Exhibit 10.38
                              EMPLOYMENT AGREEMENT

     It is hereby  agreed by and  between  Sparta  Foods,  Inc.  ("Sparta")  and
William J. Schuch ("Schuch") as follows:

     WHEREAS,  Schuch  wishes to be employed  with  Sparta and Sparta  wishes to
employ Schuch as Vice President of Sales as set forth in this Agreement.

     WHEREAS,  Schuch  acknowledges that he will have access to confidential and
trade secret information of Sparta,  which, if disclosed or used for the benefit
of any  other  person  or  entity,  would  cause  harm  to the  business  and/or
competitive position of Sparta.

     WHEREAS,  Schuch  acknowledges  his obligation  during his employment  with
Sparta,  and at all times  thereafter,  not to use or disclose  confidential  or
trade  secret  information  of Sparta  for the  benefit  of any other  person or
entity;

     WHEREAS,  the  parties  wish to set forth the terms of their  agreement  in
writing.

     NOW,  THEREFORE,  in consideration of the foregoing and the mutual promises
and covenants  contained herein,  and for other good and valuable  consideration
the  receipt  and  sufficiency  of which  is  specifically  acknowledged  by the
parties, Sparta and Schuch agree as follows:

     1.  Employment.  Sparta hereby  employs  Schuch and Schuch  hereby  accepts
employment upon the terms and conditions set forth in this Agreement.

     2. Term. The term of this Agreement  shall commence on October 20, 1997 and
shall  continue until  terminated by either Schuch or Sparta in accordance  with
Paragraph 9 of this Agreement.

     3. Duties.  Schuch shall serve as Sparta's Vice President of Sales.  Schuch
shall devote his entire time, attention, energy and best efforts to the business
of Sparta during the term of this  Agreement.  Schuch shall discharge all duties
and responsibilities as determined in the discretion of President and CEO and/or
the Board of Directors of Sparta.

     4.  Annual  Salary.  Sparta  shall pay to Schuch a salary on an  annualized
basis of $85,000,  which shall be  increased to $90,000 on an  annualized  basis
after ninety (90) days of employment  should  Sparta be satisfied  with Schuch's
performance. Salary shall be paid on a bi-weekly basis, less appropriate payroll
deductions.  Further increases,  if any, are at the sole discretion of the Board
of Directors.
<PAGE>

     5.  Bonus.  Sparta  shall pay  Schuch a bonus for the  fiscal  year  ending
September  30,  1998  in the  amount  of  $21,  250,  less  appropriate  payroll
deductions,  if Schuch is an employee in good standing as of September 30, 1998.
Additional amounts or future bonuses,  if any, are at the sole discretion of the
Board of Directors.

     6.  Benefits.  Sparta  shall  provide  to Schuch all  benefits  in the same
amounts and upon the same  conditions  as are  provided  for other  employees of
Sparta at his level in accordance with applicable plan documents.

     7.  Vacation.  Schuch shall be entitled to four weeks during the first year
of his  employment  and for any  subsequent  years in which he is employed  with
Sparta. Unused vacation may not be carried over into the next year.

     8. Automobile. Schuch shall be eligible for a company-leased vehicle on the
same terms as are available to other employees.

     9. Termination or Resignation. Either party may terminate the employment of
Schuch for any reason or no reason, with or without cause, upon 90 days' written
notice to the other  party.  The parties  agree that Schuch may continue to work
during the 90-day  notice period or may receive,  in lieu  thereof,  his regular
salary  through the 90-day  period.  Such  decision  shall be in  Sparta's  sole
discretion.  If either party terminates the employment of Schuch as set forth in
this  Paragraph  9, Schuch shall be entitled to his regular  salary  through the
last date of the notice period together with any accrued and unused vacation for
the year in which he is terminated or resigns,  and any severance to which he is
entitled in accordance with Paragraph 10 of this Agreement.  Schuch shall not be
entitled  to any further  payments  of any kind,  except as may be due under any
pension, profit sharing or benefit plan in which Schuch is a participant.

     10. Severance.  Sparta shall,  unless Schuch is terminated for cause, for a
period of one year after Schuch's  termination or resignation under Paragraph 9,
pay  Schuch  severance  at the rate of his last  annual  salary  (excluding  any
bonuses or other payments),  less  appropriate  payroll  deductions,  to be paid
according to the bi-weekly payroll schedule.  If Sparta is terminated for cause,
he shall not be entitled to any severance payments and shall only be entitled to
his regular  salary  through the last date of the notice  period as set forth in
Paragraph 9, together with any accrued and unused vacation for the year in which
he is  terminated  or  resigns.  Schuch  shall not be  entitled  to any  further
payments of any kind, except as may be due under any pension,  profit sharing or
benefit plan in which Schuch is a participant.

     Cause  shall  be  defined  as  conduct  detrimental  to  Sparta's  business
reputation or good will;  misrepresentation or dishonesty in any dealing between
Schuch and  Sparta or  between  Schuch and  Sparta's  customers  or  prospective
customers;  abuse of alcohol or use of controlled  substances  while on the job;
refusal to comply with Sparta's directives,  rules,  regulations or policies; or
the violation of any term of this Agreement.
<PAGE>

     11.  Confidentiality.  Schuch  acknowledges  and  agrees  that he will not,
during his employment or at any time thereafter,  directly or indirectly, use or
disclose to any other entity or person, any confidential  information of Sparta,
without the prior written approval of Sparta's Board of Directors.  For purposes
of this  Agreement,  the  term  "confidential  information"  shall  include  any
information  of Sparta,  whether in print,  or on a  computer  disk,  or tape or
otherwise,  including a formula, pattern, compilation,  program, device, method,
technique,  or process which (a) derives  independent  economic value, actual or
potential,  from not being generally known to the public or to other persons who
can obtain  economic value from its disclosure or use; and (b) is the subject of
efforts that are  reasonable  under the  circumstances  to maintain its secrecy.
Schuch  acknowledges that such  confidential  information  includes,  but is not
limited to, customer lists and  information,  information  regarding  active and
inactive accounts, methods of operation, financial information, and marketing or
strategic plans or information.

     12.  Noncompetition.  In  consideration of his employment and the covenants
herein,  and  for  other  good  and  valuable   consideration  the  receipt  and
sufficiency of which is specifically acknowledged by Schuch, Schuch acknowledges
and agrees  that,  during the period of his  employment  and for a period of one
year after his  termination or resignation  from employment at any time, for any
reason or no reason,  with or without  cause,  and whether such  termination  or
resignation is voluntary or  involuntary,  he shall not, on behalf of himself or
for any other person or entity:

     a. Directly or indirectly, as an employee,  proprietor, agent, stockholder,
     partner, officer, director or otherwise,  participate or engage in, manage,
     work for, broker for, operate,  control,  render advice or assistance to or
     be  connected  in any way with any other  person or entity  engaged  in the
     business  of  the   manufacture  or   distribution   of  tortillas   and/or
     tortilla-related products;

     b. Directly or indirectly, contact or solicit any actual, potential or past
     customer   of  Sparta  for  the  purpose  of  selling   tortilla's   and/or
     tortilla-related products;

     c. For any reason influence or solicit, or attempt to influence or solicit,
     either  directly or indirectly,  any employee of Sparta to terminate his or
     her  employment  with Sparta or to work for any person or entity other than
     Sparta.

     13.  Return  of  Property.  Schuch,  immediately  upon his  resignation  or
termination  from  employment,   whether  such  termination  or  resignation  is
voluntary or  involuntary,  shall return to Sparta all documents or other items,
whether in print, on computer disk,  tape or otherwise,  and all copies thereof,
within his possession or control, belonging to Sparta, or in any manner relating
to the  business  of, or the  services  provided  by  Sparta,  or the duties and
services performed by Schuch on behalf of Sparta,  including but not limited to,
any confidential or trade secret information of Sparta.
<PAGE>

     14. Remedy Upon Violation. In the event of a violation or violations of the
terms  of  Paragraphs  11,  12  or  13  of  this  Agreement  by  Schuch,  Schuch
acknowledges and agrees that Sparta shall be entitled,  in addition to any other
remedy it may have at law or  equity,  to an  injunction  with the  posting of a
minimal  bond or  other  security,  enjoining  or  restraining  Schuch  from any
violation or violations  of this  Agreement,  and Schuch hereby  consents to the
issuance of such injunction upon an appropriate showing under applicable law. If
any of the rights or restrictions contained in this Agreement shall be deemed by
a Court of competent  jurisdiction to be  unenforceable by reason of the extent,
duration or geographic scope, or other provision of this Agreement,  the parties
contemplate that the Court shall modify such extent, duration,  geographic scope
or other  provision of this Agreement and enforce this Agreement in its modified
form for all purposes in the manner contemplated by this Agreement.

     15. Other Agreements.  Schuch, by his signature to this Agreement, confirms
and warrants that he does not have any noncompetition,  confidentiality or other
agreements with or obligations to any other person or entity which would prevent
or interfere with his employment or duties and responsibilities with Sparta.

     16.  Successors and Assigns.  This Agreement  shall inure to the benefit of
the successors and assigns of Sparta.

     17. Entire  Agreement.  This Agreement  states the entire  agreement of the
parties  with  respect  to the  subject  matter  hereof  and  merges  all  prior
negotiations,  agreements, and understandings, if any. No modification, release,
discharge,  or waiver,  of any provision of this Agreement shall be of any force
or  effect  unless  made in  writing  and  signed  by the  parties  hereto,  and
specifically  identified  as a  modification,  release,  or  discharge,  of this
Agreement.  If any term,  clause, or provision,  of this Agreement shall for any
reason be adjudged invalid, unenforceable, or void, the same shall not impair or
invalidate any of the other  provisions of the Agreement,  all of which shall be
performed in accordance with their respective terms. This Agreement contains the
entire  agreement  of the parties.  It may not be changed  orally but only by an
agreement  in writing  signed by the parties  against  whom  enforcement  of any
waiver, change, modification, extension or discharge is sought.

     18.  Governing  Law.  This  Agreement  shall  be  governed,  construed  and
interpreted in accordance with the laws of the State of Minnesota.

<PAGE>


Dated: __________, 1997                   _____________________________
                                          William J. Schuch



                                          SPARTA FOODS, INC.


Dated: __________, 1997                   By __________________________
                                          Its _________________________