
          NET OWNERSHIP         INCREASE/DECREASE         CHANGE TO INTEREST
              RATIO              TO INTEREST RATE        RATE IN BASIS POINTS
          -------------------------------------------------------------------
          Less than ***%               *****                     *****
          -------------------------------------------------------------------
          Less than ***% and           *****                     *****
            greater than or 
            equal to ***%
          -------------------------------------------------------------------
          Less than ***% and           *****                     *****
            greater than or 
            equal to ***%
          -------------------------------------------------------------------
          Less than ***% and           *****                     *****
            greater than or
            equal to ***%
          -------------------------------------------------------------------
          Greater than or equal        *****                     *****
            to ***%
          -------------------------------------------------------------------

          The interest rate change shall occur within one month after the      
          Bank's receipt of the monthly compliance report.
      E.  The interest rate on Term Loan, Note No. 39181NP shall be fixed to   
          maturity at 25 basis points (0,25%) over the ten (10) year U.S.      
          Constant Maturity Treasury Rate, as published in The Wall Street     
          Journal Midwest Edition, for the previous day.  The interest rate on 
          Term Loan, Note No. 39181NP, shall not be subject to Paragraph D of  
          this Section IV.
      F.  Any outstanding draws under the Letter of Credit Commitment, Note    
          No. 39182NP, shall bear interest at the variable rate per annum      
          equal to the highest prime rate, as published in The Wall Street     
          Journal Money Rate section, plus 200 basis points (2.0%).  Interest  
          rate changes will take place within seven business days from the     
          time of publication in The Wall Street Journal.  The interest rate   
          on Letter of Credit Commitment, Note No. 39182NP shall not be        
          subject to Paragraph D of this Section IV.
      
          [* - Confidential treatment requested in previous filing]


                                      16



      G.  Interest on the Loans shall be payable on the last day of each       
          calendar quarter or as the Bank may specify.

V.    FEES
      A.  The Term Loans, except for Letter of Credit Commitment, Note No.     
          39182NP, shall be subject to an agency fee of 10 basis points        
          (0.10%) on an annualized basis, on the daily outstanding balances    
          and commitments payable on the last day of each calander quarter,    
          in arrears.
      B.  The Letter of Credit Commitment, Note No. 39182NP shall be subject   
          to a commitment fee of 62.5 basis points (0.625%) on an annualized   
          basis, on the daily outstanding commitments payable on the last day  
          of each calander quarter, in arrears.  This commitment fee shall be  
          on a non-patronage basis.
      C.  Borrower shall pay an origination fee of $4,000 payable at the time
          of the first advance.

VI.   FIXED RATE SEASONAL ADVANCES AND MATURITIES
      In accordance with and subject to the Bank's Fixed Rate Seasonal Loan    
      Program, and subject to the Bank's overall program funding limitations,  
      it is agreed the interest rate may be fixed on any seasonal loan        
      indebtedness (the "fixed amount") made under this loan agreement as      
      follows:
 
      D.  The minimum fixed amount shall be $100,000.
      E.  Each fixed amount and each selected pricing maturity date will be    
          treated as a separate indebtedness for interest rate designation and 
          interest billing purposes.
      F.  Fixed amount pricing maturities shall not be less than 15 days nor   
          greater than 180 days from the day of advance to be based on the     
          maturity selection of the Borrower, however, all fixed amounts shall 
          have pricing maturities no later than April 30, 2000.
      G.  The Borrower may receive same day interest rate quotes if a firm     
          request is placed and accepted by the Bank before 12:01 p.m.         
          (Central Time) on any business day.  A firm request is one placed by 
          telephone or in writing by an authorized representative of the       
          Borrower.
      H.  Fixed amounts shall be automatically converted to the variable rate  
          seasonal loan at maturity.
      I.  Fixed amounts cannot be repaid or repriced by the Borrower prior to  
          their respective pricing maturity dates without being subject to     
          prepayment penalties.  Such penalties shall be determined according  
          to a methodology specified by the Bank which preserves the Bank's   
          yield on the fixed amount prepaid or repriced and which is based     
          upon the difference between the Bank's cost of like funds to pricing 
          maturity at the time of prepayment and the existing fixed rate on    
          the fixed amount.
      J.  Each fixed amount shall be summarized in the Daily Activity          
          Statement (the "statement") to the Borrower.  Each statement shall   
          reference and confirm at least the following:

          1.  Note No. 24340.
          2.  The fixed amount and its Contract No.
          3.  The rate of interest.
          4.  The effective date.
          5.  The pricing maturity date.





                                      17      



      K.  The Borrower agrees that the statement shall verify the              
          understanding reached by the parties, and that the Borrower shall be 
          bound by the statement without its signature; provided, however, if  
          there is an error reflected in the statement, the Borrower shall     
          notify the Bank of the error within five days after receipt of the   
          statement and an appropriate correction will be made.
      L.  If there is a question on the interest rate applicable to the fixed  
          amount, the rate as established by the Bank for such amounts shall   
          be controlling.
      M.  Section IV., paragraph D. shall not apply to this Section VI.,       
          "FIXED RATE SEASONAL ADVANCES AND MATURITIES."

VII.  CUSTOMER MANAGED FIXED RATE TERM ADVANCES AND MATURITIES
      In accordance with and subject to the Bank's Customer Managed Fixed Rate 
      Term Program and subject to the Bank's overall program funding           
      limitations, it is agreed the interest rate may be fixed on any term     
      loan indebtedness (the "fixed amount") under this loan agreement as      
      follows:

      A.  The minimum fixed amount shall be $1,000,000.
      B.  Each fixed amount and each selected pricing maturity date shall be   
          treated as a separate indebtedness for interest rate designation and 
          interest billing purposes.
      C.  Fixed amount pricing maturities shall be for a minimum maturity of   
          60 days and a maximum of seven years.
      D.  The Borrower shall have indebtedness under the variable rate term    
          interest rate program or priced maturing fixed amounts against which 
          to apply scheduled term loan payments as set forth in the"REPAYMENT" 
          section of this loan agreement.
      E.  The Borrower's selection of loan interest rate quotes and pricing    
          maturities must be communicated to the Bank by 2:00 p.m. (Central    
          Time) on the day prior to the fixed amount advance.  If this         
          selection deadline is not met, maturing fixed amounts shall          
          automatically convert to the variable rate term loan.
      F.  Fixed amounts cannot be repaid or repriced by the Borrower prior to  
          their respective pricing maturity dates without being subject to     
          prepayment penalties.  Such penalties shall be determined according  
          to a methodology specified by the Bank which preserves the Bank's    
          yield on the fixed amount prepaid or repriced and which is based     
          upon the difference between the Bank's cost of like funds to pricing 
          maturity at the time of prepayment and the existing fixed rate on    
          the fixed amount.
      G.  Each fixed amount shall be summarized in the Daily Activity          
          Statement (the "statement") to the Borrower.  Each statement shall   
          reference and confirm at least the following:

          1.  Note Nos. 33061 / 35062.
          2.  The fixed amount and its Contract No.
          3.  The rate of interest.
          4.  The effective date.
          5.  The pricing maturity date.

      H.  The Borrower agrees that the statement shall verify the             
          understanding reached by the parties, and that the Borrower shall be 
          bound by the statement without its signature; provided, however, if  
          there is an error reflected in the statement, the Borrower shall     
          notify the Bank of the error within five days after receipt of the   
          statement and an appropriate correction will be made.



                                      18   



      I.  If there is a question on the interest rate applicable to the fixed 
          amount, the rate as established by the Bank for such amounts shall   
          be controlling.
      J.  Section IV., paragraph D. shall not apply to this Section VII.,      
          "CUSTOMER MANAGED FIXED RATE TERM ADVANCES AND MATURITIES."

VIII. REPRESENTATIONS AND WARRANTIES
      The Borrower represents and warrants that:

      A.  The Borrower and PPI are duly organized, existing and in good       
          standing under the laws of North Dakota and Minnesota, respectively. 
          They have the power to own their properties and to carry on their    
          business as now being conducted.  They are duly qualified to do      
          business and are in good standing in each jurisdiction in which the  
          transaction of their business makes such qualification necessary,    
          except where the failure to so qualify would not have a material     
          adverse effect on their business, operations, or properties, taken   
          as a whole.
      B.  The borrower has full power and authority to execute, deliver, and   
          perform under the terms of this loan agreement and the Borrower and  
          PPI each has full power and authority to execute, deliver and        
          perform under the terms of the notes, the security agreements,       
          mortgages, and guaranty (collectively referred to as the "Loan and   
          Security Documents") and all other documents and agreements          
          contemplated by this loan agreement, all of which have been duly     
          authorized by each respective party.
      C.  All consents or approvals of any person which are necessary for, or  
          are required as a condition of, the execution, delivery, and         
          performance under the terms of the Loan and Security Documents have  
          been obtained.
      D.  The Loan and Security Documents each constitutes the legal, valid,   
          and binding obligation of the Borrower and PPI, enforceable against  
          the Borrower and PPI, in accordance with its respective terms.
      E.  To the best of the Borrower's knowledge, there are no pending legal  
          or governmental actions, proceedings, or investigations to which the 
          Borrower or PPI is a party, or to which any property of the Borrower 
          or PPI is subject, which might result in any material adverse change 
          in the business or financial condition of the Borrower or PPI, and   
          to the best of the Borrower's knowledge, no such actions or          
          proceedings are threatened or contemplated by governmental           
          authorities or any other person.
      F.  There is no provision of the Borrower's articles of incorporation or 
          bylaws and, to the best of the Borrower's knowledge after due        
          inquiry, no provision of any existing real estate mortgage,          
          indenture, lease, security agreement, contract, note, instrument, or 
          other agreement or document binding on the Borrower or PPI, or       
          affecting their properties, which would conflict with or in any way  
          prevent the execution, delivery, or performance of the Loan and      
          Security Documents by the Borrower or PPI.
      G.  To the best of the Borrower's knowledge, the Borrower and PPI each   
          has duly and lawfully obtained, and is duly and lawfully maintaining 
          in effect, all material, licenses, certificates, permits,            
          qualifications, authorizations, and approvals which are required or
          necessary for the operation of its business, whether federal, state, 
          or local.
      H.  To the best of the Borrower's knowledge, neither the Borrower nor    
          PPI has (1) any direct or contingent liability for any obligation of 
          any other person and (2) any obligation to make a loan or advance to 
          any person or to own, purchase, or acquire any stock, obligations,  


                                      19   



           or securities of, or any other interests in, or to make any capital 
           contribution to, any person.

IX.   FINANCIAL CONDITIONS
      While this loan agreement is in effect, the Borrower agrees to comply    
      with the following financial conditions:

      A.  Cash Patronage:  The Borrower will pay cash patronage in amounts     
          necessary to qualify its patronage refunds as a qualified patronage  
          dividend as defined in the Internal Revenue Code.
      B.  Dividends:  The Borrower will not pay cash dividends on capital     
          stock in excess of minimum requirements, as stated in the Borrower's
          by-laws and/or stock certificates, without the prior written consent
          of the Bank, which will not be unreasonably withheld.
      C.  Revolvement of Equities:  The Borrower may not revolve, or otherwise 
          pay out, any owner equity if such action would cause one or more of
          the "FINANCIAL CONDITIONS D, E, or F" under this loan agreement to  
          be in a noncompliance position without the prior written consent of
          the Bank, which will not be unreasonably withheld.
      D.  Current Ratio:  The Borrower will maintain a current ratio (current  
          assets divided by current liabilities) of not less than 1.35:1,      
          measured at each month end.
      E.  Net Ownership Ratio:  The Borrower will maintain a net ownership    
          ratio (total equity divided by the sum of working capital [current 
          assets minus current liabilities] plus net fixed assets plus        
          principal on capitalized and operating leases plus other assets) of
          not less than forty percent (40%), measured at each month end.       
          Working capital may be adjusted to reflect a current ratio of       
          1.35:1.
      F.  Debt Service Coverage Ratio:  The Borrower will maintain a debt     
          service coverage ratio of not less than 1.25:1, measured for the    
          previous twelve month period ending July 31 of each year.  The debt
          service coverage ratio shall be calculated as follows:

          After-tax net income

          Add:         Depreciation and Amortization Expense
          Less:        Deferred Patronage Received
                       Cash Patronage Declared Payable
                       Extraordinary Gains
          Equal to:    Adjusted Income from Operations
          Divided by:  Current Maturities of Long-Term Liabilities
                       (including principal on capitalized and operating      
                       leases)
          Equals:      Debt Service Coverage Ratio

X.    GENERAL CONDITIONS
      While this loan agreement is in effect, the Borrower agrees to comply   
      with the following conditions:

      A.  Eligibility Status:  The Borrower will maintain its status as an     
          eligible borrower as defined in the Farm Credit Act of 1971, as     
          amended (12 U.S.C. 2129).
      B.  Stock Investment:  The Borrower will purchase equities of the Bank   
          in such amounts as prescribed by the Bank's capital plan and any     
          amendments to the plan.
      C.  Non-Patronage Loans: Term Loan, Note No. 39181NP and Letter of      
          Credit Commitment, Note No. 39182NP shall be non-patronage loans.   
          The Borrower foregoes any opportunity to purchase Bank equities or  


                                      20   



          receive allocations of patronage earnings on Term Loan, Note No.     
          39181NP and Letter of Credit Commitment, Note No. 39182NP.
      D.  Insurance:  The Borrower will maintain:

          1. Business and property insurance with financially sound insurers,
             in amounts sufficient to protect the Loans.
          2. Flood insurance as may be required by the Bank in accordance with 
             applicable law including, but not limited to, regulations of the  
             Farm Credit Administration.
          3. All appropriate grain licenses and all required grain buyers'     
             and warehouse bonds.

      E.  Financial Information:  The Borrower will furnish the Bank audited   
          annual financial statements prepared in accordance with GAAP, and    
          acceptable auditors' reports, within 120 days after the end of each  
          fiscal year, annual operating budgets within 60 days after the end  
          of each fiscal year, monthly financial statements prepared in        
          accordance with GAAP within 30 days after the end of each month, and 
          such other information as the Bank may request relative to the      
          Borrower's business, and permit such examination of its books and    
          records as the Bank may specify.  The Borrower also agrees that      
          parties preparing such financial information are authorized to       
          release to the Bank such financial information as the Bank may      
          request.
      F.  Collateral Reports:  The Borrower will furnish the Bank collateral   
          reports to be submitted in such form and frequency as required by   
          the Bank.
      G.  Negative Pledge:  The Borrower will not mortgage, pledge, assign, or 
          grant security interests in any assets to any other party without   
          the prior written consent of the Bank, which will not be             
          unreasonably withheld.
      H.  Corporate Documents:  The Borrower will not amend its articles of    
          incorporation, by-laws, growers agreement, nor its grain delivery    
          payment policies without the consent of the Bank, which will not be  
          unreasonably withheld.
      I.  Environmental Representations, Conditions, and Indemnity Clause:     
          Except as disclosed in writing to the Bank, the Borrower represents  
          and agrees to the following:
 
          1.  Hazardous Material Notice:  The Borrower represents that it has
              not received a notice from any governmental agency or other
              persons nor is there any present or threatened suit,            
              investigation, or other proceeding, with regard to Hazardous
              Materials (defined in paragraph 7 below) on, in, or affecting
              its owned or leased property.  It shall immediately give the
              Bank oral and written notice if it receives such a notice.
          2.  No Violation of Environmental Laws:  The Borrower has not and
              will not violate any federal, state, or local environmental laws 
              relating to or affecting its owned or leased property, which     
              violation would have a material affect on the Borrower's 
              business or materially affects the value of the collateral.
          3.  No Releases of Hazardous Material:  There has been no release,
              nor shall the Borrower permit any release, of such nature
              requiring notification to proper authorities of any Hazardous
              Material onto the Borrower's owned or leased property.
          4.  Storage Tank Registered; No Leaks:  All above ground and 
              underground storage tanks have been duly registered with all     
              applicable federal, state and local government authorities.  The 
              Borrower has no knowledge of any leaks from any of its above


                                      21  



              ground or underground storage tanks.
          5.  Investigation of Released Hazardous Materials:  If there is a    
              suspected release of Hazardous Materials, the Borrower shall, at 
              its own expense conduct all investigations, testing, and other   
              actions, including an environmental audit made at the Bank's     
              request, necessary to determine the extent (if any) of the
              release of Hazardous Materials and to clean up and remove all
              Hazardous Material in accordance with environmental laws.
          6.  Indemnity:  The Borrower agrees to indemnify, hold harmless, and 
              defend the Bank against all claims of whatever kind (including   
              attorneys', consultants', and experts' fees) paid or asserted    
              against the Bank as a direct result of the Borrower's violation 
              of any environmental law.  This indemnity shall continue for the 
              benefit of the Bank after the termination of this loan agreement 
              or other loan or security documents.
          7.  Definition:  Hazardous Material is defined as any toxic,         
              radioactive, or hazardous substance, material, waste, pollutant, 
              emission, or contaminant, including but not limited to :         
              (a) asbestos, (b) urea formaldehyde, (c) the group of organic    
              compounds known as polychlorinated biphenyls (PCBs), (d) any     
              petroleum product and byproduct including but not limited to     
              gasoline, fuel oil, crude oil, and the various constituents of
              such products, and (e) pesticides, fertilizers, and other
              agricultural chemicals.

XI.   REPAYMENT
      The indebtedness arising from the Loans shall be repaid as follows:

      A.  The Seasonal Loan, Note No. 24340, of not to exceed $15,000,000     
          shall mature on October 31, 1999; provided, however, the Borrower    
          shall make such payments from time to time as may be required to    
          maintain the loan within the limits set forth in the "LIMITATION ON
          ADVANCES" section of this loan agreement; provided further, any      
          balances outstanding under the fixed rate seasonal loan provisions   
          shall mature as specified in the statement.  Any outstanding fixed  
          amounts as of October 31, 1999 shall be repaid no later than April 
          30, 2000.
      B.  The present Term Loan,  Note No. 39181NP, of $12,000,000 shall be    
          repaid by annual principal payments of One Million Two Hundred       
          Thousand Dollars ($1,200,000) each, to be remitted to the Bank on or
          before September 30 of each year, commencing on September 30, 1999. 
          All outstanding balances shall be repaid by September 30, 2008.
      C.  Advances made in support of Letter of Credit Commitment, Note No.    
          39182NP, of not to exceed $12,000,000, shall be payable on demand.
      D.  The present Term Loan, Note No. 33061, of $13,000,000 shall be       
          repaid by quarterly principal payments of Six Hundred Eighty-Five    
          Thousand Dollars ($685,000) each, to be remitted to the Bank on or  
          before March 31, June 30, September 30, and December 31 of each     
          year, commencing on March 31, 2000; provided, however, that if the  
          Borrower is not in default, it shall not be required to make         
          payments that would accelerate the repayment of fixed interest rate
          balances.  All outstanding balances shall be repaid by December 31,
          2004.
      E.  The present Construction Term Loan, Note No. 35062, of $15,950,000   
          shall be repaid by quarterly principal payments of Six Hundred      
          Twenty-Five Thousand Dollars ($625,000) each, to be remitted to the
          Bank on or before March 31, June 30, September 30, and December 31   
          of each year; provided, however, that if the Borrower is not in     
          default, it shall not be required to make payments that would       


                                      22  



          accelerate the repayment of fixed interest rate balances.  All      
          outstanding balances shall be repaid by December 31, 2004.

      In the absence of instructions from the Borrower, or if the Borrower is
      in default, the Bank at its discretion, may apply repayments to the
      reduction of any of the indebtedness outstanding between the Bank and
      the Borrower.

XII.  LATE FEE PENALTY
      Payments received fifteen (15) calendar days after the scheduled 
      repayment date are subject to a late payment penalty equal to 1% of the  
      past due amount but not less than $25.00 per transaction.

XIII. EXPIRATION
      The unadvanced portion of the Loans shall be cancelled as indicated
      below; provided, however, the Bank may, at its option, extend the
      expiration date of the Loans and the maturity date of the Seasonal Loan
      without notice to or consent of the Borrower.

          Seasonal Loan, Note No. 24340 - October 31, 1999
          Letter of Credit Commitment, Note No. 39182NP - December 31, 2008,   
           subject to decreased amounts provided for in the letter of credit.

XIV.  REINSTATEMENT
      In order to facilitate repayments and reborrowings under this loan       
      agreement, the bank is authorized to reinstate all sums repaid on the    
      Seasonal Loan through the expiration date specified in this loan         
      agreement; provided, however, that the total amount outstanding under
      this loan agreement shall not exceed the face amount of the Seasonal
      Loan; and provided, further, that the right of the Borrower to such
      reinstatement may be denied and cancelled at any time at the option of
      the Bank.

XV.   DEFAULT PROVISION
      If the Borrower shall fail to pay when due any amount on any of the
      Loans under this loan agreement, or on any other indebtedness of the
      Borrower secured hereby, or fail to observe or perform any of the
      provisions or representations of this loan agreement, or of any security
      agreement or mortgage, or shall be subject to the jurisdiction of a
      bankruptcy court whether by a voluntary filing or involuntary action, or
      shall be in default of the Note Purchase Agreement executed by Borrower
      dated as of July 15, 1998, or any of the documents evidencing such Note
      Purchase Agreement or securing the obligation thereunder, the Borrower
      shall be in default.  When the Borrower is in default, the Bank may
      declare by written notice to the Borrower that the Loans and other
      indebtedness are immediately due and payable.  The Bank may then
      terminate its commitment to lend and cancel any reinstatement rights
      provided to the Borrower under this loan agreement, and proceed to
      enforce payment and exercise any or all of the rights afforded to the
      Bank by law or agreement.  Upon demand, and as permitted by law, the
      Borrower shall reimburse the Bank for all attorneys' fees and costs
      incurred by the Bank in protecting or enforcing its rights or
      collateral, including reasonable attorneys' fees incurred by the Bank in 
      a bankruptcy or receivership proceeding or in enforcing any judgment     
      against the Borrower.






                                      23  



XIV.  ACCEPTANCE
      This loan agreement is the full agreement under the terms and conditions 
      of the Loans.  It shall not be modified except in writing, and shall not 
      become effective unless the Borrower shall, within 60 days from date,    
      signify its acceptance of these terms and conditions by signing and      
      returning a copy of this loan agreement to the Bank.

      BY DIRECTION of the loan committee this 24th day of November, 1998.

      ST. PAUL BANK FOR COOPERATIVES

      By /s/ Marvin L. Lindo
      Its Senior Vice President

      ACCEPTED AND AGREED TO:

      DAKOTA GROWERS PASTA COMPANY
      CARRINGTON, NORTH DAKOTA

      By /s/ Tim Dodd
      Its President


      ACKNOWLEDGED BY AND AGREED TO
      AS TO SECTION VIII; AND SECTION X.,
      PARAGRAPHS D. AND I.:

      PRIMO PIATTO, INC.
      NEW HOPE, MINNESOTA

      By /s/ Tim Dodd
      Its President





























                                      24 <PAGE>

Exhibit 10.2

380313                                              Date Approved: 11/24/98
 

                            NONNEGOTIABLE NOTE OF
                        DAKOTA GROWERS PASTA COMPANY
                          CARRINGTON, NORTH DAKOTA

                               Note No. 24340

$15,000,000.00                                            November 24, 1998

     For value received, the undersigned ("Maker") promises to pay to the St.
Paul Bank for Cooperatives ("Bank"), at its office in the City of St. Paul,
Minnesota, the sum of Fifteen Million no/100 Dollars ($15,000,000.00) with
interest on the unpaid balance at a variable rate of interest which may
increase or decrease as the Bank may, from time to time, determine as provided
in the Loan Agreement of even date between the Maker and the Bank.  The unpaid
balance of this note, with accrued interest, and required equity purchases,
may be paid at any time subject to a prepayment penalty, if any, in accordance
with the terms of the Loan Agreement between the Bank and Maker.

     This note shall at all times evidence and constitute prima facie proof of
the indebtedness of the Maker to the bank or its successors or assigns, of
such amount of money (not in excess of the amount of the principal
indebtedness stated above plus accrued interest and required equity purchases)
as shown to be owing by the records of the Bank, or its successors or assigns.

     In the event that suit is brought on this note, the Maker agrees to pay
such reasonable attorneys' fees and costs of collection as permitted by law to
be charged.

     The maker hereby waives presentment for payment, demand, protest, notice
of protest, and notice of dishonor and nonpayment of this note.

     If requested by the Bank, its successors or assigns, the Maker agrees to
deliver in substitution for this note, a negotiable note for the amount of the
unpaid balance of Maker's indebtedness, plus accrued interest and required
equity purchases.


                                              DAKOTA GROWERS PASTA COMPANY

                                              By /s/ Timothy J. Dodd
                                                   Its President

                                              By /s/ Curtis R. Trulson
                                                   Its Secretary












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