UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

            [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended  August 31, 1999

                                       OR

            [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 2-60372

                           FARMLAND INDUSTRIES, INC.
             (Exact Name of Registrant as Specified in Its Charter)
KANSAS                                                           44-0209330
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer
Identification No.)

3315 NORTH OAK TRAFFICWAY, KANSAS CITY, MISSOURI                 64116-0005
(Address of Principal Executive Offices)                         (Zip Code)

              Registrant's Telephone Number, Including Area Code:  816-459-6000

              Securities registered pursuant to Section 12(b) of the Act:   None

              Securities registered pursuant to Section 12(g) of the Act:   None


          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 [   ]

          Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.  [  X  ]

          Farmland Industries, Inc. is a cooperative.  Its voting stock can only
be held by its members.  No public market for voting stock of Farmland
Industries, Inc. is established and it is unlikely, in the foreseeable future,
that a public market for such voting stock will develop.

     Documents incorporated by reference:    None
                                       Page 1
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                                     PART I

ITEMS 1 AND 2.      BUSINESS AND PROPERTIES

                                  THE COMPANY

          Farmland Industries, Inc., founded in 1929 and formally incorporated
in Kansas in 1931, is a farm supply and a processing and marketing cooperative.
Its principal executive offices are at 3315 North Oak Trafficway, Kansas City,
Missouri  64116 (telephone 816-459-6000).  Farmland has grown from revenues of
$310,000 during its first year of operation to approximately $10.7 billion
during 1999.  Unless the context requires otherwise, (i) "Farmland", "we", "us",
"our", or the "Company" refers to Farmland Industries, Inc. and its consolidated
subsidiaries, (ii) all references to "year" or "years" are to fiscal years ended
August 31, and (iii) the term "member" means (a) any voting member, (b) any
associate member, or (c) any other person with which Farmland is a party to a
currently effective patronage refund agreement (a "patron").  See "Business and
Properties - Business - Patronage Refunds and Distribution of Annual Earnings."


MEMBERSHIP

      Farmland operates on a cooperative basis and is primarily owned by its
members.  Requirements for membership in the cooperative are established by the
Articles of Incorporation of Farmland and by the Board of Directors.

      As of August 31, 1999, Farmland's membership, associate membership and
patrons eligible for patronage refunds consisted of approximately 1,400
cooperative associations of farmers and ranchers and 5,700 pork or beef
producers or associations of such producers.  See ''Business and Properties -
Business - Patronage Refunds and Distribution of Annual Earnings."

PROPOSED UNIFICATION

On May 6, 1999, Farmland and Cenex Harvest States Cooperatives announced that
they were considering a complete unification.  During September, the Boards of
Directors of Farmland and Cenex Harvest States separately approved the terms of
the unification and entered into a formal Transaction Agreement.  Both
cooperatives have scheduled a November 23, 1999, member vote regarding the
unification.  If members approve, and if the companies receive the required
regulatory approval, the unification is scheduled to occur March 1, 2000.  The
unified entity will be named United Country Brands.



                                    BUSINESS

GENERAL

      In terms of revenue, Farmland is one of the largest cooperatives in the
United States.  In 1999, we had sales of $10.7 billion including export sales of
approximately $1.3 billion to customers worldwide.  Substantially all of our
international sales are invoiced and collected in U.S. Dollars.

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

      Our farm supply operations consist of four principal product divisions:
petroleum, plant foods, crop protection and feed.  Principal products of the
petroleum division are refined fuels, propane and by-products of petroleum
refining.  Principal products of the plant foods division are nitrogen and
phosphate-
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based fertilizers ("plant foods").  Principal products of the crop protection
division include a complete line of insecticides, herbicides and mixed
chemicals. Crop protection  operations are conducted primarily through our 50%
ownership in WILFARM, L.L.C. and Omnium, LLC.  Principal products of the feed
division include swine, dairy, pet, beef, poultry, mineral and specialty feeds,
feed ingredients and supplements, animal health products and livestock services.
We manufactured approximately 59% of the dollar value of our sales of farm
supply products in 1999.  Approximately 68% of the farm supply products we sold
in 1999 were at wholesale to farm cooperative associations which are members of
Farmland, and who, in turn, distribute these products primarily to farmers and
ranchers.

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

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

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

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


BUSINESS RISK FACTORS

   INCOME TAX MATTERS

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

          On March 24, 1993, the Internal Revenue Service ("IRS") issued a
statutory notice to Farmland asserting deficiencies in federal income taxes
(exclusive of statutory interest thereon) in the aggregate amount of $70.8
million.  The asserted deficiencies relate primarily to the Company's tax
treatment of the $237.2 million gain resulting from its sale of the stock of
Terra and the IRS's contention that Farmland incorrectly treated the Terra sale
gain as income against which certain patronage-sourced operating losses could be
offset.  The statutory notice further asserts that Farmland incorrectly
characterized for tax purposes gains aggregating approximately $14.6 million and
a loss of approximately $2.3 million, from dispositions of certain other assets.

          On June 11, 1993, Farmland filed a petition in the United States Tax
Court contesting the asserted deficiencies in their entirety.  The case was
tried on June 13-15, 1995.  The parties submitted post-trial briefs to the court
in September 1995 and reply briefs were submitted to the court in November 1995.
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          If the United States Tax Court decides in favor of the IRS on all
unresolved issues raised in the statutory notice, Farmland would have additional
federal and state income tax liabilities aggregating approximately $85.8 million
plus accumulating statutory interest thereon (approximately $317.3 million
through August 31, 1999), or $403.1 million (before tax benefits of the interest
deduction) in the aggregate at August 31, 1999.  In addition, such a decision
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $15.3 million (including accumulated statutory
interest).  The asserted federal and state income tax liabilities and
accumulated interest would become immediately due and payable unless Farmland
appealed the decision and posted the requisite bond to stay assessment and
collection.

      In March 1998, Farmland received notice from the IRS assessing the $15.3
million tax and accumulated statutory interest related to our 1989 tax year (as
described above).  In order to establish the trial court in which  initial
litigation, if any, of the dispute would occur and to stop the accumulation of
interest, Farmland deposited funds with the IRS in the amount of the assessment.
After making this deposit, we filed for a refund of the entire amount deposited.

          The liability resulting from an adverse decision by the United States
Tax Court would be charged to current earnings and would have a material adverse
effect on Farmland.  In the event of such an adverse determination of the Terra
tax issue, certain financial covenants of the Company's Syndicated Credit
Facility (the "Credit Facility"), dated May 15, 1996, become less restrictive.
Had the United States Tax Court decided in favor of the IRS on all unresolved
issues and had all related additional federal and state income taxes and
accumulated interest been due and payable on August 31, 1999, our borrowing
capacity under the existing credit facilities was adequate to finance the
liability.  However, Farmland's ability to finance such an adverse decision
depends substantially on the financial effects of future operating events on its
borrowing capacity.  See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Financial Condition, Liquidity and Capital
Resources."


ENVIRONMENTAL MATTERS

      Farmland is subject to various stringent federal, state and local
environmental laws and regulations, including those governing the use, storage,
discharge and disposal of hazardous materials, which may impose liability for
cleanup of environmental contamination. Farmland uses hazardous materials and
generates hazardous wastes in the ordinary course of our manufacturing
processes.  See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Financial Conditions Liquidity and Capital Resources -
Matters Involving the Environment."


EXTERNAL RISK FACTORS THAT MAY AFFECT FARMLAND

      Farmland's revenues, margins, net income and cash flow may be volatile due
to factors beyond our control.  External factors that affect agricultural
conditions and Farmland's results of operations include:

1.REGULATORY: Farmland's ability to grow through acquisitions and investments

  in ventures can be adversely affected by regulatory delays or other
  unforeseen factors beyond our control.  Various federal and state regulations
  can affect the amount of fertilizer and other chemicals used.

2.COMPETITION: Competitors may have better access to equity capital markets and

  may offer more varied products or possess greater resources than Farmland.

3.IMPORTS AND EXPORTS:  Factors which affect the level of agricultural products

  imported or exported including foreign trade and monetary policies, laws and
  regulations, political and governmental changes, inflation and exchange
  rates, taxes, operating conditions and world demand.  Fluctuations in the
  level of agricultural product imports and exports will likely impact our
  operations.
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4.WEATHER:  Weather conditions, both domestic and global, affect Farmland's

  operations.  Weather conditions may either increase or decrease demand.
  Changes in demand affect selling prices and income of all our business
  segments.  Weather conditions also may increase or decrease the supply of
  products.  These changes in supply may affect costs related to Farmland's
  pork and beef processing and marketing, livestock production and grain
  storage and marketing business.

5.RAW MATERIALS COST: Historically, changes in the costs of raw materials have

  not necessarily resulted in corresponding changes in the prices at which
  finished products have been sold by Farmland.

6.YEAR  2000: Farmland does not know with certainty all of the consequences of

  its most reasonably likely worst case Year 2000 scenario. We cannot with
  certainty address the virtually unlimited number of differing circumstances
  relating to what  might be its most reasonably likely worst case. Farmland
  has distributed a survey of  its significant customers and vendors to
  determine their state of Year 2000 readiness.  However, responses to the
  survey  questionnaire have not  provided a basis to conclude whether such
  customers and vendors are Year 2000 compliant.

7.OTHER FACTORS: Domestic variables, such as crop failures, federal

  agricultural programs and production efficiencies, and global variables, such
  as general economic conditions, conditions in financial markets, embargoes,
  political instabilities and local conflicts, affect the supply, demand and
  price of crude oil, refined fuels, natural gas and other commodities and may
  unfavorably impact Farmland's operations.

      Management cannot determine the extent to which these factors may impact
  our future operations.  Farmland's revenues, margins, net income and cash
  flow are likely to be volatile as conditions affecting agriculture and
  markets for our products change.  See "Management's Discussion and Analysis
  of Financial Condition and Results of Operations - Results of Operations for
  Years Ended August 31, 1997, 1998 and 1999" and "Business and Properties -
  Business - Raw Materials" and "Crop Production - Raw Materials."


LIMITED ACCESS TO EQUITY CAPITAL MARKETS

          As a cooperative, Farmland cannot sell its voting common equity to
traditional public or private markets. Instead, equity is raised largely from
payment of the noncash portion of patronage refunds with common stock, associate
member common stock and capital credits, from offerings of preferred stocks and
from net income on transactions with nonmembers.  See ''Business and Properties
- Business - Patronage Refunds and Distribution of Annual Earnings'' and '' -
Equity Redemption Plans."
PLANT FOODS AND CROP PROTECTION

   MARKETING

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

      Competition in the plant nutrient industry is dominated by price
considerations.  However, during the spring and fall plant nutrient application
seasons, farming activities intensify and delivery service capacity is a
significant competitive factor. Farmland maintains a significant capital
investment in distribution assets and a seasonal investment in inventory to
enhance its manufacturing and distribution operations. We own or lease plant
nutrient custom dry blending, liquid mixing, storage and distribution
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facilities at a large number of locations throughout our trade territory to
conform delivery capacity more closely to customer demands for delivery
services.

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

      During October 1999, Farmland, Cenex Harvest States Cooperatives and Land
O'Lakes entered into a definitive agreement to form an agronomy marketing joint
venture for the purpose of distributing both plant foods and crop protection
products.  The consummation of this agreement is subject to completion of the
Farmland and Cenex Harvest States unification into United Country Brands.

   PRODUCTION

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

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

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

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

      Farmland and Norsk Hydro a.s. are each 50% owners of, Farmland Hydro, L.P.
("Hydro"), a joint venture which owns a phosphate fertilizer manufacturing plant
at Green Bay, Florida. Hydro's plant produces products such as super phosphoric
acid, diammonium phosphate and monoammonium phosphate.  Annual production in
tons of such products for 1997, 1998 and 1999 was 1,504,000, 1,428,000 and
1,457,000, respectively.  Farmland provides management and administrative
services and Norsk Hydro a.s. provides marketing services to Hydro.  Products of
this plant are distributed principally to international markets.

      Farmland is a  50% owner of SF Phosphates Limited Liability Company ("SF
Phosphates"), a venture which operates a phosphate mine located in Vernal, Utah,
a phosphate chemical plant located in Rock Springs, Wyoming and a 96-mile
pipeline connecting the mine to the plant.  The plant produces monoammonium
phosphate and super phosphoric acid with annual production in tons for 1997,
1998 and 1999, of 529,000, 527,000 and 522,000, respectively.  Under the venture
agreement, the owners purchase the production of the venture in proportion to
their ownership.
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   RAW MATERIALS

      Natural gas, the largest single component of nitrogen-based fertilizer
production, is purchased directly from natural gas producers.  Natural gas
purchase contracts are generally market sensitive and contract prices change as
the market price for natural gas changes.  In addition, Farmland has a hedging
program which utilizes natural gas futures and options to reduce risks of market
price volatility.  See " Business and Properties - Business - Business Risk
Factors - External Factors That May Affect the Company."

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

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

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

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

   MARKETING

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

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

   PRODUCTION

      Farmland owns a refinery, with an approximately 100,000 barrel per day
capacity, at Coffeyville, Kansas. Production at the Coffeyville refinery
amounted to approximately 71% of refined fuel sales in 1999.  Effective
September 1, 1999, we formed an alliance, Cooperative Refining, LLC, with the
owners of National Cooperative Refinery Association ("NCRA").  Cooperative
Refining performs all activities related to operating NCRA's refinery at
McPherson, Kansas and Farmland's refinery at Coffeyville, Kansas.
                                     Page 7
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   RAW MATERIALS

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

      Crude oil is purchased approximately 45 to 60 days in advance of the time
the related refined products are to be marketed.  Certain of these advance crude
oil purchase transactions, as well as fixed price advance sales contracts of
refined products, are hedged utilizing various petroleum futures contracts.  See
"Business and Properties - Business - Business Risk Factors - External Factors
That May Affect the Company".

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


FEED

      Feed products include swine, beef, poultry, dairy, pet, mineral and
specialty feeds, feed ingredients and supplements, animal health products and
farm and ranch supplies.  The primary components of feed products are grain and
grain by-products, which are generally available in the region in which we
operate.
      This business segment's sales were approximately 7%, 6% and 5% of
consolidated sales for the years 1997, 1998 and 1999, respectively.
Approximately 47% of the feed segment's sales in 1999 was attributable to
products manufactured in our feed mills. Farmland operates feed mixing plants at
20 locations throughout its territory, an animal protein plant in Maquoketa,
Iowa, an animal protein plant and a premix plant located in Eagle Grove, Iowa, a
premix plant in Marion, Ohio and a pet food plant in Muncie, Kansas.

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

          During November 1999, Farmland, Cenex Harvest States Cooperatives and
Land O'Lakes signed a letter of intent to form a feed venture that will combine
all aspects of their feed businesses.  We anticipate the feed venture will begin
operations on March 1, 2000.  The consummation of this agreement is subject to
completion of the Farmland and Cenex Harvest State unification with United
Country Brands.


PORK

   PROCESSING

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

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

     MARKETING

     Farmland's pork products marketed include fresh pork, fabricated pork,
smoked meats, ham, bacon, fresh sausage, dry sausage, hot dogs and packing house
by-products.  These products are marketed under a variety of brand names
including:  Farmland, Farmstead, OhSe, Maple River, Carando, Roegelein, Regal
and Marco Polo.   Product distribution is through national and regional retail
food chains, food service accounts, distributors and through international
marketing brokers.

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

LIVESTOCK PRODUCTION

  PRODUCTION AND MARKETING

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

BEEF

  PROCESSING

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

  MARKETING

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

     Beef marketing is a highly competitive industry with many suppliers of
fresh and boxed beef.  Other meat products such as pork, poultry and fish also
compete directly with beef products.  Competitive methods in this industry
include price, product quality, brand and product differentiation and customer
service.
                                     Page 9
<PAGE>
GRAIN MARKETING

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

NORTH AMERICAN GRAIN

  MARKETING

     Farmland markets wheat, corn, soybeans, milo, barley and oats, with wheat
and corn constituting the majority of the marketing business.  We purchase grain
from members and nonmembers located in the Midwestern part of the United States
and assume all risks related to selling such grain.  Grain is priced in the
United States principally through bids based on organized commodity markets.
     In 1998, Farmland and ConAgra Inc., formed Farmland-Atwood, LLC, a 50%-
owned venture.  In May 1999, Farmland purchased ConAgra's, interest in the
venture.  Farmland-Atwood provides risk management services, financial and grain
support services and grain brokerage to its customers.

     Farmland is exposed to price risk as a result of holding grain inventory
and because, in the ordinary course of business, Farmland is a party to numerous
fixed price sales and fixed price purchase contracts.  To reduce the price
change risk associated with holding positions in grain, Farmland takes opposite
and offsetting positions by entering into grain commodity futures contracts.
Generally, such contracts have terms of up to one year. Our strategy is to
maintain hedged positions on as close to 100% of our grain positions as is
possible.  During 1997, 1998 and 1999, Farmland maintained hedges on
approximately 93%, 93% and 95%, respectively, of its grain positions.  The
average market value of grain positions not hedged during the year amounted to
less than 1% of our average total assets.  While hedging activities reduce the
risk of loss from changing market values of grain, such activities also limit
the gain potential which otherwise could result from changes in market prices of
grain.  See "Management's Discussion and Analysis of Financial Conditions and
Results of Operations - Financial Condition, Liquidity and Capital Resources -
Results of Operations for Years Ended August 31, 1997, 1998 and 1999 - Grain
Marketing".

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

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


INTERNATIONAL GRAIN

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

     Tradigrain's purchases of grain are made on a cash basis and its sales of
grain are mostly made against confirmed letters of credit.  Furthermore,
Tradigrain may take long or short grain positions.  These positions are
accounted for on a mark-to-market basis and the gain or loss is recognized as a
component of net income.
                                    Page 10
<PAGE>
RESEARCH

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

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


CAPITAL EXPENDITURES AND INVESTMENTS IN VENTURES

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

          The Farmland Board has authorized expenditures (of which $32.8 million
was committed as of August 31, 1999) of up to $221.9 million for capital
additions and improvements during the years 2000 and 2001.  The majority of
these expenditures are in the crop production, pork processing and marketing,
beef processing and marketing and petroleum businesses and are primarily for
plant improvements.  From time to time, management may recommend additional
capital projects to Farmland's Board of Directors for approval.

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


YEAR 2000

      Farmland formalized its Year 2000 program in the fall of 1997.  Year 2000
readiness was defined by criteria which, if satisfied, would demonstrate that
systems and applications programs function correctly after the turn of the
century without abnormal results. Further, minimum acceptance testing procedures
for evaluating whether systems and applications met Year 2000 compliance
criteria were defined.  In addition, systems and applications were categorized
as "high risk" or "low risk" according to the respective level of impact on the
continuation of business by Farmland at the turn of the century.
      A comprehensive information technology ("IT") software inventory and
assessment was then completed. As a result of this readiness assessment, we
believe that all noncompliant systems have been identified.

      To address the state of readiness condition, Farmland established an
Oversight Committee consisting of the Chief Information Officer, the Chief
Financial Officer and General Counsel of Farmland and a Year 2000 Program
Office.

      The Oversight Committee has responsibility for both IT and non-IT systems
(embedded technologies such as microcontrollers built into machinery) and has a
direct reporting relationship to the Farmland Board of Directors.  The Oversight
Committee has delegated Year 2000 compliance responsibility for non-IT systems
to management of the respective plants or facilities. Farmland contracted with
an outside vendor to inspect and remediate all processor related Year 2000
issues in its meat plants.  This inspection and remediation has been completed.
We have not separately tracked  the replacement cost and time related to non-IT
systems.  However, we believe these costs have not had a material adverse effect
on our operating results.
                                    Page 11

      The Program Office, which is the working arm of the Oversight Committee,
organizes and administers Year 2000 projects related to IT systems. The Program
Office maintains a detailed project plan to complete and test projects within
specific time frames. The Program Office continuously monitors the status of the
SAP implementation and re-assesses the risk areas depending on movement of that
system's implementation schedule. The Program Office provides a monthly update
of Year 2000 progress to the Oversight Committee. The Program Office has revised
the estimated hours required for Year 2000 projects related to IT systems to
approximately 45,500 hours and the overall cost to approximately $6.5 million.
Through October 1999, approximately 44,000 hours of such work had been
performed.  The remaining work primarily relates to final testing of the
effectiveness of the remediation work performed.  The targeted completion of the
remaining work is December 1, 1999.

      Farmland believes all significant modifications required to reach a state
of readiness for Year 2000 have been completed.  However, despite all reasonable
efforts to resolve our Year 2000 issues, as described above, no assurances can
be given that the level of Year 2000 readiness actually attained will eliminate
all potential material effects that Year 2000 problems might have on our
business, results of operation, or financial condition.  It is not, and will
not, be possible for us to represent that we have achieved complete Year 2000
compliance.

      Farmland does not know all of the consequences of its most reasonably
likely worst case Year 2000 scenario. We cannot address the virtually unlimited
number of differing circumstances relating to what might be its most reasonably
likely worst case. Farmland is and intends to continue to address this
uncertainty through activities of its Oversight Committee and Program Office, as
described above.

      Farmland has distributed a survey to its significant customers and vendors
to determine their state of Year 2000 readiness.  However, responses to the
survey questionnaire have not provided a basis to conclude whether such
customers and vendors are Year 2000 compliant.  Further, we have not conducted
and do not plan to conduct tests designed to confirm compatibility of our
information systems as modified for Year 2000 issues with those of significant
customers and vendors.  Farmland will rely on the integrity of its vendors and
customers to resolve their Year 2000 issues.


GOVERNMENT REGULATION

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

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

      The Federal Agriculture Improvement and Reform Act ("FAIR") represents the
most significant change in government farm programs in more than 60 years.
Under FAIR, the former system of variable price-linked deficiency payments to
farmers has been replaced by a program of fixed payments which decline over a
seven-year period from 1996 to 2002.  To compensate for adverse market and
weather conditions, additional transfer payments were made by the Federal
government during 1998 and 1999.  FAIR eliminates federal planting restrictions
and acreage controls. Farmland believes that FAIR was intended to accelerate the
trend toward greater market orientation and reduced Government influence on the
agricultural sector.  As a result, we expect the number of acres under
cultivation to increase over a long period of time.  This increase may favorably
impact demand of producers for our plant nutrients and crop protection products
and fuels.  Whether demand for our products is favorably impacted depends in a
large part on whether U.S. agriculture becomes more competitive in world markets
as this industry
                                    Page 12
<PAGE>
moves toward greater market orientation, the extent which governmental actions
expand international trade agreements and whether market access opportunities
for U.S. agriculture is increased.

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

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


EMPLOYEE RELATIONS

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


PATRONAGE REFUNDS AND DISTRIBUTION OF ANNUAL EARNINGS

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

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

      Nonqualified patronage refunds may be paid entirely in allocated equity;
there is no minimum cash requirements.  Nonqualified patronage refunds paid by
Farmland have been recorded as book credits in the form of common shares,
associate member common shares or capital credits (depending on the membership
status of the recipient). The Board of Directors may determine to record the
nonqualified patronage refund in any other form or forms of nonpreferred
equities. Farmland is not allowed an income tax deduction for a nonqualified
patronage refund in the year paid. The nonqualified patronage refund is
deductible for federal income tax purposes only when such nonqualified written
notices of allocation are redeemed for cash or tangible property.
                                    Page 13

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

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

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


          Nonmember-sourced income (earnings attributed to transactions with
persons not eligible to receive patronage refunds, i.e. nonmembers) and
nonpatronage income or loss (income or loss from activities not directly related
to the cooperative marketing or purchasing activities of Farmland) is subject to
income taxes computed on the same basis as such taxes are computed on the income
or loss of other corporations.


EQUITY REDEMPTION PLANS

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

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

          The base capital plan provides a mechanism for determining Farmland's
total capital requirements and each voting member's and associate member's share
(referred to as the "Base Capital Requirement").  As part of the Base Capital
Plan, the Board of Directors may, in its discretion, provide for redemption of
Farmland common shares or associate member common shares held by voting members
or associate members whose holdings of common shares or associate member shares
exceed the voting members' or associate members' Base Capital Requirement.  The
base capital plan provides a mechanism under which the cash portion of the
patronage refund payable to voting members or associate members will depend upon
the degree to which such voting members or associate members meet their Base
Capital Requirements.

   ESTATE SETTLEMENT PLAN

      The estate settlement plan provides that equity holdings of deceased
natural persons (except for equity purchased and held for less than five years)
be redeemed at par value.  This provision is subject to a limitation of $1.0
million in any one fiscal year without further authorization by the Board of
Directors for such year.
                                    Page 14
<PAGE>
   SPECIAL EQUITY REDEMPTION PLANS

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

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

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

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

(a)Includes redemptions of preferred stock.



ITEM 3.        LEGAL PROCEEDINGS

          Management believes there is no litigation existing or pending against
Farmland or any of its subsidiaries that, based on the amounts involved or the
defenses available, would have a material adverse effect on our financial
position except for the pending tax litigation relating to Terra, as explained
in Note 6 of the Notes to Consolidated Financial Statements.  See "Business and
Properties - Business - Business Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Financial Condition,
Liquidity and Capital Resources".



ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF EQUITY HOLDERS

          No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of equity holders.

                                    Page 15
<PAGE>
                                   PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS

          There is no established public market for the voting common stock,
associate member common stock and capital credits of Farmland. We believe that
it is highly unlikely that a public market for these equities will develop in
the foreseeable future for the following reasons:

1.The common stock, associate member common stock and capital credits are
  nondividend bearing;

2.The common stock, associate member common stock and capital credits are
  not transferable without consent of the Farmland Board of Directors.

3.The amount of patronage refunds a holder, who is eligible to receive
  patronage refunds, may receive is dependent on the earnings of Farmland
  attributable to the quantity or value of business such holder transacts
  with Farmland and not on the amount of equity held.  See "Business and
  Properties - Business - Patronage Refunds and Distribution of Annual
  Earnings" included herein; and

4.Farmland may redeem its equities from time to time at the sole and
  absolute discretion of the Board of Directors.  See "Business and
  Properties - Business - Equity Redemption Plans" included herein.

          At August 31, 1999 there are approximately 3,500 holders of common
shares, 550 holders of associate member shares and 6,600 holders of capital
credits based on holders of record.
                                    Page 16
<PAGE>
ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

          The following selected consolidated financial data as of the end of
and for each of the years in the five-year period ended August 31, 1999 are
derived from the Consolidated Financial Statements of Farmland, which have been
audited by KPMG LLP, independent certified public accountants.  The information
set forth below should be read in conjunction these Consolidated Financial
Statements.  See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and related
notes.
<TABLE>
<CAPTION>
                                                                    Year Ended August 31

                                        1995              1996              1997             1998              1999

                                                               (Amounts in Thousands)
<S>                                <C>               <C>               <C>              <C>             <C>
SUMMARY OF OPERATIONS:<F1>(1)
Net Sales.....................     $   7,256,869     $  9,788,587      $   9,147,507      $  8,775,046    $   10,709,073
Operating Income of Industry
  Segments(2)<F2>.............           323,254          291,781            295,626           192,874           181,852
Interest Expense..............            53,862           62,445             62,335            73,645            90,773
Net Income....................           162,799          126,418            135,423            58,770            13,865



DISTRIBUTION OF NET INCOME:
Patronage Refunds:


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

                                    $    162,799      $   126,418       $    135,423      $     58,770    $       13,865




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

<FN>
<F1>

1.   See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition, Liquidity and
     Capital Resources" for a discussion of the pending income tax litigation relating to Terra, a former subsidiary of Farmland.
<F2>
2.   Includes segment gross income, segment selling, general, and administrative expenses, and the segment's equity in income (loss)
     of investees.
</FN>
</TABLE>
                                    Page 17
<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

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

          Farmland's debt securities issued under the continuous debt program
generally are offered on a best-efforts basis through our wholly owned broker-
dealer subsidiary, Farmland Securities Company and also may be offered by
selected unaffiliated broker-dealers. The types of debt securities offered in
the continuous debt program include certificates payable on demand and
subordinated debenture bonds. The total amount of debt securities outstanding
and the flow of funds to, or from, Farmland as a result of the continuous debt
program are influenced by the rate of interest which we establish for each type
or series of debt security offered and by options of Farmland to call for
redemption certain of its outstanding debt securities. During the year ended
August 31, 1999, the outstanding balance of demand certificates decreased by
$3.7 million and the outstanding balance of subordinated debenture bonds
increased by $101.1 million.  The continuous debt security program has been
suspended temporarily until a prospectus containing information describing the
proposed unified company has been filed and approved.

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

      If unification with Cenex Harvest States occurs, we believe it is likely
that the Credit Facility will be replaced with a new credit facility.  However,
there is no assurance that United Country Brands will be successful in
negotiating an adequate credit facility.

          Farmland pays commitment fees under the Credit Facility equal to 22.5
basis points annually on the unused portion of the short-term credit and 1/4 of
1% annually on the unused portion of the long-term credit.  In addition,
Farmland must comply with the Credit Facility's financial covenants regarding
working capital, the ratio of certain debts to average cash flow and the ratio
of equity to total capitalization, all as defined in the agreement. We are in
compliance with all covenants of the Credit Facility.  The short-term credit
provisions of the Credit Facility are reviewed and/or renewed annually.  The
next scheduled review date is in May 2000.  The revolving term provisions of the
Credit Facility expire in May 2001.

          At August 31, 1999, Farmland had $368.5 million of short-term
borrowings under the Credit Facility and $180.0 million of revolving term
borrowings; additionally, $52.7 million of the Credit Facility was being
utilized to support letters of credit issued on our behalf.  As of August 31,
1999, under the short-term credit provisions, we had capacity to finance
additional current assets of $231.1 million and, under the long-term credit
provisions, we had capacity to borrow up to an additional $267.6 million.

          During April 1998, Farmland National Beef Packing Company, L.P.
replaced its existing borrowing arrangements with a new five year $130.0 million
credit facility.  This facility, which expires March 31, 2003, is provided by
various participating banks and these borrowings are nonrecourse to Farmland or
Farmland's other affiliates.  Farmland National Beef used a portion of this
facility to repay in full its borrowings from Farmland.  At August 31, 1999,
Farmland National Beef had borrowings under this facility of $64.1 million and
$3.3 million of the facility was being utilized to support letters of credit.
Assets with a carrying value at August 31, 1999, of $241 million have been
pledged by Farmland National Beef to support its borrowings under the facility.

      Leveraged leasing has been utilized to finance railcars and a significant
portion of our fertilizer production equipment.  In December 1997, Farmland
entered into a series of agreements which provide for the construction and
operation under a long-term lease of facilities adjacent to our petroleum
refinery
                                    Page 18
<PAGE>
at Coffeyville, Kansas.  These facilities are designed to convert petroleum coke
by-products into fertilizers.  When the facilities are completed (presently
scheduled for the second quarter of fiscal year 2000), Farmland will be
obligated to make future minimum lease payments which, at that time, will have
an approximate present value of $223 million.  Alternatively, Farmland has an
option to purchase the facilities.

          Farmland maintains other borrowing arrangements with banks and
financial institutions. Under such agreements, at August 31, 1999, $62.2 million
was borrowed.

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

          In December 1997, Farmland sold 2 million shares of 8% Series A
Cumulative Redeemable Preferred Shares (the "Preferred Shares") at $50 per
Preferred Share with an aggregate liquidation preference of $100 million ($50
liquidation preference per share).  The Preferred Shares are not redeemable
prior to December 15, 2022.  On and after December 15, 2022, the Preferred
Shares may be redeemed for cash at our option, in whole or in part, at specified
redemption prices declining to $50 per share on and after December 15, 2027,
plus accumulated and unpaid dividends.  The Preferred Shares do not have any
stated maturity, are not subject to any sinking fund or mandatory redemption
provisions and are not convertible into any other security.  Proceeds from the
issuance of the Preferred Shares were used to call for early redemption
approximately $47.6 million of principal and accumulated interest on certain
subordinated debt securities and to redeem approximately $50.0 million of
capital shares and equity.

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

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

      Farmland operates on a cooperative basis.  In accordance with its bylaws,
Farmland determines its annual earnings before income tax in accordance with
generally accepted accounting principles.  Such earnings are then identified to
the various patronage refund allocation units (groups of similar products or
services) which have been established by the Board of Directors  The earnings of
each patronage refund allocation unit are then divided into 1) a patronage
sourced portion determined on the basis of the quantity or value of business
done by such allocation unit with or for its members who are eligible to receive
patronage refunds and 2) a non-patronage sourced portion for which amounts are
determined on the basis of the quantity or value of business done by such
allocation unit with or for persons who are not eligible to receive patronage
refunds, plus such net amount of earnings, expense or loss in an allocation unit
which are unrelated to the cooperative operations carried on by Farmland for its
members.  The patronage sourced portion of each patronage refund allocation unit
is allocated among the members transacting business with such allocation unit in
the ratio that the quantity or value of the business done with or for each such
member bears to the quantity or value of the business done with or for all of
such members.  The Board of Directors reasonably and equitability determines
whether allocations within any allocation unit will be on the basis of the
quantity or value.  The non-patronage sourced portion of annual earnings and
earnings unrelated to the cooperative operations carried on by Farmland for its
members are transferred to earned surplus after appropriate reduction for income
tax.
                                    Page 19
<PAGE>
      Under Farmland's bylaws, patronage refunds are distributed to members from
the member sourced earnings as determined above, unless the earned surplus
account after such distribution is lower than 30% of the sum of the prior year-
end balance of outstanding common shares, associate member shares, capital
credits and patronage refunds for reinvestment.  In such cases, the patronage
refund is reduced by the lesser of 15% or an amount required to increase the
earned surplus account to the required 30%.  The amount by which the member
sourced income is so reduced is treated as nonmember-sourced income.  The member
sourced income remaining is distributed to members as patronage refunds.  For
the years 1997, 1998 and 1999, the earned surplus account exceeded the required
amount by $101.7 million, $80.1 million and $57.3 million, respectively.

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

      The Board of Directors of this Association has complete discretion to
determine the handling and ultimate disposition of the Association's patronage-
sourced net losses (including allocation unit losses) and the form, priority and
manner in which such losses or portions thereof are taken into account,
retained, and ultimately disposed of or recovered.  The Board may retain such
losses of the Association and subsequently (i) dispose of them by offset against
the net earnings of the Association of subsequent years, (ii) apply such losses
to prior years' patronage allocation at any time in order to dispose of them by
means of offset and cancellation against members' and patrons' equity account
balances, or (iii) select and use any other method of disposition of such losses
as the Board of Directors, in its sole discretion, from time to time determines.

      Net cash from operating activities for 1999 decreased $200.1 million
compared to 1998, reflecting lower net income and an increase in accounts
receivable and inventories, partially offset by an increase in accounts payable.
Major uses of cash for 1999 include: $162.5 million used in operations, $121.2
million for capital expenditures, $38.2 million for acquisition of other long-
term assets, and $23.6 million for patronage refunds distributed from income of
the 1998 fiscal year.

      Major sources of cash include:  $114.9 million from net increase in bank
loans and other notes payable, $101.3 million from the net increase of
subordinated debt certificates outstanding, $54.1 million of distributions from
joint ventures, and $76.1 million from an increase in the balance of checks and
drafts outstanding.

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

          On March 24, 1993, the IRS issued a statutory notice to Farmland
asserting deficiencies in federal income taxes (exclusive of statutory interest
thereon) in the aggregate amount of $70.8 million.  The asserted deficiencies
relate primarily to the Company's tax treatment of the $237.2 million gain
resulting from its sale of the stock of Terra and the IRS's contention that
Farmland incorrectly treated the Terra sale gain as income against which certain
patronage-sourced operating losses could be offset.  The statutory notice
further asserts that Farmland incorrectly characterized for tax purposes gains
aggregating approximately $14.6 million and a loss of approximately $2.3 million
from dispositions of certain other assets.

          On June 11, 1993, Farmland filed a petition in the United States Tax
Court contesting the asserted deficiencies in their entirety.  The case was
tried on June 13-15, 1995.  The parties submitted
                                    Page 20
<PAGE>
post-trial briefs to the court in September 1995 and reply briefs were submitted
to the court in November 1995.

          If the United States Tax Court decides in favor of the IRS on all
unresolved issues raised in the statutory notice, Farmland would have additional
federal and state income tax liabilities aggregating approximately $85.8 million
plus accumulating statutory interest thereon (approximately $317.3 million
through August 31, 1999), or $403.1 million (before tax benefits of the interest
deduction) in the aggregate at August 31, 1999.  In addition, such a decision
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $15.3 million (including accumulated statutory
interest thereon).  The asserted federal and state income tax liabilities and
accumulated interest would become immediately due and payable unless Farmland
appealed the decision and posted the requisite bond to stay assessment and
collection.

      In March 1998, Farmland received notice from the IRS assessing the $15.3
million tax and accumulated statutory interest thereon related to the Company's
1989 tax year (as described above).  In order to establish the trial court in
which initial litigation, if any, of the dispute would occur and to stop the
accumulation of interest, Farmland deposited funds with the IRS in the amount of
the assessment.  After making the deposit, we  filed for a refund of the entire
amount deposited.

          The liability resulting from an adverse decision by the United States
Tax Court would be charged to current earnings and would have a material adverse
effect on Farmland.  In the event of such an adverse determination of the Terra
tax issue, certain financial covenants of the Company's Syndicated Credit
Facility (the "Facility") become less restrictive.  Had the United States Tax
Court decided in favor of the IRS on all unresolved issues and had all related
additional federal and state income taxes and accumulated interest thereon been
due and payable on August 31, 1999, Farmland's borrowing capacity under the
Credit Facility was adequate at that time to finance the liability.  However,
Farmland's ability to finance such an adverse decision depends substantially on
the financial effects of future operating events on its borrowing capacity under
the Credit Facility.

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

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


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

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

          The table below shows the increase (decrease) in sales and income by
business segment in each of the years in the three-year period ended 1999,
compared with the respective prior year.
                                    Page 21
<PAGE>
<TABLE>
<CAPTION>

                                                                          Change in Sales

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

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

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

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

                                                                               Change in Business Segment Income

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

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

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

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

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


</TABLE>


          In computing the change of business segment income or loss, income and
expenses not identified to an industry segment and income taxes have been
excluded.  See Note 11 of the Consolidated Financial Statements.
                                    Page 22
<PAGE>
Following  is management's discussion of business segment sales, segment income
or loss and other factors affecting Farmland's net income during 1997, 1998 and
1999.


PLANT FOODS

   SALES

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

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

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

   INCOME

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

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

      Income of the plant foods segment decreased $19.4 million, or 9%, in 1997
compared with 1996.  This decrease was primarily a result of higher natural gas
costs which resulted in lower nitrogen plant foods unit margins and by a $2.3
million decrease in our share of net income from crop production ventures.  The
effect of this decrease was partially offset by higher unit margins related to
the distribution of phosphate plant foods.
                                    Page 23
<PAGE>
CROP PROTECTION

   SALES

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

   INCOME

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

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

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

PETROLEUM

   SALES

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

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

      Sales of the petroleum business increased $270.2 million, or 25%, in 1997
compared with 1996.  This increase was principally attributable to expansion of
capacity at the Coffeyville, KS refinery, which enabled us to increase unit
sales of refined fuels.  In addition, unit prices for these products were higher
than in 1996.
                                    Page 24
<PAGE>
   INCOME

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

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

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

   SALES

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

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

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

  INCOME

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

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

     Income of the feed business decreased $6.7 million in 1997 compared with
1996.  This decrease was primarily attributable to declining sales through
traditional local cooperative channels and an increase in sales to lower margin
commercial accounts.
                                    Page 25
<PAGE>
PORK PROCESSING AND MARKETING

  SALES

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

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

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

     INCOME

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

     Income of the Company's pork processing and marketing segment increased
$33.0 million in 1998 compared with 1997.  The increase was primarily due to
increased gross margins in pork processing.
     Income of the pork processing and marketing segment decreased $29.9 million
in 1997 compared with 1996.  The decrease was primarily due to increased cost of
live hogs and to the increased selling and administrative expenses related to
the pork processing business.


LIVESTOCK PRODUCTION

  INCOME

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

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

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


BEEF PROCESSING AND MARKETING

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

     Beef processing and marketing business sales increased $232.1 million in
1998 compared with 1997.  The increase was attributable to increases of
approximately 15% in the number of cattle processed partly offset by lower
wholesale prices for beef.
                                    Page 26
<PAGE>
     Beef processing and marketing business sales increased $54.9 million in
1997 compared with 1996.  This increase was due to the increase of the number of
cattle processed and higher wholesale prices for beef.

  INCOME

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

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

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


NORTH AMERICAN GRAIN

  SALES

     North American grain sales increased $116.3 million, or 6% in 1999 compared
to 1998.  This increase is primarily due to an increase in unit sales related to
feed grains.
     In 1998, unit sales increased 4%.  However, commodity prices decreased and
sales declined from $2.2 billion in 1997 to $2.1 billion in 1998.

     North American grain sales decreased $1.2 billion in 1997 compared with
1996.  This decrease resulted from decreases in both unit sales (primarily due
to a reduction in export sales) and unit prices.

  INCOME

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

     North American grain income increased $4.9 million in 1998 compared with
1997.  This increase resulted primarily from higher storage revenues.

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


INTERNATIONAL GRAIN

  SALES

     International Grain's sales increased $1.9 billion in 1999 compared to
1998.  The primary cause of this increase in sales is the change in Tradigrain's
business from grain brokerage operations to buy/sell operations.  Due to this
change, it is appropriate for Tradigrain to record the full value of the grain
sold as revenue ($2.0 billion in 1999) and the related cost of grain acquisition
as cost of goods sold ($1.9 billion in 1999), rather than recognizing as revenue
only the net margins on grain transactions.   For 1997 and 1998, the net margin
recognized as revenue totaled $31.2 million and $63.5 million, respectively.
                                    Page 27
<PAGE>
The gross value of these transactions for 1997 and 1998 totaled $2.3 billion and
$1.7 billion, respectively.

  INCOME

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

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

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


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

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

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

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


OTHER INCOME (DEDUCTIONS)

   INTEREST EXPENSE

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

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

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

   OTHER, NET

      Other income was $43.3 million in 1999, $30.3 million in 1998, and $22.5
million in 1997.  Significant components of the increase in 1999 compared to
1998 include a $7.7 million gain on the sale of phosphate rock reserves, $4.3
million from litigation relating to the purchase of raw materials (natural
                                    Page 28
<PAGE>
 gas) consumed in producing nitrogen fertilizers and $4.1 million from closing
futures contracts used to hedge anticipated purchase of natural gas which
purchases are no longer anticipated due to temporary suspension of production of
the Enid, Oklahoma and Lawrence, Kansas UAN facilities, and have been included
in the income of the plant foods business segment..

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


CAPITAL EXPENDITURES

      See "Business and Properties - Business - Capital Expenditures and
Investments in Ventures."


MATTERS INVOLVING THE ENVIRONMENT

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

          Farmland wholly or jointly owns or operates 27 grain elevators and 65
manufacturing properties and has potential responsibility for environmental
conditions at a number of former manufacturing facilities and at waste disposal
facilities operated by third parties.  Farmland also has been identified as a
potentially responsible party ("PRP") under the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") at
various National Priority List sites and has unresolved liability with respect
to the past disposal of hazardous substances at five such sites.  CERCLA may
impose joint and several liability on certain statutory classes of persons for
the costs of investigation and remediation of contaminated properties,
regardless of fault or the legality of the original disposal.  These persons
include the present and former owners or operators of a contaminated property
and companies that generated, disposed of, or arranged for the disposal of
hazardous substances found at the property.  We are investigating or remediating
contamination at 31 properties under CERCLA and/or the state and federal
hazardous waste management laws.  During 1997, 1998 and 1999, we paid
approximately $4.6 million, $3.1 million and $7.2 million, respectively, for
environmental investigation and remediation.

          Farmland currently is aware of probable obligations for environmental
matters at 41 properties.  As of August 31, 1999, we had an environmental
accrual in our Consolidated Balance Sheet for probable and reasonably estimated
cost for remediation of contaminated property of $13.3 million. We periodically
review and, as appropriate, revise our environmental accruals.  Based on current
information and regulatory requirements, we believe that the accruals
established for environmental expenditures are adequate. Farmland has also
recorded, as a receivable, approximately $4.0 million of estimated, probable
insurance proceeds related to an environmental issue which has been remediated.

Some environmental matters are in preliminary stages and the timing, extent and
costs of actions which governmental authorities may require are currently
unknown.  As a result, certain costs of addressing environmental matters are
either not probable or not reasonably estimable and, therefore, have not been
accrued.  In management's opinion, it is reasonably possible that Farmland may
incur $9.7 million of costs in addition to the $13.3 million which has been
accrued.
                                    Page 29
<PAGE>
          Under the Resource Conservation Recovery Act of 1976 (' 'RCRA''),
Farmland has three closure and four post-closure plans in place for five
locations. Closure and post-closure plans also are in place for three landfills
and two injection wells as required by state regulations. Such closure and post-
closure costs are estimated to be $4.9 million at August 31, 1999 (and is in
addition to the $9.7 million discussed in the prior paragraph).  These
liabilities are accrued when plans for termination of plant operations have been
made.  Operations are being conducted at these locations and we do not plan to
terminate such operations in the foreseeable future. Therefore, these
environmental exit costs have not been accrued.

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

          Protection of the environment requires us to incur expenditures for
equipment or processes.  These expenditures may impact our future net income.
However, we do not anticipate that our competitive position will be adversely
affected by such expenditures or by laws and regulations enacted to protect the
environment. Environmental expenditures are capitalized when such expenditures
provide future economic benefits. In 1997, 1998 and 1999, Farmland had capital
expenditures of approximately $8.4 million, $8.7 million and $6.5 million,
respectively, to improve our environmental compliance and the efficiency of our
operations.  Management believes we currently are in substantial compliance with
existing environmental rules and regulations.


RECENT ACCOUNTING PRONOUNCEMENTS

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


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

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

      Where any such forward-looking statement includes a statement of the
assumptions or basis underlying such forward-looking statement, Farmland
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.  Where, in any forward-
looking statement, Farmland, or its management, expresses an expectation or
belief as to future results, such expectation or belief is expressed in good
faith and believed to have a reasonable basis, but there can be no assurance
that the statement of expectation or belief will result or be achieved or
accomplished.  Such forward looking statements include, without limitation,
statements regarding the seasonal effects upon the business, the effects of
actual, pending and possible legislation and regulation (including, but not
limited to, the effects of FAIR, "fast-track" and certain environmental laws),
the anticipated expenditures for environmental remediation, the consequences of
an adverse judgment in certain litigations (including the Terra litigation), our
ability to fully and timely complete modifications and expansions with respect
to certain manufacturing facilities, the redemption of the our various equities,
the adequacy of certain raw material reserves and supplies, our ability to
complete our unification with Cenex Harvest States, and the Company's ability to
resolve Year 2000 issues with respect to its financial, informational and
operational systems.  Discussion containing such forward-looking statements is
found in the material set forth under
                                    Page 30
<PAGE>
"Business and Properties" (including, without limitation, "Business Risk
Factors"), "Market for the Registrant's Common Equity and Related Stockholder
Matters", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Notes to Consolidated Financial Statements", as well
as within this Form 10-K generally.
      Taking into account the foregoing, the following are identified as
important factors that could cause actual results to differ materially from
those expressed in any forward-looking statement made by, or on behalf of,
Farmland:

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

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

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

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

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

6.Regulatory delays and other unforeseeable obstacles beyond our control that
  may affect growth strategies through unification (including our proposed
  unification with Cenex Harvest States), acquisitions and investments in
  ventures.

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

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

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

10.The factors identified in "Business and Properties - Business - Business Risk
  Factors".



ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

SENSITIVITY ANALYSIS

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

      The following table presents one measure of market risk exposure using
sensitivity analysis.  Market risk exposure is defined as the change in the fair
value of the derivative commodity instruments assuming a hypothetical change of
10% in market prices.  Actual changes in commodity market prices
                                    Page 31
<PAGE>
 may differ from hypothetical changes.  Fair value was determined for derivative
commodity contracts using the average quoted market prices for the three near-
term contract periods.  For derivative commodity instruments, fair value was
based on the Company's net position by commodity at year-end.  The market risk
exposure excludes the underlying positions that are being hedged.  The
underlying commodities hedged have a high inverse correlation to price changes
of the derivative commodity instruments.

     Effect of 10% Change in Fair Value
               As of August 31

            (Amounts in Millions)
DERIVATIVE COMMODITY CONTRACTS:
                                 1998  1999

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


      Farmland uses interest rate swaps to hedge a portion of its variable
interest rate exposure and uses foreign currency forward contracts to hedge its
exposure related to certain foreign currency denominated transactions.  Assuming
an adverse interest rate movement of 100 basis points, the impact on fair value
of interest positions held at August 31, 1998 and 1999 would be $3.1 million and
$1.6 million, respectively.  Assuming an adverse movement in the foreign
currency spot price of 10%, the impact on fair value of currency positions held
at August 31, 1998 and 1999 would be $4.1 million and $2.6 million,
respectively.  Market risk on other than trading transactions is not material to
our results of operations or financial position, as we have offsetting physical
positions.  The market risk of trading positions is unlikely to have a material
impact on our financial position, but could have a material impact on our
results of operations.
                                    Page 32
<PAGE>
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

              INDEX TO FARMLAND CONSOLIDATED FINANCIAL STATEMENTS


    Independent Auditors' Report ...............................34

    Consolidated Balance Sheets, August 31, 1998 and
    1999 .......................................................35

    Consolidated Statements of Operations for each of
    the years in the three-year period ended August
    31, 1999 ...................................................37

    Consolidated Statements of Cash Flows for each of
    the years in the three-year period ended August
    31, 1999 ...................................................38

    Consolidated Statements of Capital Shares and
    Equities for each of the years in the three-year
    period ended August 31, 1999 ...............................40

    Notes to Consolidated Financial Statements .................41
                                    Page 33
<PAGE>

                           INDEPENDENT AUDITORS' REPORT


The Board of Directors
Farmland Industries, Inc.:

We have audited the accompanying consolidated balance sheets of Farmland
Industries, Inc. and subsidiaries as of August 31, 1998 and 1999, and the
related consolidated statements of operations, cash flows and capital shares and
equities for each of the years in the three-year period ended August 31, 1999.
These consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Farmland Industries,
Inc. and subsidiaries as of August 31, 1998 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended August 31, 1999, in conformity with generally accepted accounting
principles.




KPMG LLP




Kansas City, Missouri
October 15, 1999
                                    Page 34
<PAGE>
                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS

                                    ASSETS
<TABLE>
<CAPTION>
                                                                           August 31

                                                                 1998                1999

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


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




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



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


  Net Property, Plant and Equipment.........................$      827,149     $       833,203
Other Assets................................................$      212,356     $       256,648







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


FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
                                    PAGE 35
<PAGE>
                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS

                           LIABILITIES AND EQUITIES
<TABLE>
<CAPTION>
                                                                                          August 31

                                                                                 1998                1999

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

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


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

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


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


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


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

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

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


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


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


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

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


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


                                    Page 36

<PAGE>
                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                              Year Ended August 31

                                                                  1997                 1998               1999

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


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


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


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

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


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


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


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


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

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


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



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

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



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


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

                                    Page 37

<PAGE>
                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                              Year Ended August 31

                                                                    1997             1998               1999

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

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

    Other liabilities.........................................       35,736           (79,784)          (35,791)


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


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


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

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


                                      Page 38

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

                                                                            Year Ended August 31

                                                                  1997               1998              1999

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


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

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

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



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



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



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


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


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


Acquisition of businesses:
    Fair value of assets acquired.......................... $        -0-        $   168,409       $      32,883
    Goodwill...............................................       2,550              14,819              14,574
    Minority owners' investment............................         965                  -0-                 -0-

    Equity issuable........................................          -0-            (26,323)                 -0-
    Cash paid or payable...................................      (3,515)             (2,766)             (7,750)

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


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

                                    Page 39
<PAGE>
                        FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF CAPITAL SHARES AND EQUITIES
<TABLE>
<CAPTION>

                                                                 Years Ended August 31, 1997, 1998 and 1999

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

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


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

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


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


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


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

                                    Page 40


                   FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

          Goodwill and Other Intangible Assets -- The excess of cost over the
fair market value of assets of businesses purchased is amortized on a
straight-line basis over a period of 15 to 25 years. Farmland assesses the
recoverability of goodwill and measures impairment, if any, by determining
whether the unamortized balance can be recovered over its remaining life through
undiscounted future operating cash flows.  Goodwill is reflected in the
accompanying Consolidated Balance Sheets net of accumulated amortization of
$16.4 million and $18.4 million, respectively, at August 31, 1998 and 1999.
Other intangible assets, primarily software, are amortized over three to ten
years.

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

    Derivative Commodity Instruments -- Farmland uses derivative commodity
instruments, including forward contracts, futures and options contracts,
primarily to reduce its exposure to risk of loss from changes in commodity
prices.  Derivative commodity instruments which are designated
                                      Page 41
<PAGE>
as hedges and for which changes in value exhibit high correlation to changes in
value of the underlying position are accounted for as hedges.

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

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

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

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

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

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

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

(2)  INVENTORIES

          Major components of inventories are as follows:
                                    Page 42

<TABLE>
<CAPTION>
<PAGE>
                                                       August 31


                                                1998                1999

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

                                         $     725,967        $     840,504





</TABLE>

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


(3) INVESTMENTS AND LONG-TERM RECEIVABLES

          Investments and long-term receivables are as follows:

<TABLE>
<CAPTION>

                                                                             August 31

                                                                      1998                1999

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

                                                                 $    298,402       $     329,729


</TABLE>


          National Bank for Cooperatives ("CoBank") requires its borrowers to
maintain an investment in stock of the bank.  The amount of investment required
is based on the average amount borrowed from CoBank during the previous five
years.  At August 31, 1998 and 1999, Farmland's investment in CoBank
approximated its requirement.  CoBank maintains a statutory lien on the
investment held by Farmland in CoBank.
                                    Page 43
<PAGE>
          Summarized financial information of investees accounted for by the
equity method is as follows:

<TABLE>
<CAPTION>

                                                                              August 31

                                                                       1998                1999

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

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


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

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


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


</TABLE>


<TABLE>
<CAPTION>
                                                               Year Ended August 31

                                                    1997                1998                1999

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


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


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


</TABLE>



          Farmland's investments accounted for by the equity method consist
principally of 50% equity interests in three manufacturers of crop production
products, Farmland Hydro, L.P., SF Phosphates Limited Company and Farmland
MissChem, Limited and a 50% equity interest in a distributor of crop protection
products, WILFARM, LLC.  During 1998, Farmland's North American Grain business
formed two 50%-owned alliances; Concourse Grain, LLC and Farmland-Atwood, LLC,
with ConAgra.  Concourse Grain, a marketing alliance, provided both domestic and
international customers with multiple classes of wheat.  Farmland-Atwood
provides risk management services, financial and grain support services and
grain brokerage to its customers.  On May 24, 1999, the owners of Concourse
Grain voted to liquidate the venture.  On May 28, 1999, we acquired the
remaining 50% interest in Farmland-Atwood. At August 31, 1999, our share of the
undistributed earnings of all ventures accounted for by the equity method
totaled $63.6 million.
                                    Page 44
<PAGE>
(4) PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                         August 31

                                                1998                    1999

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

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


</TABLE>




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

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

<TABLE>
<CAPTION>
                                                                                 August 31

                                                                           1998              1999

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

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

                                                                       $   728,103       $   808,413


</TABLE>


          Farmland has a $1.1 billion Syndicated Credit Facility with a group of
domestic and international banks ("the Credit Facility"). The Credit Facility
provides revolving short-term credit of up to $650.0 million to finance seasonal
operations and inventory, and revolving term credit of up to $450.0 million. At
August 31, 1999, Farmland had outstanding $368.5 million of revolving short-term
borrowings under the Credit Facility and $180.0 million of revolving term
borrowings; additionally, $52.7 million of the Credit Facility was being
utilized to support letters of credit issued on our behalf.
                                    Page 45

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

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

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

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

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

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

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

          Borrowings from CoBank, under both the Syndicated Credit Facility and
short-term notes payable, totaling $215.6 million at August 31, 1999, are
partially secured by liens on the equity investment held by Farmland in CoBank.
See Note 3.
                                    Page 46
<PAGE>

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


                     (Amounts in
                      Thousands)

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

                        $ 808,413




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

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


(6)  INCOME TAXES

   A.     TERRA RESOURCES, INC.

          In July 1983, Farmland sold the stock of Terra Resources, Inc.
("Terra"), a wholly owned subsidiary engaged in oil and gas exploration and

production operations and exited its oil and gas exploration and production
activities.  The gain from the sale of Terra amounted to $237.2 million for tax
reporting purposes.

          On March 24, 1993, the Internal Revenue Service ("IRS") issued a
statutory notice to Farmland asserting deficiencies in federal income taxes
(exclusive of statutory interest thereon) in the aggregate amount of $70.8
million.  The asserted deficiencies relate primarily to the Company's tax
treatment of the $237.2 million gain resulting from its sale of the stock of
Terra and the IRS's contention that Farmland incorrectly treated the Terra sale
gain as patronage-sourced income against which certain patronage-sourced
operating losses could be offset.  The statutory notice further asserts that,
among other things, Farmland incorrectly characterized for tax purposes gains
aggregating approximately $14.6 million and a loss of approximately $2.3
million, from dispositions of certain other assets.

          On June 11, 1993, Farmland filed a petition in the United States Tax
Court contesting the asserted deficiencies in their entirety.  The case was
tried on June 13-15, 1995.  The parties submitted post-trial briefs to the court
in September 1995 and reply briefs were submitted to the court in November 1995.

          If the United States Tax Court decides in favor of the IRS on all
unresolved issues raised in the statutory notice, Farmland would have additional
federal and state income tax liabilities aggregating approximately $85.8 million
plus accumulating statutory interest thereon (approximately $317.3 million
through August 31, 1999), or $403.1 million (before tax benefits of the interest
deduction) in the aggregate at August 31, 1999.  In addition, such a decision
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $15.3 million (including accumulating statutory
interest thereon).  The asserted federal and state income tax

                                    Page 47

<PAGE>
liabilities and accumulated interest thereon would become immediately due and
payable unless Farmland appealed the decision and posted the requisite bond to
stay assessment and collection.

      In March 1998, Farmland received notice from the IRS assessing the $15.3
million tax and accumulated statutory interest thereon related to the Company's
1989 tax year (as described above).  In order to establish the trial court in
which initial litigation, if any, of the dispute would occur and to stop the
accumulation of interest, Farmland deposited funds with the IRS in the amount of
the assessment.  After making the deposit, we filed for a refund of the entire
amount deposited.

          The liability resulting from an adverse decision by the United States
Tax Court would be charged to current earnings and would have a material adverse
effect on Farmland.  In the event of such an adverse determination of the Terra
tax issue, certain financial covenants of the Company's Syndicated Credit
Facility (the "Credit Facility"), dated May 15, 1996, become less restrictive.
Had the United States Tax Court decided in favor of the IRS on all unresolved
issues and had all related additional federal and state income taxes and
accumulated interest thereon been due and payable on August 31, 1999, Farmland's
borrowing capacity under the Credit Facility was adequate at that time to
finance the liability.  However, Farmland's ability to finance such an adverse
decision depends substantially on the financial effects of future operating
events on its borrowing capacity under the Credit Facility.

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

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

  b. OTHER INCOME TAX MATTERS

  Income (loss) before income taxes include the following components:
<TABLE>
<CAPTION>
                                        Year Ended August 31

                                   1997          1998         1999

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

Total.......................     $ 63,673      $55,027     $  5,822


</TABLE>
                                    Page 48
<PAGE>
          Income tax expense (benefit) is comprised of the following:

<TABLE>
<CAPTION>

                                                               Year Ended August 31

                                                    1997                1998                1999

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

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

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

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

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

                                               $        220        $      3,450        $      5,275



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






</TABLE>



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

<TABLE>
<CAPTION>

                                                               Year Ended August 31

                                                    1997                1998                1999


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

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

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


</TABLE>

                                    Page 49
<PAGE>
     The tax effect of temporary differences that give rise to significant
portions of deferred tax liabilities and deferred tax assets at August 31, 1998
and 1999 are as follows:

<TABLE>
<CAPTION>
                                                               August 31

                                                        1998                1999

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

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



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

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

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



</TABLE>


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

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

(7) MINORITY OWNERS' EQUITY IN SUBSIDIARIES

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

<TABLE>
<CAPTION>.
                                                                       August 31

                                                               1998              1999

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

                                                           $     35,471      $     41,009


</TABLE>

                                    Page 50
<PAGE>

(8)  PREFERRED STOCK, EARNED SURPLUS AND OTHER EQUITIES

          A summary of preferred stock is as follows:

<TABLE>
<CAPTION>
                                                                              August 31

                                                                         1998           1999

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

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

                                                                     $100,071       $  100,069


</TABLE>


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

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

<TABLE>
<CAPTION>
                                                                        August 31

                                                                  1998             1999

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

                                                              $    332,313     $    282,340


</TABLE>



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

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

          Capital credits are issued: 1) for payment of patronage refunds to
patrons who do not satisfy requirements for membership or associate membership
and 2) upon conversion of common
                                    Page 51
<PAGE>
stock or associate member common stock held by persons who no longer meet
qualifications for membership or associate membership in Farmland.

(9)CONTINGENT LIABILITIES AND COMMITMENTS

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

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

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

                                                  $266,671





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

          Farmland has been designated by the Environmental Protection Agency as
a potentially responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), at various National

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

          The ultimate costs of resolving certain environmental matters are not
quantifiable because many such matters are in preliminary stages and the timing
and extent of actions which governmental authorities may ultimately require are
unknown.  It is possible that the costs of such resolution may be greater than
the liabilities which, in the opinion of management, are probable and reasonably
estimable at August 31, 1999.  In the opinion of management, it is reasonably
possible for such costs to approximate an additional $9.7 million.

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

      In December 1997, Farmland entered into a series of agreements which
provide for the construction and operation under a long-term lease of facilities
adjacent to our petroleum refinery at Coffeyville, Kansas.  These facilities are
designed to convert petroleum coke by-products into fertilizers.  When the
facilities are completed (presently scheduled during the second quarter of
fiscal 2000), Farmland will be obligated to make future minimum lease payments
which, at that time, will have an approximate present value of $223 million.
Alternatively, Farmland has an option to purchase the facilities.  Our
subordinated debt securities are subordinated in right of payment to payments
related to the Coffeyville facility and to $72.8 million of certain lease
obligations.
                                    Page 52
<PAGE>

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


(10) EMPLOYEE BENEFIT PLANS

          The Farmland Industries, Inc. Employee Retirement Plan (the "Plan") is
a defined benefit plan in which employees whose customary employment is at the
rate of at least 15 hours per week may participate.  Participation in the Plan
is optional prior to age 34, but mandatory thereafter.  Benefits payable under
the Plan are based on years of service and the employee's average compensation
during the highest four of the employee's last ten years of employment.

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

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

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

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

<TABLE>
<CAPTION>
                                                                                  Year Ended August 31

                                                                          1997            1998            1999

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

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

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


</TABLE>




          The following table sets forth the Plan's funded status and amounts
recognized as assets in our Consolidated Balance Sheets at August 31, 1998 and
1999.  Such prepaid pension cost is based on the Plan's funded status as of May
31, 1998 and 1999.
                                    Page 53

<PAGE>
<TABLE>
<CAPTION>
                                                                                    AUGUST 31

                                                                          1998                      1999

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

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



CHANGE IN FAIR VALUE OF PLAN ASSETS:


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

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



FUNDED STATUS AND PREPAID PENSION COST:

  Funded Status of the Plan, end of year                           $       42,564             $        47,805
  Unrecognized Prior Service cost                                             414                         207
  Unrecognized Net (Gain)/Loss                                              5,387                      (3,337)

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


</TABLE>



                                    Page 54


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

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

                                                  1997                   1998                   1999


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

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

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




 (11)     INDUSTRY SEGMENT INFORMATION

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

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

          Our farm supply operations consist of four segments:  petroleum, plant
foods, crop protection and feed.  Principal products of the petroleum division
are refined fuels, propane, jet fuels and by-products of petroleum refining.
Principal products of the plant foods division are nitrogen-based and phosphate-
based plant foods.  Principal products of the crop protection business are,
through the Company's ownership in the WILFARM, LLC and Omnium L.L.C. joint
ventures, a complete line of insecticides, herbicides and mixed chemicals.
Principal products of the feed division include swine, dairy, pet, beef,
poultry, mineral and specialty feeds; feed ingredients and supplements, animal
health products and livestock services.

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

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

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

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

                                    Page 55

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

                                        Combined
                                        Segments            Unallocated           Consolidated

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

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

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


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

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

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

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

1997 (PAGE 1 OF 3)
Equity in net income
   of investees                             49,494                    57                 49,551

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

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


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



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



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



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



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


</TABLE>



                                    Page 56

<PAGE>
<TABLE>
<CAPTION>

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

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

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

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

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


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

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

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

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

Equity in net income
   of investees                        43,269        4,986           163         399         237        49,054

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

Income tax (expense)                                                 -            -           -             -
                                 -             -


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



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



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



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



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


</TABLE>


                                    Page 57

<TABLE>
<CAPTION>

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

                                     Pork                       Beef                 Grain               Total

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

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

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

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


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

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

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

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


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

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

Income tax (expense)                       -            -            -                           -            -
                                                                                   -


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



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



Total assets                     $    354,224  $    29,818  $   277,008   $   263,403  $    229,688  $ 1,154,141



Depreciation and
   amortization expense          $     19,673  $     1,772  $    11,222   $     3,039  $      1,935  $    37,641


1997 (PAGE 3 OF 3)
(Amounts in Thousands)
Capital expenditures             $     16,475  $     3,439  $    15,735   $     1,696  $        950  $    38,295


</TABLE>

                                    Page 58


<PAGE>
<TABLE>
<CAPTION>

1998 (PAGE 1 OF 3)
(Amounts in Thousands)
                                                       CONSOLIDATED SEGMENTS

                                       Combined
                                       Segments            Unallocated           Consolidated

<S>                                <C>                   <C>                   <C>
Sales & transfers                  $      8,985,984      $           -         $     8,985,984
Transfers between
   segments                                (210,938)                 -                (210,938)

Net sales                          $      8,775,046      $           -         $     8,775,046

Cost of sales                             8,299,505                  -               8,299,505


Gross income                       $        475,541      $           -         $       475,541

Selling, general and
   administrative expenses         $        335,677      $       96,322        $       431,999

Other income (expense):
   Interest expense                $             -       $      (73,645)       $       (73,645)
   Interest income                               -                5,463                  5,436
   Other, net                                 6,806              23,459                 30,265

Total other income (expense)       $          6,806      $      (44,750)       $       (37,944)

Equity in income/(loss)
   of investees                              53,010               3,424                 56,434

Minority owners' interest
   in net (income)/loss
   of subsidiaries                           (7,202)                197                 (7,005)

Income tax benefit                               -                3,743                  3,743


Net income (loss)                  $        192,478      $     (133,708)       $        58,770



Investment in and
   advances to investees           $        183,614      $       12,492        $       196,106



        Total assets               $      2,579,039      $      295,579        $     2,874,618



Depreciation and
   amortization expense            $         86,218      $       15,615        $       101,833



Capital expenditures               $        150,579      $        3,650        $       154,229


</TABLE>


                                    Page 59


<TABLE>
<CAPTION>

1998 (PAGE 2 OF 3)
(Amounts in Thousands)
                                                             INPUT AND OTHER SEGMENTS

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

<S>                              <C>           <C>          <C>            <C>         <C>         <C>
Sales & transfers                $  1,161,940  $       299  $  1,141,090   $ 570,622   $ 163,761   $ 3,037,712
Transfers between
   segments                            (4,396)          -         (4,162)    (20,890)    (27,304)      (56,752)

Net sales                        $  1,157,544  $       299  $  1,136,928   $ 549,732   $ 136,457   $ 2,980,960

Cost of sales                       1,081,397          243     1,114,081     509,418     103,869     2,809,008


Gross income                     $     76,147  $        56  $     22,847   $  40,314   $  32,588   $   171,952

Selling, general and
   administrative expenses       $     28,188  $        31  $     22,485   $  31,132   $  37,449   $   119,285

Other income (expense):
   Interest expense              $         -   $        -   $         -    $      -    $      -    $        -
   Interest income                         -            -             -           -           -             -
   Other, net                           1,978           (9)        1,938         272       2,997         7,176

Total other income (expense)     $      1,978  $        (9) $      1,938   $     272   $   2,997   $     7,176

Equity in net income/(loss)
   of investees                        42,768        7,199           260       1,123         566        51,916

Minority owners' interest
   in net (income)/loss
   of subsidiaries                        281           -             -           -          687           968

Income tax benefit                         -            -             -           -           -             -


Net income (loss)                $     92,986  $     7,215  $      2,560   $  10,577   $    (611)  $   112,727



Investment in and
   advances to investees         $    140,212  $    13,264  $      1,087   $   7,308   $    4,862  $   166,733



Total assets                     $    631,887  $    23,027  $    433,117   $  98,555   $  222,099  $ 1,408,685



Depreciation and
   amortization expense          $     22,215  $        57  $     14,609   $   4,500   $    6,529  $    47,910



Capital expenditures             $     25,761  $       311  $     26,172   $   5,627   $   47,866  $   105,737


  </TABLE>


                                     Page 60

  <TABLE>
<CAPTION>

1998 (PAGE 3 OF 3)
(Amounts in Thousands)
                                                                  OUTPUT SEGMENTS

                                     Pork                       Beef                 Grain               Total

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

<S>                              <C>           <C>          <C>           <C>          <C>           <C>
Sales & transfers                $ 1,510,677   $    63,371  $ 2,135,476   $ 2,175,261  $    63,487   $ 5,948,272
Transfers between
   segments                                        (53,184)          -       (101,002)          -       (154,186)
                                 -

Net sales                        $ 1,510,677   $    10,187  $ 2,135,476   $ 2,074,259  $    63,487   $ 5,794,086

Cost of sales                      1,339,263        17,323    2,081,585    2,052,326            -      5,490,497


Gross income                     $   171,414  $     (,136) $    53,891   $    21,933  $    63,487   $   303,589

Selling, general and
   administrative expenses       $   144,804   $     2,172  $    15,292   $    19,375  $    34,749   $   216,392

Other income (expense):
   Interest expense              $        -    $        -   $        -    $        -   $        -    $        -
   Interest income                        -             -            -             -            -             -
   Other, net                          2,230           660       (4,934)        2,655         (981)         (370)

Total other income (expense)     $     2,230  $        660 $    (4,934)  $     2,655  $      (981)  $      (370)


1998 (PAGE 3 OF 3)
(Amounts in Thousands)
Equity in net income/(loss)
   of investees                           -            477       (1,569)        2,186           -          1,094

Minority owners' interest
   in net (income)/loss
   of subsidiaries                        -             -        (8,170)           -            -         (8,170)

Income tax benefit                        -             -              -           -            -             -


Net income (loss)                $    28,840   $    (8,171) $    23,926   $     7,399  $    27,757   $    79,751



Investment in and
   advances to investees         $        -     $     3,496  $        -    $    13,385  $        -    $    16,881



Total assets                     $   330,999   $    33,343  $   273,503   $   297,050  $   235,459   $ 1,170,354



Depreciation and
   amortization expense          $    19,386   $     1,231  $    12,608   $     3,065  $     2,018   $    38,308



Capital expenditures             $    19,166   $     3,068  $    18,680   $     3,601  $       327   $    44,842


</TABLE>


                                    Page 61

<PAGE>
<TABLE>
<CAPTION>
1999 (PAGE 1 OF 3)
(Amounts in Thousands)
                                                       CONSOLIDATED SEGMENTS

                                       Combined
                                       Segments            Unallocated           Consolidated

<S>                                <C>                   <C>                   <C>
Sales & transfers                  $    11,038,775       $            -        $     11,038,775
Transfers between
   segments                               (329,702)                   -                (329,702)

Net sales                           $   10,709,073        $           -         $    10,709,073

Cost of sales                           10,231,081                    -              10,231,081


Gross income                       $       477,992       $            -        $        477,992

Selling, general and
   administrative expenses                 358,412               122,427                480,839

Other income (expense):
   Interest expense                             -                (90,773)               (90,773)
   Interest income                              -                  8,337                  8,337
   Other, net                               29,971                13,351                 43,322

Total other income (expense)       $        29,971       $       (69,085)      $        (39,114)

Equity in income/(loss)
   of investees                             62,272                 3,238                 65,510

Minority owners' interest
   in net (income)/loss
   of subsidiaries                         (18,010)                  283                (17,727)

Income tax benefit                              -                  8,043                  8,043


Net income (loss)                  $       193,813       $      (179,948)      $         13,865



Investment in and
   advances to investees           $       193,143       $        11,904       $        205,047



        Total assets               $     2,855,640       $       402,009       $      3,257,649



Depreciation and
   amortization expense            $        93,284       $        15,900       $        109,184



Capital expenditures               $       114,986       $         6,198       $        121,184


</TABLE>


                                    Page 62

<TABLE>
<CAPTION>

1999 (PAGE 2 OF 3)
(Amounts in Thousands)
                                                             INPUT AND OTHER SEGMENTS

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

<S>                              <C>           <C>          <C>            <C>         <C>         <C>
Sales & transfers                $  1,009,019  $       247  $    954,220   $ 599,208   $ 284,756   $  2,847,450
Transfers between
   segments                            (6,735)          -            (48)    (23,661)    (30,837)       (61,281)

Net sales                        $  1,002,284  $       247  $    954,172   $ 575,547   $ 253,919   $  2,786,169

Cost of sales                       1,004,267          174       918,186     530,246     216,879      2,669,752


Gross income                     $     (1,983) $        73  $     35,986   $  45,301   $  37,040   $    116,417

Selling, general and
   administrative expenses       $     30,085  $         4  $     20,553   $  30,774   $  42,527   $    123,943

Other income (expense):
   Interest expense              $         -   $        -   $         -    $      -    $      -    $         -
   Interest income                         -            -             -           -           -              -
   Other, net                          18,166          242         2,726         355       7,465         28,954

Total other income (expense)     $     18,166  $       242  $      2,726   $     355   $   7,465   $     28,954

Equity in net income/(loss)

   of investees                        46,374        7,682         2,366         906         229         57,557

Minority owners' interest
   in net (income)/loss
   of subsidiaries                        167           -             -         (504)        498            161

Income tax benefit                         -            -             -           -           -              -


Net income (loss)                $     32,639  $     7,993  $     20,525   $  15,284   $   2,705   $     79,146



Investment in and
   advances to investees         $    146,501  $    16,310  $      4,383   $   7,771   $   6,658   $    181,623



Total assets                     $    651,650  $    26,287  $    491,018   $ 121,380   $  99,101   $  1,389,436



Depreciation and
   amortization expense          $     23,432  $        66  $     16,039   $   4,844   $   9,662   $     54,043



Capital expenditures             $      6,683  $         6  $     26,841   $   4,970   $  11,758   $     50,258


  </TABLE>

                                     Page 63


  <TABLE>
<CAPTION>

1999 (PAGE 3 OF 3)
(Amounts in Thousands)
                                                                 OUTPUT SEGMENTS

                                   Pork                       Beef                 Grain                Total

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

<S>                            <C>           <C>          <C>           <C>           <C>            <C>
Sales & transfers              $ 1,380,297   $    64,156  $  2,358,500  $ 2,411,788   $  1,976,584   $ 8,191,325
Transfers between
   segments                             -        (47,237)           -      (221,184)            -       (268,421)

Net sales                      $ 1,380,297   $    16,919  $  2,358,500  $ 2,190,604   $  1,976,584   $ 7,922,904

Cost of sales                    1,175,938        38,332     2,273,251    2,159,466      1,914,342     7,561,329


Gross income                   $   204,359   $   (21,413) $     85,249  $    31,138   $     62,242   $   361,575

Selling, general and
   administrative expenses     $   157,419   $     3,061  $     17,750  $    20,415   $     35,824   $   234,469

Other income (expense):
   Interest expense            $        -    $        -   $         -   $        -    $         -    $        -
   Interest income                      -             -             -            -              -             -
   Other, net                          899             1           914          580         (1,377)        1,017

Total other income (expense)   $       899   $         1  $        914  $       580   $     (1,377)  $     1,017

Equity in net income/(loss)

   of investees                         15          (336)        1,191        3,845             -          4,715

Minority owners' interest
   in net (income)/loss
   of subsidiaries                      -             (4)      (18,167)          -              -        (18,171)

Income tax benefit                      -             -             -            -              -             -


Net income (loss)              $    47,854   $   (24,813) $     51,437  $    15,148   $     25,041   $   114,667



Investment in and
   advances to investees       $       266 $     5,890  $         -   $     5,364   $         -    $    11,520



Total assets                   $   344,979 $    41,614  $    296,039  $   470,301   $    313,271   $ 1,466,204



Depreciation and
   amortization expense        $    19,576   $       829  $     13,497  $     4,588   $        751   $    39,241



Capital expenditures           $    18,169   $     4,929  $     21,027  $    11,891   $      8,712   $    64,728


</TABLE>

                                    Page 64



       Substantially all of Farmland's long-lived assets are located in the
  United States.  Sales by country, determined by customer location, were as
  follows:

  <TABLE>
  <CAPTION>
                                                            Year Ended August 31

                                                 1997                1998                1999

                                                           (Amounts in Thousands)
<S>                                        <C>                 <C>                 <C>
United States........................        $   7,784,212       $   7,474,758       $   7,520,565
Mexico...............................              441,384             472,955             570,959
Japan................................              158,694             157,022             220,763
Other................................              763,217             670,311           2,396,786

Total................................        $   9,147,507       $   8,775,046       $  10,709,073


</TABLE>




(12) SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK

          Farmland extends credit to its customers on terms generally no more
favorable than standard terms of sale for the industries it serves.  A
substantial portion of our receivables are concentrated in the agricultural
industry.  Collection of these receivables may be dependent upon economic
returns from farm crop and livestock production.  A significant amount of trade
receivables are with customers located in foreign countries.  Although Farmland
does not currently foresee a credit risk associated with these receivables,
repayment is dependent upon the financial stability of those countries' national
economies.  Farmland has counterparty performance risk on forward contracts we
have entered into with producers and local cooperatives.  In the past, Farmland
has not had significant problems with non-performance on these contracts and we
do not anticipate having significant non-performance problems in the future.
However, the risk of non-performance always exists and such risk may change as
the agricultural economy changes. Our credit risks are continually reviewed and
management believes that adequate provisions have been made for doubtful
accounts.

      Farmland enters into interest rate swap agreements, natural gas/financial
swap agreements, and foreign currency exchanges with financial institutions. We
continually monitor our positions with, and the credit quality of, the financial
institutions which are counterparties to our financial instruments and we do not
anticipate non-performance by counterparties.

          Farmland maintains investments in and advances to cooperatives,
cooperative banks and joint ventures from which it purchases products or
services.  A substantial portion of the business of these investees is dependent
upon the agribusiness economic sector.  See Note 3.



(13)DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

          Estimates of fair values are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision.  Changes in assumptions could affect the estimates.
Except for our investments in other cooperatives, the fair market value of all
financial instruments held by Farmland approximates the carrying value of these
instruments.

      Investments in the equities of other cooperatives which have been
purchased are carried at cost and equities received as patronage refunds are
carried at par value, less provisions for other than temporary impairment.
Management believes it is not practicable to estimate the fair value of these
equities because there is no established market for these equities and estimated
future cash flows, which are largely dependent on the future equity redemption
policy of each cooperative, are not determinable.  At August 31, 1998 and 1999,
the carrying value of our investments in other cooperatives' equities totaled
$43.7 million and $53.4 million, respectively.
                                    Page 65
<PAGE>
          For all other financial instrument assets, the fair value has been
estimated by discounting future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit ratings.  The
estimated fair value of the fixed rate financial instrument liabilities was
calculated using a discount rate equal to the interest rate on financial
instruments with similar maturities currently offered for sale by Farmland.  The
estimated fair value of our variable rate financial instruments approximates the
carrying value.

(14) RELATED PARTY TRANSACTIONS

          Farmland has a 50% interest in two manufacturers of phosphate products
and a manufacturer of nitrogen products, Farmland Hydro, L.P., SF Phosphates
Limited Company and Farmland MissChem Limited, a 50% interest in a distributor
of crop protection products, WILFARM, LLC, a 50% interest in a manufacturer  and
distributor of crop protection products, Omnium, LLC  and a 50% interest in
OneSystem Group, LLC, which is an information technology service.

          During 1997, 1998 and 1999, Farmland purchased $131.9 million, $231.5
million and $224.1 million, respectively, of products and services from these
ventures. Farmland had accounts payable of $5.9 million and $14.6 million due to
these ventures at August 31, 1998 and 1999, respectively, and a note payable due
to a venture of $17.1 million and $12.6 million at August 31, 1998 and 1999,
respectively.  Accounts receivable owed to us at August 31, 1998 and 1999
totaled $22.3 million and $6.2 million, respectively.  Notes receivable due from
these ventures totaled $35.0 million and $35.4 million at August 31, 1998 and
1999, respectively.


(15) OTHER INCOME

      During 1999, Farmland realized $10.3 million of gain resulting from the
favorable settlement of various lawsuits involving natural gas pricing, crude
oil supply, and environmental recoveries.  Farmland also sold its investment in
its Florida phosphate reserves resulting in a gain of approximately $7.7 million
before income taxes.  In connection with the temporary shutdown of the Lawrence
fertilizer production facility, Farmland realized a $4.1 million gain on futures
positions closed as a result of anticipated natural gas purchases which will not
occur.

          During 1998, we sold:  (1)  an approximate 3.8% interest in Farmland
National Beef, resulting in a gain before income taxes of $7.2 million; and (2)
all of our interest in Cooperative Services Company, formerly a wholly-owned
subsidiary, resulting in a gain before income taxes of $2.2 million.


(16) SUBSEQUENT EVENTS

      During September, the Boards of Directors of Farmland and Cenex Harvest
States separately approved the terms of a unification.  Both cooperatives have
scheduled a November 23, 1999, member vote regarding the unification.  If
members approve, the unification is scheduled to occur March 1, 2000.  The
unified entity will be named United Country Brands.

      During September, 1999, Land O'Lakes, Inc., Farmland and Cenex Harvest
States announced their intent to form a marketing venture which will distribute
crop production and crop protection products.  The venture anticipates
beginning operations early in calendar year 2000.

                                    Page 66
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE

   None.

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
                                    Page 67

<PAGE>
<TABLE>
<CAPTION>
          The directors of Farmland are as follows:

                                              Expiration of  Total Years
                        Age as of   Positions  Present Term   of Service
                       August 31,   Held With       as         as Board
                           1999     Farmland     Director       Member 	 Business Experience During Last Five Years

          Name


<S>                    <C>         <C>            <C>         <C>        <C>
Albert J. Shivley           56     Chairman of the    2001        15     General Manager--American Pride Co-op
                                        Board                            Association, Brighton, Colorado, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.
Jody Bezner                 58      Vice Chairman     2000         8     Producer--Texline, Texas.  Mr. Bezner
                                      and Vice                           serves as President of Dalhart Consumers
                                      President                          Fuel Association, Inc., Board of
                                                                         Directors, Dalhart, Texas, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.
Lyman Adams, Jr.            48                        2001         7     General Manager--Cooperative Grain and
                                                                         Supply, Hillsboro, Kansas, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.
Ronald J. Amundson          55                        2000        11     General Manager--Central Iowa Cooperative,
                                                                         Jewell, Iowa, a local cooperative
                                                                         association of farmers and ranchers.
Baxter Ankerstjerne         63                        1999         9     Producer--Peterson, Iowa.
                                                                         From 1988 to 1997, Mr. Ankerstjerne served

                                                                         as Chairman of the Board of Directors of
                                                                         Farmers Cooperative Association, Marathon,
                                                                         Iowa.
Richard L. Detten           65                        1999        12     Producer--Ponca City, Oklahoma
                                                                         Active member and past President and Vice
                                                                         President of Farmers Cooperative
                                                                         Association Of Tonkawa, Oklahoma, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.
Steven Erdman               49                        2001         7     Producer--Bayard, Nebraska.
                                                                         Mr. Erdman serves as Secretary, Panhandle
                                                                         Co-op, Scottsbluff, Nebraska, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.
                                                              Page 68
<PAGE>
Harry Fehrenbacher          51                        1999         3     Producer--Newton, Illinois.
                                                                         Mr. Fehrenbacher serves as President of
                                                                         the Board of Directors of Effingham
                                                                         Equity, Effingham, Illinois, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.
Martie Floyd                51                        2000         2     Producer--Johnson, Kansas.  Mr. Floyd
                                                                         serves as Secretary of the Board of
                                                                         Directors of Johnson Cooperative Grain Co,
                                                                         Inc., Johnson, Kansas, a local cooperative
                                                                         association of farmers and ranchers.
Warren Gerdes               51                        2001         6     General Manager--Farmers Cooperative
                                                                         Elevator Company, Buffalo Lake, Minnesota,
                                                                         a local cooperative association of farmers
                                                                         and ranchers.

Thomas H. Gist              64                        1999         1     Producer--Marianna, Ark.  Mr. Gist serves
                                                                         as Secretary of the Board of Directors of
                                                                         Tri-County Farmers Association of
                                                                         Brinkley, Ark. A local cooperative
                                                                         association of farmers and ranchers.
Ben Griffith                50                        2001        10     General Manager--Central Cooperatives,
                                                                         Inc., Pleasant Hill, Missouri, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.
Gail D. Hall                57                        2000        11     General Manager--Lexington Cooperative Oil
                                                                         Company, Lexington, Nebraska, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.  Mr. Hall retired from the
                                                                         position of General Manager in February
                                                                         1999.
Barry Jensen                54                        1999         9     Producer--White River, South Dakota.
                                                                         Mr. Jensen currently serves as a Director
                                                                         of Dakota Pride Cooperative, Winner, South
                                                                         Dakota, a local cooperative association of
                                                                         farmers and ranchers.
Ron Jurgens                 61                        2001         4     General Manager-Agri Co-op in Holdrege,
                                                                         Nebraska, a local cooperative association
                                                                         of farmers and ranchers.
                                                              Page 69
<PAGE>
William F. Kuhlman          50                        1999         3     Producer--Oakley, Kansas.  Mr. Kuhlman
                                                                         serves on the Boards of Directors of
                                                                         Kansas Retail Venture Group.  Formerly, he
                                                                         was President and CEO of Cooperative
                                                                         Agricultural Services, Inc., Oakley,
                                                                         Kansas and General Manager of Menlo-
                                                                         Rexford Cooperative, local cooperative
                                                                         associations of farmers and ranchers.

Greg Pfenning               50                        2000         7     Producer--Hobart, Oklahoma.  Director of
                                                                         The Farmers Cooperative Association,
                                                                         Hobart Oklahoma, a local cooperative
                                                                         association of farmers and ranchers.
Monte Romohr                46                        1999         9     Producer--Gresham, Nebraska Mr. Romohr
                                                                         serves as a Director of Farmers Co-op
                                                                         Business Association, Shelby, Nebraska, a
                                                                         local cooperative association of farmers
                                                                         and ranchers.
Joe Royster                 47                        1999         6     General Manager--Dacoma Farmers
                                                                         Cooperative, Inc., Dacoma, Oklahoma, a
                                                                         local cooperative association of farmers
                                                                         and ranchers.
E. Kent Stamper             53                        1999         3     Producer--Plainville, Kansas.  Mr. Stamper
                                                                         serves as Director and Vice President of
                                                                         the Board of Directors of Midland
                                                                         Marketing Coop, Hays, Kansas, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.  He is a member of the Director
                                                                         Development Committee of the Kansas
                                                                         Cooperative Council.
Eli F. Vaughn               50                        2000         2     General Manager--Farmers Cooperative
                                                                         Company, Afton, Iowa, a local cooperative
                                                                         association of farmers and ranchers.
Frank Wilson                51                        2001         4     General Manager-Elkhart Farmers Co-op
                                                                         Association, Elkhart, Texas, a local
                                                                         cooperative association of farmers and
                                                                         ranchers.
</TABLE>



                                    Page 70

<PAGE>
          Directors are elected for a term of three years by the shareholders of
Farmland at its annual meeting.  The expiration dates for such three-year terms
are sequenced so that about one-third of the Board of Directors is elected each
year.  The executive committee consists of Ronald Amundson, Lyman Adams, Jody
Bezner, Monte Romohr, Albert Shivley and H. D. Cleberg.  With the exception of
H. D. Cleberg, President and Chief Executive Officer, members of the executive
committee serve as chairmen of standing committees of the Board of Directors as
follows: Ronald Amundson, corporate responsibility committee; Lyman Adams, audit
committee; Jody Bezner, compensation committee; Monte Romohr, finance committee;
and Albert Shivley, governance committee.

      If the unification with Cenex Harvest States is approved, the Directors
whose term expires in 1999 will have their term extended to the unification date
which currently is anticipated to be March 1,2000.  At the unification date, 17
members of Farmland's Board will be selected to serve on the Board of the united
company, United Country Brands.

      The executive officers of Farmland are as follows:

<TABLE>
<CAPTION>

                   Age as of
                   August 31,
Name                  1999             Principal Occupation and Other Positions

<S>                  <C>     <C>
H. D. Cleberg           60   President and Chief Executive Officer - Mr. Cleberg has been with Farmland since
                               1968.  He was appointed to his present position effective April 1991.  Prior to
                               April 1991 Mr. Cleberg held senior leadership positions in Farmland's input and
                               output businesses and in corporate areas responsible for transportation and
                               logistics, sales, marketing and research.
 R. W. Honse            56   Executive Vice President and Chief Operating Officer - Mr. Honse has been with
                               Farmland since 1973.  He was appointed to his present position in February 1999.
                               From September 1995 to February 1999, he served as Executive Vice President and
                               Chief Operating Officer, Ag Input Businesses.  From January 1992 to September
                               1995, he served as Executive Vice President, Agricultural Inputs Operations.
<J. F. Berardi          56   Executive Vice President and Chief Operating Officer, Grain and Grain Businesses
                               from July 1996 through September 1999 - Effective September 23, 1999, Mr. Berardi
                               was appointed Chief Financial Officer for United Country Brands, Inc.  Mr. Berardi
                               joined Farmland in March 1992, serving as Executive Vice President and Chief
                               Financial Officer.
T. M. Campbell          49   Executive Vice President and Chief Financial Officer - Mr. Campbell joined Farmland
                               in August 1992, serving as Vice President and Treasurer.  He was appointed to his
                               present position in August 1996.
 G. E. Evans            55   Executive Vice President and Chief Operating Officer, Refrigerated Foods and
                               Livestock Production Group - Mr. Evans has been with Farmland since 1971.  He was
                               appointed to his present position in July 1997. He held the same position in the
                               Meat and Livestock Businesses from September 1995 until July 1997.  From January
                               1992 to September 1995 he served as Senior Vice President, Agricultural Production
                               Marketing/Processing.
                                                              Page 71

<PAGE>
B. L. Sanders           58   Senior Vice President and Corporate Secretary - Dr. Sanders had been with Farmland
                               since 1968.  He was appointed to his present position in September 1991.  From
                               April 1990 to September 1991 he served as Vice President, Strategic Planning and
                               Development.
Stan Riemann            48   Executive Vice President and President, Crop Production Group - Mr. Riemann joined
                               Farmland in March 1974.  He was appointed to his present position as Executive
                               Vice President and President, Crop Production in May 1999.
Kent Nunn               42   Vice President and Chief Information Officer Farmland Industries; President and
                               Chief Executive Officer OneSystem Group, LLC - Mr. Nunn joined Farmland in 1990.
                               He was appointed to his present position of Vice President and Chief Information
                               Officer in 1995, and has served as President and CEO of OneSystem Group, LLC since
                               its formation in 1997.
Bob Terry               43   Vice President and General Counsel - Mr. Terry has been with Farmland since
                               September 1989.  He was appointed to his present position in 1993.
</TABLE>


                                    Page 72
<PAGE>
ITEM 11.    EXECUTIVE COMPENSATION

          The following table sets forth the annual compensation awarded to,
earned by, or paid to the Chief Executive Officer and the Company's next four
most highly compensated executive officers for services rendered to Farmland in
all capacities during 1997, 1998 and 1999.


<TABLE>
<CAPTION>
                                                                                   Long-Term
                                               Annual Compensation                Compensation

                                                                      Employee
                                                                      Variable
                                  Year Ending                       Compensation         LTIP
Name and Principal Position        August 31         Salary             Plan           Payouts

<S>                              <C>            <C>              <C>              <C>
H. D. Cleberg,                       1997         $     540,292    $     469,954   $         514,999
President and                        1998         $     578,878    $     213,564   $         400,436
Chief Executive Officer              1999         $     623,814    $         -0-   $             -0-

R. W. Honse,                         1997         $     322,125    $     245,352   $         257,499
Executive Vice President and         1998         $     347,328    $     110,144   $         200,218
Chief Operating Officer              1999         $     426,224    $         -0-   $             -0-

G. E. Evans,                         1997         $     317,568    $     245,352   $         257,499
Executive Vice President and         1998         $     333,456    $     110,144   $         200,218
Chief Operating Officer              1999         $     348,456    $         -0-   $             -0-
Refrigerated Foods and
Livestock Production Group

J. F. Berardi,                       1997         $     286,814    $     245,352   $         243,194
Executive Vice President and         1998         $     326,016    $     110,144   $         200,218
Chief Operating Officer,             1999         $     340,680    $         -0-   $             -0-
Grain and Grain Group

S. A. Riemann                        1997         $     231,240    $     165,044   $         171,666
Executive Vice President and         1998         $     246,264    $      61,781   $         133,479

President, Crop Production Group     1999         $     261,314    $         -0-   $             -0-
<FN>



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



          Under the Annual Employee Variable Compensation Plan, all regular
salaried employees' total compensation is based on a combination of base and
variable pay.  The variable compensation award is dependent upon the employee's
position, the performance of Farmland for the fiscal year and/or the selected
performance criteria of the operating unit where the individual is employed.
Variable compensation is awarded only in years that Farmland achieves a
threshold performance level as approved each year by the Board of Directors.  We
intend for our total cash compensation (base plus variable) to be competitive,
recognizing that in the event Farmland fails to achieve a predetermined
threshold level of performance, the base pay alone will place the employees well
under market rates.  This system of variable compensation allows us to keep our
fixed costs (base salaries) lower and only increase payroll costs consistent
with our ability to pay.  Distributions under this plan are made annually after
the close of each fiscal year.

     Under the Management Long-Term Incentive Plan, selected management
employees are paid cash incentive amounts determined by a formula which takes
into account the position held and Farmland's
                                    Page 73
<PAGE>
aggregate income over periods specified in the plan.  Periods covered by the
Management Long-Term Incentive Plan are: 1998 through 2000 ("2000 Plan"), 1999
through 2001 ("2001 Plan") and 2000 through 2002 ("2002 Plan").  For each plan,
if the aggregate income is less than the Threshold or if the sum of the cash
returned to members as patronage refunds, redemptions under the base capital
plan, estate settlement plans and special allocated equity redemptions is less
than the amount specified in the respective Plan, subject to the following
paragraph, no payment will occur with respect to such Plan.

          The Board of Directors may, in its sole discretion, amend or
discontinue, adjust or cancel any award otherwise payable under the Management
Long-Term Incentive Plan, should Farmland incur a loss in the final year of any
plan.  In addition, the Board of Directors may impact the payout amount of a
plan by approving for inclusion or exclusion in the calculation of performance
the effects of extraordinary events occurring during a plan period.

          Subject to the preceding paragraph, if aggregate income equals or
exceeds the Threshold and the cash returned to members equals or exceeds the
specified amounts, then .83% of aggregate income of the three year plan period
is made available to pay incentive awards.  In general, a participant must be an
active employee of Farmland at the end of a Plan in order to receive payment of
the award.  Absent a significant change in their status, in which event such
percentages may be adjusted, of the amount made available to pay incentives,
Messrs. Cleberg, Honse, Evans, Berardi and Riemann will receive at least 11.2%,
7.2%, 5.6%, 5.6% and 3.7%, respectively, for the 2000 Plan, 11.2%, 7.9%, 5.6%,
5.6% and 3.7% respectively, for the 2001 Plan and 11.2%, 8.4%, 5.6%, 5.6% and
3.7% respectively, for the 2002 Plan.

                                    Page 74

<PAGE>
    Under the 2000 Plan, the 2001 Plan and the 2002 Plan, certain management
employees, including those executives set forth below, may be eligible for
future awards, contingent on satisfying the terms and conditions of the Plan
as set forth above.
<TABLE>
<CAPTION>

                                                                    Estimated Future Payouts Under Non-Stock
       (A)                 (B)                    (C)                           Price Based Plans

                    Number of Shares,    Performance or Other
                     Units or Other     Period Until Maturation        (D)               (E)             (F)
       Name            Rights (1)              or Payout            Threshold        Target (2)      Maximum (2)

                                                                             (Amounts in Thousands)
<S>                        <C>         <C>                       <C>               <C>                   <C>
H. D. Cleberg                                 1998 - 2000        $    463
                                              1999 - 2001             460
                                              2000 - 2002             376

R. W. Honse                                   1998 - 2000        $    296
                                              1999 - 2001             326
                                              2000 - 2002             282

G. E. Evans                                   1998 - 2000        $    232
                                              1999 - 2001             230
                                              2000 - 2002             188

J. F. Berardi                                 1998 - 2000        $    232
                                              1999 - 2001             230
                                              2000 - 2002             188

S. A. Riemann                                 1998 - 2000        $    153
                                              1999 - 2001             152
                                              2000 - 2002             124
<FN>

(1) Rights in the incentive pool are expressed as a minimum percentage
    of the total pool.

(2) The Plan does not specify a target or maximum payment.  Payouts are
    only made when income over the three year plan period reaches the
    threshold amount, and then the amount available for payment is a
    fixed percentage of total income.
</FN>
</TABLE>


   Our Executive Deferred Compensation Plan permits executive employees to
defer part of their salary and/or part or all of
their variable and incentive compensation.  The amount to be deferred and
 the period for deferral is specified by an election made
semi-annually.  Payments of deferred amounts shall begin at the earlier of
 the end of the specified deferral period, retirement,
disability or death.  The employee's deferred account balance is credited
 annually with interest at the highest rate of interest
paid by Farmland on any subordinated debt certificate sold during the year.
 Payment of an employee's account balance shall, at the
employee's election, be a lump sum or in ten annual installments.  Amounts
 deferred pursuant to the plan for the accounts of the
named individuals during the years 1997, 1998 and 1999 are included in the
 cash compensation table.

          Farmland established the Farmland Industries, Inc. Employee
 Retirement Plan (the "Retirement Plan") in 1986.  Generally,
employees whose customary employment is at the rate of at least 15 hours per
 week may participate in the Retirement Plan.
Participation in the Retirement Plan is optional prior to age 34, but
 mandatory thereafter.  Approximately 7,945 active and 9,300
inactive employees were participants in the Retirement Plan on August 31,
 1999.  The Retirement Plan is funded by employer and
employee contributions to provide lifetime retirement income at normal
 retirement age 62, or a reduced income beginning as early as
age 55.  The Retirement Plan also contains provisions for death and
 disability benefits.  The Retirement Plan has been determined
qualified under the Internal Revenue Code.  The Retirement Plan is
 administered by a committee appointed by the Board of Directors
and all funds are held
                                                              Page 75
<PAGE>
by a bank trustee in accordance with the terms of the trust agreement.
 Farmland's funding strategy is to make the maximum annual
contributions to the Retirement Plan's trust fund that can be deducted for
 federal income tax purposes.  Farmland's contributions
made to the Retirement Plan for the years ended August 31, 1997, 1998 and
 1999 were $12.2 million, $-0- million and $ 1.7 million,
respectively.

         If the proposed unification of Farmland and Cenex Harvest States is
 consummated, the Retirement Plans of either or both
companies may be modified, or a Retirement Plan currently in effect for one
 of the companies may be adopted.

          Payments to participants in the Retirement Plan are based upon
 length of participation and compensation reported for the
four highest of the last ten years of employment.  Compensation for this
 purpose includes base salary and compensation earned under
the Annual Employee Variable Compensation Plan discussed above.  However, at
 the present time, the maximum compensation per
participant which may be covered by a qualified pension plan is limited to
 $160,000 annually and the maximum retirement benefit
which may be paid by such plan is limited to $130,000 annually by the
 Internal Revenue Code ("IRC").

          We established a Supplemental Executive Retirement Plan ("SERP")
 effective January 1, 1994.  The SERP is intended to
supplement the retirement income of executive participants in the Retirement
 Plan whose retirement benefit is reduced because of the
limitation of the IRC on the amount of annual salary which can be included
 in the computation of retirement income or the amount of
annual retirement benefit which may be paid by a qualified retirement plan.

         Prior to September 1, 1999, Farmland's obligation to pay supplemental
 retirement benefits under the SERP was limited to the
aggregate cash value of the life insurance policies designated by the Board's
 Administrative Committee as policies of the SERP.  The
SERP was amended so that effective September 1, 1999, our obligation is to
 make up 100% of the employer provided retirement benefit
that would otherwise be lost under the Retirement Plan due to the IRC limits
 discussed above for qualified plans.

          The following table sets forth, for compensation levels up to
 $160,000, the estimated annual benefits payable at age 62
for members of the Retirement Plan.  These benefits are not reduced to take
 into account Social Security payments.  The following
table also sets forth, for compensation levels exceeding $160,000, the
 combined estimated annual benefits payable under the
Retirement Plan and SERP assuming:  (1) Retirement occurs on or after age 62;
 (2) The portion of the employee's benefit lost (due to
the IRC limitations) which would have been provided by the employer's
 contribution to the Retirement Plan is 85% of the total
benefit lost;  (3) Benefits have been computed using an IRC 401(a)(17) Final
 Average Wage of $155,000, which represents the average
of the compensation limits for the last four years; and (4) Grandfathered
 benefits, if any, have been ignored.  Grandfather benefits
(prior to 1995) would alter the amounts paid from either the Retirement Plan
 or the SERP, but would not materially alter the total
benefit amount shown in this chart.
                                                              Page 76
<PAGE>
<TABLE>
<CAPTION>


      Final Averag                                                 Years of Service

       Wage                    15                     20                    25                  30                     35

 <s                     <C>                   <C>                   <C>                   <C>                   <C>
            100,000       $        26,250       $        35,000       $        43,750       $        52,500       $        61,250
            125,000                32,813                43,750                54,688                65,625                76,563
            150,000                39,375                52,500                65,625                78,750                91,875
            200,000                50,728                67,638                84,547               101,456               118,366
            250,000                61,884                82,513               103,141               123,769               144,397
            300,000                73,041                97,388               121,734               146,081               170,428
            350,000                84,197               112,263               140,328               168,394               196,459
            400,000                95,353               127,138               158,922               190,706               222,491
            450,000               106,509               142,013               177,516               213,019               248,522
            500,000               117,666               156,888               196,109               235,331               274,553
            600,000               139,978               186,638               233,297               279,956               326,616
            700,000               162,291               216,388               270,484               324,581               378,678
            800,000               184,603               246,138               307,672               369,206               430,741
            900,000               206,916               275,888               344,859               413,831               482,803
          1,000,000               229,228               305,638               382,047               458,456               534,866
          1,100,000               251,541               335,388               419,234               503,081               586,928
          1,200,000               273,853               365,138               456,422               547,706               638,991
          1,300,000               296,166               394,888               493,609               592,331               691,053
          1,400,000               318,478               424,638               530,797               636,956               691,053
          1,500,000               340,791               454,388               567,984               681,581               795,178

</TABLE>


          The following table sets forth the credited years of service for
certain of Farmland's executive officers at August 31, 1999.

                  Name                   Years of Creditable Service

                 H. D. Cleberg                       34
                 R. W. Honse                         25
                 G. E. Evans                         25
                 J. F. Berardi                        7
                 S. A. Riemann                       23



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

          The following persons, none of whom, except as indicated below, is
either currently or formerly an officer or employee of Farmland or any of its
subsidiaries, served as members of the compensation committee during 1999:
Messrs. Jody Bezner, Tom Gist, Harry Fehrenbacher, Barry Jensen and Joe Royster.
Mr. Bezner has served as Vice Chairman and Vice President of the Board of
Farmland from December 1997 to the current date.  No executive officer of
Farmland (i) served as a member of a compensation committee (or other board
committee performing equivalent functions or, in the absence of such committee,
the entire board of directors) of another entity, one of whose executive
officers served on the compensation committee of Farmland, (ii) served as a
director of another entity, one of whose executive officers served on the
compensation committee of Farmland, or (iii) served as a member of a
compensation committee (or other board committee performing equivalent functions
or, in the absence of such committee, the entire board of directors) of another
entity, one of whose executive officers served as a director of Farmland.
                                    Page 77
<PAGE>

COMPENSATION OF DIRECTORS

          Directors' compensation consists of payment of three hundred dollars
($300.00) per day of Farmland business (including, for example, board and
committee meetings and other similar activities), plus reimbursement of
necessary expenses incurred in connection with their official duties.  In
addition, we pay annual retainers of $30,000 to the Chairman; $25,000 to each
member of the Executive Committee, other than the Chairman and President; and
$20,000 to all other directors.



ITEM 12.  EQUITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          Farmland's equity consists of preferred shares, common shares,
associate member common shares and capital credits.  Only the common shares have
voting rights.

          At August 31, 1999, no person was known by Farmland to be the
beneficial owner of more than five percent of Farmland's common shares.

          At August 31, 1999, the directors and executive officers of Farmland,
neither individually nor as a group, beneficially owned in excess of one percent
of any class of Farmland's equity.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Farmland transacts business in the ordinary course with its directors
and with its local cooperative members with which the directors are associated
on terms no more favorable than those available to its other members.
                                    Page 78
<PAGE>

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A)  Listing of Financial Statements, Financial Statement Schedules and Exhibits

     (1)  FINANCIAL STATEMENTS

           Consolidated Balance Sheets, August 31, 1998 and 1999

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

           Consolidated Statements of Cash Flows for each of the years
           in the three-year period ended August 31, 1999

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

           Notes to Consolidated Financial Statements



  (2) FINANCIAL STATEMENTS

      All schedules are omitted as the required information is inapplicable
  or the information is presented in the Consolidated Financial Statements
  or related notes.

  (3)     EXHIBITS


Exhibit No.                            Description of Exhibits


        PLAN OF COMBINATION

  2. A  Transaction Agreement between Cenex Harvest States Cooperatives, a
        Minnesota cooperative association and Farmland Industries, Inc., a
        Kansas cooperative corporation, dated as of September 23, 1999.*

        ARTICLES OF INCORPORATION AND BYLAWS:

   3.(i)A Articles of Incorporation and Bylaws of Farmland Industries, Inc.
        effective December 10, 1998.  (Incorporated by Reference - Form S-1/A,
        filed December 16, 1998)

      INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
      INDENTURES**:

   4.(i)A Form of Trust Indenture with UMB Bank, National Association, providing
        for issuance of unsubordinated debt securities, including form of
        Demand Loan Certificates. (Incorporated by Reference - Form S-1, No.
        33-40759, effective December 31, 1997)

   4.(i)B Form of Trust Indenture with Commerce Bank, National Association,
        providing for issuance of subordinated debt securities, including forms
        of Ten-Year Bond, Series A, Ten-Year Bond, Series B, Five-Year Bond,
        Series C, Five-Year Bond, Series D, Ten-Year Monthly Income Bond,
        Series E, Ten-Year Monthly Income Bond, Series F, Five-Year Monthly
        Income Bond, Series G and Five-Year Monthly Income Bond, Series H.

        (Incorporated by Reference - Form  S-1, No. 33-40759, effective
        December 31, 1997)
                                    Page 79
<PAGE>
   4.(i)C Certificate of Designation for a Series of Preferred Shares Designated
        as 8% Series A Cumulative Redeemable Preferred Shares, dated December
        19, 1997. (Incorporated by Reference - Form S-2, filed April 3, 1998)

   4(.ii)A   Syndicated Credit Facility between Farmland Industries, Inc. and
        various banks dated May 15, 1996, (Incorporated by Reference - Form 10-
        Q filed July 15, 1996)

        MATERIAL CONTRACTS:

        MANAGEMENT REMUNERATIVE PLANS:

  10.(iii)A  Employee Variable Compensation Plan (September 1, 1999 - August 31,
        2000)

  10.(iii)B  Farmland Industries, Inc. Management Long-Term Incentive Plan
        (Incorporated by Reference - Form 10-K, filed November 7, 1997)

          10.(iii)B(1) Exhibit F (Fiscal years 1998 through 2000) (Incorporated
                by Reference - Form 10-K, filed November 7, 1997)

          10.(iii)B(2) Exhibit G (Fiscal years 1999 through 2001) (Incorporated
                by Reference - Form 10-K, filed November 20, 1998)

        10.(iii)B(3)   Exhibit H (Fiscal years 2000 through 2002)

  10.(iii)C  Farmland Industries, Inc. Supplemental Executive Retirement Plan
        (As Amended and Restated Effective September 1, 1999)


        10.(iii)C(1)   Resolution Approving the Revision of Appendix A and
        Appendix A (Incorporated by Reference - Form 10-K, filed November 27,
        1996)

  10.(iii)D  Farmland Industries, Inc. Executive Deferred Compensation Plan (As
        Amended and Restated Effective November 1, 1996) (Incorporated by
        Reference - Form 10-K, filed November 27, 1996)

  10.(iii)E  Employment agreement between Farmland and Mr. H. D. Cleberg, dated
        May 1, 1999 (Incorporated by Reference - Form 10-Q, filed July 14,
        1999).

  10.(iii)F  Employment Agreement between Farmland and Mr. Robert Honse, dated
        June 7, 1999 (Incorporated by Reference - Form 10-Q, filed July 14,
        1999).

  10.(iii)G  Summary of severance and retention bonus plan for certain
        management employees of Farmland, dated June 7, 1999 (Incorporated by
        Reference - Form 10-Q filed July 14, 1999).

  21    Subsidiaries of the Registrant

  24    Power of Attorney


  27    Financial Data Schedule

*   Exhibits to the Transaction Agreement do not contain information material to
an investment decision and have not been filed.  At the Commission's request, we
agree to furnish a copy of such exhibits.

**  Long-term debt instruments pursuant to which the debt issuable thereunder
does not exceed 10% of Farmland's total assets have not been filed.  At the
Commission's request, we agree to furnish a copy of such instruments or
agreements.
                                    Page 80
<PAGE>
(B)  Reports on Form 8-K

     No reports on Form 8-K have been filed during the last quarter of the
period covered by the report.


SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT

      As of the filing of this Form 10-K, no annual report covering the
Registrant's last fiscal year and no proxy statement, form of proxy or other
proxy soliciting material, has been sent to holders of the Registrant's
securities.  At such time as any such annual report or proxy soliciting material
is sent to holders of the Registrant's securities subsequent to the filing of
this Form 10-K, four copies of the same will be furnished to the Commission as
and to the extent required by the Instructions to Form 10-K.
                                    Page 81
<PAGE>

                                  SIGNATURES

     PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES ACT
OF 1934, FARMLAND INDUSTRIES, INC. HAS DULY CAUSED THIS REPORT ON FORM 10-K TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF KANSAS CITY, STATE OF MISSOURI ON NOVEMBER 19, 1999.

                                    FARMLAND INDUSTRIES, INC.


                                    BY     /s/  TERRY M. CAMPBELL

                                             Terry M. Campbell
                                        Executive Vice President and
                                          Chief Financial Officer


                                    BY      /s/  ROBERT B. TERRY

                                              Robert B. Terry
                                     Vice President and General Counsel


     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THIS FORM 10-K
HAS BEEN SIGNED FOR THE FOLLOWING PERSONS ON BEHALF OF FARMLAND INDUSTRIES, INC.
AND IN THE CAPACITIES AND ON THE DATE INDICATED PURSUANT TO VALID POWER OF
ATTORNEY EXECUTED ON OCTOBER 20, 1999.


        Signature                    Title                           Date

           *                  Chairman of Board,            November 19, 1999

    Albert J. Shivley               Director

            *                 Vice Chairman of Board         November 19, 1999

       Jody Bezner            Vice President and Director

            *                       Director                 November 19, 1999

   Lyman L. Adams, Jr.

            *                       Director                 November 19, 1999


           *                       Director                 November 19, 1999

    Richard L. Detten

            *                       Director                 November 19, 1999

      Steven Erdman

            *                       Director                 November 19, 1999

    Harry Fehrenbacher

            *                       Director                 November 19, 1999

       Martie Floyd

            *                       Director                 November 19, 1999

      Warren Gerdes


           *                       Director                  November 19, 1999
      Thomas H. Gist
                                    Page 82
<PAGE>
            *                       Director                 November 19, 1999

       Ben Griffith

            *                       Director                 November 19, 1999

       Gail D. Hall

            *                       Director                 November 19, 1999

       Barry Jensen

            *                       Director                 November 19, 1999

       Ron Jurgens

            *                       Director                 November 19, 1999

    William F. Kuhlman

            *                       Director                 November 19, 1999

      Greg Pfenning

            *                       Director                 November 19, 1999

       Monte Romohr

           *                       Director                 November 19, 1999

       Joe Royster

            *                       Director                 November 19, 1999

     E. Kent Stamper

            *                       Director                 November 19, 1999

      Eli F. Vaughn

            *                       Director                 November 19, 1999

       Frank Wilson



    /s/  H.D. CLEBERG              President,                November 19, 1999

      H. D. Cleberg             Chief Executive
                                    Officer

  /s/  TERRY M. CAMPBELL      Executive Vice President       November 19, 1999

    Terry M. Campbell         and Chief Financial Officer
                              (Principal Financial Officer)

     /s/  MERL DANIEL          Vice President and            November 19, 1999

       Merl Daniel                 Controller
                              (Principal Accounting Officer)


*BY/s/  TERRY M. CAMPBELL

    Terry M. Campbell
     Attorney-In-Fact

                                    Page 82