FY 99 STANDARD VARIABLE COMPENSATION PLAN
                     (SEPTEMBER 1, 1998 - AUGUST 31, 1999)

OBJECTIVE
               To pay additional cash beyond base salary to eligible employees
               of Farmland Industries, Inc. or one of its units, contingent upon
               the company's financial performance.  Farmland Industries, Inc.
               ("Corporate") must achieve a threshold or minimum return on
               equity before extraordinary items, or no payout occurs,
               regardless of individual business/service unit results.

               This plan includes four important exhibits which are an integral
               part of the plan structure.  Please be aware of and consult them.
               They include the following:

               Exhibit A -    Corporate financial performance criteria 
                              and levels

               Exhibit B -    A summary schedule of payout opportunities by
                              earnings level

               Exhibit C -    Additional detail on determination of payout

               Exhibit D -    Descriptions and definitions of accounting terms
               and            methodologies relevant to this plan

PLAN STRUCTURE
               The plan provides a one-time cash payment following the
               conclusion of FY 99 to eligible employees for the attainment of
               corporate objectives. The corporate standard measure is Return On
               Equity (ROE).  With Senior Management approval, including the
               Chief Executive Officer, a business unit may be based completely
               on corporate ROE.  Alternatively, a business unit may be based
               partially or completely on unit measures, with full Senior
               Management approval, and would thus not participate in this
               standard plan.  Farmland would have to achieve at least the
               threshold ROE level before any payout would occur under a
               customized unit plan.

               A further requirement for payout to Farmland Industries, Inc.
               Vice Presidents and above is that cash patronage payments to
               members must occur; if not, this group will receive no payout
               under the terms of this plan.

ELIGIBILITY
               The following types of employees are ineligible for payout under

               the Standard Variable Compensation Plan:

               . Employees whose terms and conditions of employment are subject
                 to collective bargaining
               . Employees hired after 6/1/99 (Waived if the employee is a
                 former regular full time employee during FY 99.  Payout is
                 prorated)
               . Regular part time employees with less than 500 hours of
                 service during FY 99
               . Temporary employees with less than 1000 hours of service
                 during FY 99
               . Employees terminated for cause prior to 8/31/99
               . Employees who terminate voluntarily prior to 8/31/99
                 (Employees who terminate to accept a position with a member
                 cooperative may be eligible for a prorated payout.)
               . Employees included in variable compensation plans other than
                 the standard variable compensation plan.  Exceptions must be
                 approved by Senior Management of the affected area and by the
                 VP, Human Resources.

               Certain classes of employees who terminate prior to the end of
               the fiscal year will receive payout based on their eligible
               earnings during the year:

                    Death/Disability
                    Retirement
                    Reduction in Force
                    Focus Team member obtaining outside employment
                    Layoff
                    Leave of Absence
                    Hired after 9/1/98 but on or before 6/1/99

               Involuntary separations, other than for reasons included in the
               list above, which are not for performance or for cause, may

               result in prorated payout.

               Employees who voluntarily terminate prior to 08/31/99 for the
               purpose of assuming a position with a system member cooperative
               may be eligible to receive a payout.  To secure eligibility, the
               employee must notify Corporate Human Resources, in writing, at
               the time of separation and ensure that the  system member
               cooperative notifies Farmland's Corporate Human Resources
               Department, in writing, to verify employment from the point of
               separation through the conclusion of the plan year.

               Employees on formal disciplinary or performance probation are
               ineligible for that portion of the fiscal year.

DETERMINATION
OF PAYOUT
               Payout is determined as a percentage of eligible gross wages or
               salary paid during the fiscal year, as shown in Exhibits B and C.
               Corporate performance measurements are labeled "threshold",
               "target", and "maximum".

               Threshold - The minimal performance level required for the plan

               to pay out. No payout occurs for achievement below threshold.

               Target    - Identifies the actual performance objective.


               Maximum - A performance level exceeding target at which the

               payout as a percentage of eligible gross wages or salary is
               frozen.  No payout occurs beyond these percentages regardless of
               performance.

               Payout for performance between threshold and target or target and
               maximum is prorated.


     APPROVED:

               ________________________________________
                    H.D. Cleberg
                    President and CEO


                                   EXHIBIT A


                        FY 99 PERFORMANCE CRITERIA AND GOALS
     Corporate Return on Equity:



     Threshold      8%


     Target              14%


     Maximum        20%
                                      EXHIBIT B

                      FY 99 STANDARD VARIABLE COMPENSATION PLAN
<TABLE>
<CAPTION>

                TARGET     MAXIMUM                      EARNINGS                            V COMP CALCULATION POINT **

 THRESHOLD

   3             5          8               All Non-Exempt/Truck Drivers                                           Any Earnings

  <S>           <C>        <C>                           <C>                                                    <C>

   3             5             8                   Below $35,000 Exempt                                            Actual Earnings

   3             6             10                   $ 35,000 - $ 38,499                                                   $ 36,750

   4             7             12                   $ 38,500 - $ 42,349                                                   $ 40,425

   5             8             15                   $ 42,350 - $ 48,699                                                   $ 45,525

   5             10            18                   $ 48,700 - $ 55,999                                                   $ 52,350

   6             12            22                   $ 56,000 - $ 64,399                                                   $ 60,200

   7             15            27                   $ 64,400 - $ 74,059                                                   $ 69,230

   8             18            33                   $ 74,060 - $ 85,169                                                   $ 79,615

   10            22            40                   $ 85,170 - $ 97,949                                                   $ 91,560

   12            25            46                   $ 97,950 - $112,639                                                   $105,295

   12            25            46                   $112,640 - $129,539                                                   $121,090

   12            25            46                   $129,540 - $148,969                                                   $139,255

   14            28            52                       $148,970 +                                Actual Earnings (Non - FII Exec)

</TABLE>


** I.E., for any exempt employee whose earnings fall within a particular range,
the payout is calculated on this middle value.

<TABLE>
<CAPTION>
                                             EXECUTIVES
THRESHOLD     TARGET          MAXIMUM         EARNINGS            V COMP CALCULATION POINT**
  <S>            <C>             <C>          <C>                    <C>
  18             36              67                                  Designated FII Executives
  22             45              83                                  Designated FII Executives
  25             50              92                                  President and CEO

                                                $ 90,000 - $107,999  $  99,000
                                                $108,000 - $129,599  $ 118,800
                                                $129,600 - $155,519  $ 142,560
                                                $155,520 - $186,619  $ 171,070
                                                $186,620 - $223,939  $ 205,280
                                                $223,940 - $268,729  $ 246,335
                                                $268,730 - $322,479  $ 295,605
                                                $322,480 - $386,979  $ 354,730
                                                $386,980 - $464,379  $ 425,680
                                                $464,380 - $557,259  $ 510,820
                                                $557,260 - $668,709  $ 612,985
                                                $668,710 - $802,449  $ 735,605
                                                     $802,450 +      Actual Earnings

** I.E., for any exempt employee whose earnings fall within a particular range,
the payout is calculated on this middle value.
Note:  These scales remain unchanged from Fiscal Year 1998.

</TABLE>

                                      EXHIBIT C

                          DETAIL ON DETERMINATION OF PAYOUT

     NON-EXEMPT EMPLOYEES:

          Payout is determined as a percentage of eligible gross earnings paid
     from 9/1/98 to 8/31/99.

          Note:     Eligible gross wages may exclude some lump sums.

     EXEMPT/MANAGEMENT EMPLOYEES:
          Payout is determined as a percentage of the Variable Comp Calculation
Point based on eligible gross wages from 9/1/98 to 8/31/99.  Exhibit B grid 
lists the percentage opportunities assigned to each Variable Comp Calculation 
Point.**

          NOTE:     Lump Sum amounts given during the fiscal year will not be
                    included in Eligible gross wages unless they were given in
                    lieu of merit increase.

          **Variable Comp Calculation Point and designated percentage will be
     used unless comparison to FY96 salary range midpoint and grade determined
     percentage results in a higher payout amount; but once a person has 
     transitioned to the current variable pay computation method, that person
     cannot return to receiving a payout based on the fy96 salary range 
     midpoint.  Individuals hired, promoted or demoted after 9/1/96 are 
     ineligible for this comparison.

     ELIGIBLE EARNINGS:
          Base earnings, merit increase pay, lump sum in lieu of a merit
     increase, shift differential, bridge differential, and geographic 
     differential.
          Production supervisors flat rate overtime payments.

          Non-exempts overtime payments.

     NON-ELIGIBLE EARNINGS:
          The following is list of the most common items not included as

     earnings:
               Vacation and personal holiday balance lump sum payments
               Previous FY variable compensation payment
               Sales Commission, SPIFFs payment, bonus, etc.
               Severance pay
               Relocation reimbursements

          Exceptions to normal eligibility or ineligibility of earnings must be
          approved in advance by the appropriate FII Vice President and the
          Director, Human Resource Information Team.


                                      EXHIBIT D

                          ACCOUNTING TERMS AND METHODOLOGY
                                     DEFINITIONS


INCOME is defined as income before taxes and extraordinary items as reported for

Key Results purposes.
EQUITY is the prior year's ending equity.  Equity includes all capital shares

and equities (preferred, common and associate member shares, patronage refunds
for reinvestment, and earned surplus).  It does not include minority owners
equity in subsidiaries.

RETURN ON EQUITY (ROE) is the ratio determined by dividing Income by Equity.


CASH FLOW will be measured by using the Net Cash Generated formula of net income

plus beginning assets minus ending assets.  The assets are those reported for
Key Results purposes, and at the business unit level, exclude such items as
prepayments and redating of inventory.

AVERAGE ASSETS are the key results assets averaged by adding the previous year-

end assets, September through July ending assets multiplied by two, the current
year ending assets and dividing by 24.

RETURN ON AVERAGE ASSETS is the ratio of income divided by the Average Assets.


EARNINGS AFTER INTEREST is the Key Results income for the operating unit after

interest, other income and joint venture income.

                 TREATMENT OF THE VARIABLE COMPENSATION EXPENSE


The ROE targets have been expressed after the recognition of the variable
compensation expense.  In calculating the level at which variable compensation
will be paid, the variable compensation expense is added back to Income.  For
example, assume Equity is $923,000,000 and the ROE for threshold is expressed as
8%.  This would correspond to Income of $73,840,000 (.08 times $923,000,000).
However, the $73,840,000 includes variable compensation expense (variable
compensation expense is budgeted at target and an accrual is made each month).

                             EXAMPLE OF REQUIRED INCOME*
             (ASSUMING PRIOR YEAR ENDING EQUITY OF $923,000,000 MILLION)
 <TABLE>
 <CAPTION>
                                                      Required Income
ROE
<S>                                                         <C>
Threshold   8.0%                                            $   73,840,000
Target        14.0%                                         $  129,220,000
Maximum   20.0%                                             $  184,600,000

   *Actual FY 98 ending ROE has yet to be determined.  When it is, the 
income figures will be modified accordingly.
</TABLE>



                         DETERMINATION OF EXTRAORDINARY ITEM


If Farmland achieves its performance goals, but experiences a loss year due to
extraordinary items, the Board of Directors of Farmland Industries, Inc.
maintains the discretion to authorize, adjust, or deny payout of the management
portion of the Variable Compensation Plan (See the definition of management
employees in the main plan document and in Exhibit "A").  This also applies to
management level employees who participate in customized plans.  Employees on
sales incentive plans, with base pay administered at a lower level, are NOT

affected by this provision unless specific portions of their plans are tied to
corporate performance.

                     GUIDELINES FOR "EXTRAORDINARY" DESIGNATION

The Chief Financial Officer and the Chief Executive Officer must approve the
classification of any item as "extraordinary." Transactions deemed as
"extraordinary" and therefore excluded in the determination of Income for
variable compensation include:

 . The punitive portion of litigation results in favor of or against Farmland,
  excluding redemptive payments on normal business matter where the intent is
  to substantially restore net income to where it would have been had the
  incident not occurred.
  
 . Non-recurring (one-time) adjustments to income or expense such as the gain
  from settlement of the retirement plan.  Any such items would generally be
  reported as extraordinary items on Farmland financial statements under
  generally accepted accounting principles.
  
 . The gain or loss on the disposal of a major asset, group of assets, or
  investments.
  
 . The gain or loss from any new business activity or business unit added
  subsequent to the approval of the Business Plan, provided that the
  acquisition was such that it required specific Board of Director approval
  outside of the business plan.
  
 . The impact of adjustments resulting from LIFO inventory computations or
  reserves.
  
 . Other items as approved.

     Specific requests by an operating unit for treatment of an item as
     "extraordinary" must be approved by the Senior Management representative
     before review by the Chief Financial Officer and the Chief Executive
     Officer.