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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended November 26, 2006

OR



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

For the transition period from  to
.

Commission File Number 000-51035



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UAP Holding
Corp.

(Exact Name of Registrant as Specified in Its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 11-3708834                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|7251 W. 4thStreet, Greeley,
Colorado                           |  | 80634                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

(970) 356-4400

(Registrants Telephone Number, Including Area Code)

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)



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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 whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



|                                         |  |                               
|---------------------------------------- |  | ------------------------------
|Class                                    |  | Outstanding at January 3, 2007
|Common Stock, par value $0.001 per share |  | 50,980,971 shares             

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##### Table of Contents

TAB
LE OF CONTENTS



|                                                                                              |  |   
|--------------------------------------------------------------------------------------------- |  | --
|Part I. Financial Information                                                                 |  | 3 
|                                                                                              | 
|ITEM 1. FINANCIAL STATEMENTS                                                                  |  | 3 
|Report of Independent Registered Public Accounting Firm                                       |  | 3 
|Condensed Consolidated Balance Sheets                                                         |  | 4 
|Condensed Consolidated Statements of Earnings                                                 |  | 5 
|Condensed Consolidated Statements of Cash Flows                                               |  | 6 
|Condensed Consolidated Statement of Stockholders Equity                                      |  | 7 
|Notes to Condensed Consolidated Financial Statements                                          |  | 8 
|                                                                                              | 
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 18
|                                                                                              | 
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 28
|                                                                                              | 
|ITEM 4. CONTROLS AND PROCEDURES                                                               |  | 28
|                                                                                              | 
|Part II. Other Information                                                                    |  | 30
|                                                                                              | 
|ITEM 6. EXHIBITS                                                                              |  | 30
|                                                                                              | 
|SIGNATURES                                                                                    |  | 31



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of UAP Holding Corp.

Greeley, Colorado

We have reviewed the accompanying condensed
consolidated balance sheets of UAP Holding Corp. and subsidiaries (the Company) as of November 26, 2006, and November 27, 2005, the related condensed consolidated statements of earnings for the 13-week and 39-week periods ended
November 26, 2006, and November 27, 2005, the condensed consolidated statements of cash flows for the 39-week period ended November 26, 2006, and November 27, 2005, and the condensed consolidated statement of stockholders
equity for the 39-week period ended November 26, 2006. These interim financial statements are the responsibility of the Companys management.

We
conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons
responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware
of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of UAP
Holding Corp. and subsidiaries as of February 26, 2006, and the related consolidated statements of earnings, stockholders equity, and cash flows for the year then ended (not presented herein) and in our report dated May 10, 2006, we
expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of February 26, 2006, is fairly stated, in all material respects,
in relation to the consolidated balance sheet from which it has been derived.

DELOITTE & TOUCHE LLP

Denver, Colorado

January 3, 2007



3



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##### Table of Contents

UAP HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)

UNAUDITED



|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ----------------- | - | --------- | ----------------- |  | - | --------- | -
|                                                                                                                                        |  | November 26, 2006 |           |   | February 26, 2006 |   |           | November 27, 2005 | 
|ASSETS                                                                                                                                  |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Current assets:                                                                                                                         |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Cash and cash equivalents                                                                                                               |  | $                 | 35,045    |   |                   | $ | 79,168    |                   |  | $ | 13,977    |  
|Receivables, less allowance for doubtful accounts of $16,589, $12,770 and $16,119                                                       |  |                   | 724,930   |   |                   |   | 288,879   |                   |  |   | 616,957   |  
|Inventories                                                                                                                             |  |                   | 599,474   |   |                   |   | 730,771   |                   |  |   | 536,641   |  
|Deferred income taxes                                                                                                                   |  |                   | 24,665    |   |                   |   | 21,168    |                   |  |   | 24,631    |  
|Vendor prepay                                                                                                                           |  |                   | 12,950    |   |                   |   | 69,841    |                   |  |   | 22,056    |  
|Other current assets                                                                                                                    |  |                   | 4,383     |   |                   |   | 16,123    |                   |  |   | 4,383     |  
|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Total current assets                                                                                                                    |  |                   | 1,401,447 |   |                   |   | 1,205,950 |                   |  |   | 1,218,645 |  
|Property, plant and equipment                                                                                                           |  |                   | 130,794   |   |                   |   | 114,991   |                   |  |   | 114,303   |  
|Less accumulated depreciation                                                                                                           |  |                   | (32,288   | ) |                   |   | (24,676   | )                 |  |   | (23,345   | )
|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Property, plant and equipment, net                                                                                                      |  |                   | 98,506    |   |                   |   | 90,315    |                   |  |   | 90,958    |  
|Goodwill                                                                                                                                |  |                   | 41,611    |   |                   |   | 27,167    |                   |  |   | 32,431    |  
|Intangible assets, net                                                                                                                  |  |                   | 31,660    |   |                   |   | 26,121    |                   |  |   | 25,022    |  
|Deferred income taxes                                                                                                                   |  |                   | 6,370     |   |                   |   | 9,951     |                   |  |   | 9,960     |  
|Debt issue costs, net                                                                                                                   |  |                   | 5,746     |   |                   |   | 17,155    |                   |  |   | 18,014    |  
|Investment in unconsolidated affiliates                                                                                                 |  |                   | 113       |   |                   |   | 4,166     |                   |  |   | 3,666     |  
|Other assets                                                                                                                            |  |                   | 1,873     |   |                   |   | 1,085     |                   |  |   | 466       |  
|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Total assets                                                                                                                            |  | $                 | 1,587,326 |   |                   | $ | 1,381,910 |                   |  | $ | 1,399,162 |  
|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                    |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Current liabilities:                                                                                                                    |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Accounts payable                                                                                                                        |  | $                 | 728,714   |   |                   | $ | 819,071   |                   |  | $ | 631,190   |  
|Short-term debt                                                                                                                         |  |                   | 373,615   |   |                   |   |          |                   |  |   | 148,965   |  
|Other accrued liabilities                                                                                                               |  |                   | 103,513   |   |                   |   | 73,962    |                   |  |   | 115,661   |  
|Income taxes payable                                                                                                                    |  |                   |          |   |                   |   |          |                   |  |   | 14,649    |  
|Deferred income taxes                                                                                                                   |  |                   | 2,087     |   |                   |   | 1,433     |                   |  |   | 1,580     |  
|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Total current liabilities                                                                                                               |  |                   | 1,207,929 |   |                   |   | 894,466   |                   |  |   | 912,045   |  
|Long-term debt                                                                                                                          |  |                   | 172,828   |   |                   |   | 306,339   |                   |  |   | 303,713   |  
|Other non-current liabilities                                                                                                           |  |                   | 5,903     |   |                   |   | 1,890     |                   |  |   | 2,753     |  
|Deferred income taxes                                                                                                                   |  |                   | 18,677    |   |                   |   | 19,476    |                   |  |   | 19,884    |  
|Commitments and contingencies (note 10)                                                                                                 |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Stockholders equity:                                                                                                                   |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Common stock, $.001 par value, 90,000,000 shares authorized, 50,980,858, 50,814,430 and 50,473,349 issued and outstanding,
respectively |  |                   | 51        |   |                   |   | 51        |                   |  |   | 50        |  
|Management stock  rabbi trust                                                                                                          |  |                   |          |   |                   |   | 3,956     |                   |  |   | 4,518     |  
|Additional paid-in capital                                                                                                              |  |                   | 133,344   |   |                   |   | 117,392   |                   |  |   | 111,867   |  
|Retained earnings                                                                                                                       |  |                   | 44,813    |   |                   |   | 32,606    |                   |  |   | 39,104    |  
|Accumulated other comprehensive income                                                                                                  |  |                   | 3,781     |   |                   |   | 5,734     |                   |  |   | 5,228     |  
|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Stockholders equity                                                                                                                    |  |                   | 181,989   |   |                   |   | 159,739   |                   |  |   | 160,767   |  
|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  
|Total liabilities and stockholders equity                                                                                              |  | $                 | 1,587,326 |   |                   | $ | 1,381,910 |                   |  | $ | 1,399,162 |  
|                                                                                                                                        |  |                   |           |   |                   |   |           |                   |  |   |           |  

The accompanying notes are an integral part of the condensed consolidated financial statements.



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UAP HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(dollars in thousands, except share data)

UNAUDITED



|                                                         |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|-------------------------------------------------------- |  | -------------------- | ---------- | - | ----------------------- | - | ---------- | ----------------- |  | - | ----------------- | - |  | - | ---------- | -
|                                                         |  | Thirteen Weeks Ended |            |   | Thirty-Nine Weeks Ended |  
|                                                         |  | November 26, 2006    |            |   | November 27, 2005       |   |            | November 26, 2006 |  |   | November 27, 2005 |  
|Net sales                                                |  | $                    | 375,728    |   |                         | $ | 323,089    |                   |  | $ | 2,541,542         |   |  | $ | 2,437,458  |  
|Costs and expenses:                                      |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|Cost of goods sold                                       |  |                      | 335,107    |   |                         |   | 272,547    |                   |  |   | 2,206,926         |   |  |   | 2,107,891  |  
|                                                         |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|Gross profit                                             |  |                      | 40,621     |   |                         |   | 50,542     |                   |  |   | 334,616           |   |  |   | 329,567    |  
|Selling, general and administrative expenses             |  |                      | 54,746     |   |                         |   | 56,301     |                   |  |   | 209,954           |   |  |   | 216,362    |  
|(Gain) loss on sale of assets                            |  |                      | 56         |   |                         |   | (59        | )                 |  |   | 45                |   |  |   | (1,532     | )
|Restructuring costs                                      |  |                      | 85         |   |                         |   | 970        |                   |  |   | 429               |   |  |   | 1,460      |  
|Royalties, service charges and other income and expenses |  |                      | (4,320     | ) |                         |   | (2,915     | )                 |  |   | (19,946           | ) |  |   | (20,739    | )
|                                                         |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|Operating income (loss)                                  |  |                      | (9,946     | ) |                         |   | (3,755     | )                 |  |   | 144,134           |   |  |   | 134,016    |  
|Interest expense                                         |  |                      | 11,472     |   |                         |   | 10,885     |                   |  |   | 28,631            |   |  |   | 28,179     |  
|Finance related and other charges                        |  |                      | 325        |   |                         |   |           |                   |  |   | 48,172            |   |  |   |           |  
|                                                         |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|Income (loss) before income taxes                        |  |                      | (21,743    | ) |                         |   | (14,640    | )                 |  |   | 67,331            |   |  |   | 105,837    |  
|Income tax expense (benefit)                             |  |                      | (8,592     | ) |                         |   | (5,292     | )                 |  |   | 26,464            |   |  |   | 42,490     |  
|                                                         |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|Net income (loss)                                        |  | $                    | (13,151    | ) |                         | $ | (9,348     | )                 |  | $ | 40,867            |   |  | $ | 63,347     |  
|                                                         |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|Earnings (loss) per share:                               |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|Basic                                                    |  | $                    | (0.26      | ) |                         | $ | (0.19      | )                 |  | $ | 0.80              |   |  | $ | 1.26       |  
|Diluted                                                  |  | $                    | (0.26      | ) |                         | $ | (0.19      | )                 |  | $ | 0.78              |   |  | $ | 1.21       |  
|Cash dividends declared per share of common stock        |  | $                    | 0.1875     |   |                         | $ | 0.1625     |                   |  | $ | 0.5625            |   |  | $ | 0.45       |  
|Weighted average shares outstanding:                     |  |                      |            |   |                         |   |            |                   |  |   |                   |   |  |   |            |  
|Basic                                                    |  |                      | 50,978,306 |   |                         |   | 50,472,405 |                   |  |   | 50,932,591        |   |  |   | 50,449,776 |  
|Diluted                                                  |  |                      | 50,978,306 |   |                         |   | 50,472,405 |                   |  |   | 52,425,236        |   |  |   | 52,352,306 |  

The accompanying notes are an integral part of the condensed consolidated financial statements.



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UAP HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

UNAUDITED



|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------ | ----------------- | ----------------------- | -------- | ----------------- |  | - | -------- | -
|                                                                                                                                           |                   | Thirty-Nine Weeks Ended |         
|                                                                                                                                           | November 26, 2006 |                         |          | November 27, 2005 | 
|Operations                                                                                                                                 |                   |                         |          |                   |  |   |          |  
|Net income                                                                                                                                 |                   | $                       | 40,867   |                   |  | $ | 63,347   |  
|Adjustments to reconcile net income to net cash used for operating activities:                                                             |                   |                         |          |                   |  |   |          |  
|Depreciation                                                                                                                               |                   |                         | 8,636    |                   |  |   | 8,519    |  
|Amortization of intangibles                                                                                                                |                   |                         | 1,449    |                   |  |   | 1,021    |  
|Amortization of debt issuance costs                                                                                                        |                   |                         | 2,735    |                   |  |   | 3,290    |  
|Accretion of discount on notes                                                                                                             |                   |                         |         |                   |  |   | 7,766    |  
|Write-off of debt issuance costs                                                                                                           |                   |                         | 15,957   |                   |  |   |         |  
|Premium paid to tender notes payable                                                                                                       |                   |                         | 31,714   |                   |  |   |         |  
|Gain on sales of fixed assets                                                                                                              |                   |                         | 45       |                   |  |   | (1,530   | )
|Equity in losses of unconsolidated affiliates                                                                                              |                   |                         |         |                   |  |   |         |  
|Deferred tax benefit                                                                                                                       |                   |                         | (57      | )                 |  |   | (12,595  | )
|Stock compensation                                                                                                                         |                   |                         | 2,979    |                   |  |   | 586      |  
|Change in operating assets and liabilities                                                                                                 |                   |                         | (301,352 | )                 |  |   | (239,634 | )
|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|Net cash used for operations                                                                                                               |                   |                         | (197,027 | )                 |  |   | (169,230 | )
|Investing                                                                                                                                  |                   |                         |          |                   |  |   |          |  
|Additions to property, plant and equipment                                                                                                 |                   |                         | (16,960  | )                 |  |   | (10,226  | )
|Addition of other long-lived assets                                                                                                        |                   |                         | (1,928   | )                 |  |   |         |  
|Other                                                                                                                                      |                   |                         |         |                   |  |   | 405      |  
|Proceeds from sales of assets                                                                                                              |                   |                         | 9,399    |                   |  |   | 2,184    |  
|Acquisition of businesses                                                                                                                  |                   |                         | (31,511  | )                 |  |   |         |  
|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|Net cash used for investing activities                                                                                                     |                   |                         | (41,000  | )                 |  |   | (7,637   | )
|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|Financing                                                                                                                                  |                   |                         |          |                   |  |   |          |  
|Checks not yet presented                                                                                                                   |                   |                         | 10,988   |                   |  |   | 8,143    |  
|Net borrowings on revolving line of credit                                                                                                 |                   |                         | 371,865  |                   |  |   | 148,910  |  
|Debt issuance costs                                                                                                                        |                   |                         | (6,374   | )                 |  |   | (1,046   | )
|Long-term debt issued                                                                                                                      |                   |                         | 175,000  |                   |  |   |         |  
|Long-term debt redemption and payments                                                                                                     |                   |                         | (338,475 | )                 |  |   |         |  
|Dividends paid                                                                                                                             |                   |                         | (28,660  | )                 |  |   | (14,505  | )
|Excess tax benefits from stock based compensation arrangements                                                                             |                   |                         | 9,130    |                   |  |   |         |  
|Proceeds from common stock options exercised                                                                                               |                   |                         | 300      |                   |  |   | 377      |  
|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|Net cash provided by financing activities                                                                                                  |                   |                         | 193,774  |                   |  |   | 141,879  |  
|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|Net change in cash and cash equivalents                                                                                                    |                   |                         | (44,253  | )                 |  |   | (34,988  | )
|Net effect of exchange rates on cash and cash equivalents                                                                                  |                   |                         | 130      |                   |  |   | 761      |  
|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|Net change in cash and cash equivalents                                                                                                    |                   |                         | (44,123  | )                 |  |   | (34,227  | )
|Cash and cash equivalents at beginning of period                                                                                           |                   |                         | 79,168   |                   |  |   | 48,204   |  
|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|Cash and cash equivalents at end of period                                                                                                 |                   | $                       | 35,045   |                   |  | $ | 13,977   |  
|                                                                                                                                           |                   |                         |          |                   |  |   |          |  
|Supplemental disclosure of cash flow information:                                                                                          |                   |                         |          |                   |  |   |          |  
|Cash paid during the period for interest (includes $20,968, and $0, respectively, paid for prior years accreted discount on notes
payable) |                   | $                       | 48,976   |                   |  | $ | 13,597   |  
|Net cash paid during the period for income taxes                                                                                           |                   | $                       | 14,076   |                   |  | $ | 31,088   |  
|Dividends declared but not yet paid                                                                                                        |                   | $                       | 9,559    |                   |  | $ | 8,203    |  

The accompanying notes are an integral part of the condensed consolidated financial statements.



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UAP HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

(dollars in thousands)

UNAUDITED



|                                                                                                                                    |  |             |    |             |   |        |                            |  |                   |         |  |                                        |         |   |                          |   |        |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | -- | ----------- | - | ------ | -------------------------- |  | ----------------- | ------- |  | -------------------------------------- | ------- | - | ------------------------ | - | ------ | - |  | - | ------- | -
|Thirty-Nine Weeks Ended November 26, 2006                                                                                           |  | CommonStock |    | Rabbi Trust |   |        | Additional Paid in Capital |  | Retained Earnings |         |  | Accumulated Other Comprehensive Income |         |   | TotalStockholdersEquity |  
|Balance at February 26, 2006                                                                                                        |  | $           | 51 |             | $ | 3,956  |                            |  | $                 | 117,392 |  | $                                      | 32,606  |   |                          | $ | 5,734  |   |  | $ | 159,739 |  
|Dividends to stockholders                                                                                                           |  |             |   |             |   |       |                            |  |                   |        |  |                                        | (28,660 | ) |                          |   |       |   |  |   | (28,660 | )
|Stock compensation  stock options and restricted stock units net of holdback for taxes on restricted stock units vested and
issued |  |             |   |             |   |       |                            |  |                   | 2,566   |  |                                        |        |   |                          |   |       |   |  |   | 2,566   |  
|Stock and stock option income tax benefits                                                                                          |  |             |   |             |   |       |                            |  |                   | 9,130   |  |                                        |        |   |                          |   |       |   |  |   | 9,130   |  
|Rabbi trust distribution                                                                                                            |  |             |   |             |   | (3,956 | )                          |  |                   | 3,956   |  |                                        |        |   |                          |   |       |   |  |   |        |  
|Stock options exercised                                                                                                             |  |             |   |             |   |       |                            |  |                   | 300     |  |                                        |        |   |                          |   |       |   |  |   | 300     |  
|Comprehensive income:                                                                                                               |  |             |    |             |   |        |                            |  |                   |         |  |                                        |         |   |                          |   |        |   |  |   |         |  
|Net income                                                                                                                          |  |             |   |             |   |       |                            |  |                   |        |  |                                        | 40,867  |   |                          |   |       |   |  |   | 40,867  |  
|Cash flow hedges                                                                                                                    |  |             |   |             |   |       |                            |  |                   |        |  |                                        |        |   |                          |   | (2,174 | ) |  |   | (2,174  | )
|Foreign currency translation adjustment                                                                                             |  |             |   |             |   |       |                            |  |                   |        |  |                                        |        |   |                          |   | 221    |   |  |   | 221     |  
|                                                                                                                                    |  |             |    |             |   |        |                            |  |                   |         |  |                                        |         |   |                          |   |        |   |  |   |         |  
|Total comprehensive income                                                                                                          |  |             |    |             |   |        |                            |  |                   |         |  |                                        |         |   |                          |   |        |   |  |   | 38,914  |  
|                                                                                                                                    |  |             |    |             |   |        |                            |  |                   |         |  |                                        |         |   |                          |   |        |   |  |   |         |  
|Balance at November 26, 2006                                                                                                        |  | $           | 51 |             | $ |       |                            |  | $                 | 133,344 |  | $                                      | 44,813  |   |                          | $ | 3,781  |   |  | $ | 181,989 |  
|                                                                                                                                    |  |             |    |             |   |        |                            |  |                   |         |  |                                        |         |   |                          |   |        |   |  |   |         |  

The accompanying notes are an integral part of the condensed consolidated financial statements.



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##### Table of Contents

UAP HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Thirty-Nine Week Periods Ended
November 26, 2006, and November 27, 2005

UNAUDITED

1. Description of the Business and Significant Accounting Policies

Interim Financial Statements.The
accompanying unaudited condensed consolidated financial statements of UAP Holding Corp. and its subsidiaries (the Company, UAP, we, us, and our) have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP) for interim financial information and reflect all adjustments (consisting of normal recurring accruals and changes in estimates) which, in the opinion of
management, are necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented. These financial statements should be read in conjunction with the consolidated and combined financial
statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February 26, 2006.

Business.UAP is
the largest independent distributor of agricultural and professional non-crop inputs in the United States and Canada. We market a comprehensive line of products including chemicals, fertilizer, and seed to farmers, commercial growers, and regional
dealers. We have approximately 340 distribution, storage, and sales locations. We also have three formulation facilities where we blend products primarily for sale by our distribution facilities.

Principles of Consolidation.The condensed consolidated financial statements include our accounts and the accounts of all our wholly-owned subsidiaries.
Significant intercompany balances and transactions are eliminated. Investments in 50% or less owned affiliates over which we have significant influence but do not have the ability to exercise control are accounted for using the equity method.

Fiscal Year.Our fiscal year operates on a 52- or 53-week period, ending on the last Sunday in February. Our fiscal years 2007 and 2006
contain 52 weeks.

Seasonality.Our and our customers businesses are seasonal, based upon the planting, growing, and harvesting cycles.
During fiscal years 2004 through 2006, more than 75% of our net sales occurred during the first and second fiscal quarters of each year because of the condensed nature of the planting season. Because of the seasonality of sales, we experience
significant fluctuations in our revenues, income, and net working capital levels. In addition, weather conditions can significantly vary quarterly results.

Since our suppliers typically operate on a crop year, which is a different year than our fiscal year, our rebate agreements with our suppliers are estimated throughout the year and adjusted, as necessary, typically in our fiscal third and
fourth quarters. These adjustments can impact our margin percentages by quarter with the greatest impact in the third and fourth quarters due to the impact of supplier rebate adjustments on a lower level of quarterly sales. In addition, our
customers operate on a crop year and sales and payments on accounts receivable are cyclical throughout the year. Accordingly, our results of operations over any one quarter are not necessarily indicative of the results to be expected over the full
fiscal year.

Use of Estimates.The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions. These estimates or assumptions affect reported amounts of assets, liabilities, revenue, and expenses as reflected in the financial statements. Actual results could
differ from those estimates and the differences could be material.

Vendor Rebates Receivable. At the beginning of each crop year, we enter
into agreements with many of our suppliers providing for rebates upon the achievement of specified volume purchasing or sales levels. Most of these rebates are covered by binding arrangements or published programs. Rebates that are probable and
reasonably estimable are accrued at expected rates based on total estimated crop year performance. Rebates that are not probable or estimable are accrued when certain milestones are achieved. Rebates not covered by binding agreements or published
vendor programs are accrued when conclusive documentation of right of receipt is obtained. By our fiscal year-end, we will have received substantially all of the rebates due us for the prior crop year, and rebate income is adjusted accordingly.

We accrue rebates as part of our inventory and cost of sales, primarily for chemical and seed products. As of November 26, 2006, rebates receivable
are for the current crop year, which began as early as September 2005 and may end as late as January 2007, depending on the supplier, as well as the new crop year which just began. Rebates based on the amount of materials purchased reduce cost of
goods sold as inventory is sold. Rebates that are based on the amount of sales volume are offset to cost of goods sold when we estimate they have been earned based on our experience with the supplier and our anticipated sales volume of their
products.



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##### Table of Contents

Due to the diverse nature of rebate programs, estimates of rebates earned can vary significantly from period to period
and when comparing interim periods of the current and prior year, and more likely than not will trail sales. Due to changes in vendor rebate programs, our enhanced rebate tracking ability, and operating performance factors, the Company accrued
estimated rebate earnings of $4.9 million less for the thirteen weeks ended November 26, 2006, and $20.2 million more for the thirty-nine weeks ended November 26, 2006, as compared to the same periods in fiscal 2006.

Accounting for Stock Based Compensation.On February 27, 2006, the Company adopted SFAS 123(R), Share-Based Payments (SFAS 123(R)) which
requires the measurement and recognition of compensation cost for all share-based payment awards made to employees and directors, including grants of employee stock options related to the 2003 Plan, based on the grant date estimated fair value of
each award, net of estimated cancellations, over the employees requisite service period. Prior to the adoption of SFAS 123(R), the Company accounted for share-based awards to employees and directors using the intrinsic value method in
accordance with APB 25, Accounting for Stock Issued to Employees (APB 25) as allowed under SFAS 123, Accounting for Stock Based Compensation (SFAS 123). Under the intrinsic value method, no share-based compensation cost
related to stock options had to be recognized in the Companys earnings because the exercise price was at least equal to the market value of the common stock on the grant date. Because most of the Companys stock option grants were vested
prior to February 27, 2006, and because the value used to measure compensation expense for restricted shares is the same for APB 25, SFAS 123, and SFAS 123(R), the adoption of SFAS 123(R) had less than a $50,000 impact on the Companys
operating income, pretax income, and net income and did not affect the reported amount of basic and fully diluted earnings per share for the thirty-nine weeks ended November 26, 2006.

The Company elected to use the modified prospective transition method upon adoption of SFAS 123(R), which requires the application of the accounting standard as of
February 27, 2006, the first day of the Companys fiscal year 2007. In accordance with this transition method, the Companys condensed consolidated financial statements for prior periods have not been restated to reflect, and do not
include, the impact of SFAS 123(R).

Under SFAS 123(R), for share-based payment awards granted subsequent to February 27, 2006, the fair value of
awards that are expected to ultimately vest is recognized as expense over the requisite service periods. SFAS 123(R) requires forfeitures to be estimated at the time of grant in order to estimate the amount of share-based payment awards that will
ultimately vest. Forfeiture rates are based on historical rates. The estimated forfeiture rate is adjusted if actual forfeitures differ from original estimates. The effect of any change in estimated forfeitures is recognized through a cumulative
catch-up adjustment that will be included in compensation cost in the period of the change in estimate. For share-based payment awards granted prior to February 27, 2006, the Company recognizes remaining unvested SFAS 123 pro forma expenses
according to the remaining vesting conditions.

Total share-based compensation cost recognized under SFAS 123(R) for the thirteen and thirty-nine weeks
ended November 26, 2006, which is included in selling, general and administrative expenses, was $1.2 million and $3.0 million and consists of charges associated with restricted stock units and employee stock options. The share-based
compensation income tax benefit recognized on this expense was $0.5 million and $1.2 million for the same thirteen and thirty-nine week periods, respectively. The share-based compensation excess income tax benefit recorded and recognized as a source
of cash provided by financing activities in the condensed consolidated statement of cash flows was $6.0 million and $9.1 million for the thirteen and thirty-nine weeks ended November 26, 2006.

Prior to the adoption of SFAS 123(R), the Company presented tax benefits of deductions resulting from stock compensation as cash flows from operating activities in its
statements of cash flows. SFAS 123(R) requires the cash flows from the excess tax benefits the company realizes on stock compensation to be presented as cash flows from financing activities. The tax benefit exceeds compensation expense due to tax
benefits associated with the distribution of common stock from the rabbi trust (see Deferred Compensation in Note 7).

Earnings
(loss) per Share.Earnings per share are based on the weighted average number of shares of common stock outstanding during the period. The basic and diluted weighted average share calculation for the thirteen weeks ended November 26,
2006, and November 27, 2005, and the thirty-nine week periods ended November 26, 2006, and November 27, 2005, are presented in the following table:



|                                                                                               |                  |                                                           |            |                  |                         |   |                  |   |                  |   |            |  |   |           
|---------------------------------------------------------------------------------------------- | ---------------- | --------------------------------------------------------- | ---------- | ---------------- | ----------------------- | - | ---------------- | - | ---------------- | - | ---------- |  | - | ----------
|Earnings (loss) per share                                                                      |                  | Thirteen Weeks Ended                                      |            |                  | Thirty-Nine Weeks Ended
|                                                                                               | November 26,2006 |                                                           |            | November 27,2005 |                         |   | November 26,2006 |   | November 27,2005
|                                                                                               |                  | (dollars in thousands, except earnings per share amounts)
|Net income (loss)                                                                              |                  | $                                                         | (13,151    | )                |                         | $ | (9,348           | ) |                  | $ | 40,867     |  | $ | 63,347    
|                                                                                               |                  |                                                           |            |                  |                         |   |                  |   |                  |   |            |  |   |           
|Weighted average shares of common stock outstanding used in computing basic earnings per share |                  |                                                           | 50,978,306 |                  |                         |   | 50,472,405       |   |                  |   | 50,932,591 |  |   | 50,449,776
|Net effect of dilutive stock options and restricted stock units                                |                  |                                                           |           |                  |                         |   |                 |   |                  |   | 1,492,645  |  |   | 1,902,530 
|                                                                                               |                  |                                                           |            |                  |                         |   |                  |   |                  |   |            |  |   |           
|Weighted average shares of common stock used in computing diluted earnings per share           |                  |                                                           | 50,968,306 |                  |                         |   | 50,472,405       |   |                  |   | 52,425,236 |  |   | 52,352,306
|                                                                                               |                  |                                                           |            |                  |                         |   |                  |   |                  |   |            |  |   |           
|Basic earnings (loss) per share                                                                |                  | $                                                         | (0.26      | )                |                         | $ | (0.19            | ) |                  | $ | 0.80       |  | $ | 1.26      
|                                                                                               |                  |                                                           |            |                  |                         |   |                  |   |                  |   |            |  |   |           
|Diluted earnings (loss) per share                                                              |                  | $                                                         | (0.26      | )                |                         | $ | (0.19            | ) |                  | $ | 0.78       |  | $ | 1.21      
|                                                                                               |                  |                                                           |            |                  |                         |   |                  |   |                  |   |            |  |   |           



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Hedging Instruments. We use a limited number of derivative financial instruments to mitigate our interest
rate and foreign currency exposure. Derivative instruments are recorded on the consolidated balance sheet at their fair value as either assets or liabilities. To date, our designated hedge transactions have been cash-flow hedges. For cash-flow hedge
transactions, the effective portion of the changes in fair value of derivatives are reported as other comprehensive income and are recognized in current earnings in the period or periods during which the hedged transaction effects current earnings.
Amounts excluded from the effectiveness calculation and any ineffective portions of the change in fair value of the derivative of a cash-flow hedge are recognized in current earnings. For a derivative to qualify as a hedge at inception and
throughout the hedged period, we formally document the nature and relationships between the hedging instruments and hedged items. We also document our risk-management objectives, strategies for undertaking various hedge transactions and method of
assessing hedge effectiveness. Additionally, for hedges of forecasted transactions, the significant characteristics and expected terms of the forecasted transaction must be specifically identified, and it must be probable that each forecasted
transaction will occur. If it is later deemed probable that the forecasted transaction will not occur, the gain or loss is recognized in current earnings. Financial instruments qualifying for hedge accounting must maintain a specified level of
effectiveness between the hedge instrument and the item being hedged, both at inception and throughout the hedged period. Hedges are approved by the board of directors and the company does not use derivative financial instruments for trading or
speculative purposes.

Recent Accounting Pronouncements.In July 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for certain tax positions. This interpretation
requires that we recognize in our financial statements the impact of a tax position if it is more likely than not that the position will be sustained on audit, based on the technical merits of the position. FIN 48 is effective for fiscal years
beginning after December 15, 2006, and is required to be adopted by us in our first quarter of fiscal 2008. The cumulative effects, if any, of applying FIN 48 will be recorded as an adjustment to retained earnings as of the beginning of the
period of adoption. We are currently evaluating the effect that the adoption of FIN 48 will have on our consolidated results of operations and financial condition and we are not yet in a position to determine such effects.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157). This standard
defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after December 15, 2007
and interim periods within such years. We will adopt SFAS 157 in our first quarter of fiscal 2009, as required. We are currently evaluating the new standard. However, the adoption of SFAS 157 is not expected to have a material impact on our
financial condition, results of operations, or liquidity.

In September 2006, the FASB also issued Statement of Financial Accounting Standards No. 158
Employers Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106 and 132(R) (SFAS 158). This standard requires recognition of the funded status of a
benefit plan in the statement of financial position. The Standard also requires recognition in other comprehensive income certain gains and losses that arise during the period but are deferred under pension accounting rules, as well as modifies the
timing of reporting and adds certain disclosures. We will adopt SFAS 158 effective as of the end of our fiscal year, February 25, 2007, as required. The adoption of SFAS 158 is not expected to have a material impact on our financial condition,
results of operations, or liquidity.

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin
No. 108 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108), in which the Staff provides guidance on the consideration of the effects of prior
year misstatements in quantifying current year misstatements for the purpose of assessing materiality. SAB 108 requires quantification of all misstatements on both the rollover and iron curtain approaches, and if either
approach results in a material effect on the financial statements, the financial statements should be adjusted. We will adopt SAB 108 effective as of the end of our fiscal year, February 25, 2007, as required. We are currently evaluating the
effect that application of SAB 108 will have, but adoption is not expected to have a material impact on the Companys financial condition, results of operations, or liquidity.



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##### Table of Contents

Reclassifications.Certain prior year amounts in the condensed consolidated financial statements have been
reclassified to conform to the current year presentation. These reclassifications had no net impact on previously reported results of operations.

2.
Acquisitions and Divestitures

In March 2006, we acquired the remaining 50% interest of our joint venture with UAP Timberland, LLC
(Timberland) for consideration of approximately $13 million. Prior to the acquisition, Timberland was accounted for as an unconsolidated affiliate using the equity method of accounting under which UAPs proportionate share of net
income before taxes was included in Royalties, service charges and other income and expenses in the statements of earnings. With the acquisition, Timberland became a wholly-owned subsidiary and is now consolidated. This change
contributed additional sales of approximately $47 million and $114 million during the thirteen and thirty-nine weeks ended November 26, 2006, when compared with the thirteen and thirty-nine weeks ended November 27, 2005.

We are still finalizing our purchase accounting for Timberland and six smaller acquisitions. Adjustments to the current purchase price allocations are possible although
such adjustments are anticipated to be immaterial.

On February 28, 2006, we sold a portion of our retail locations in western Canada for total
consideration of approximately $8 million. Related assets were classified as held for sale in the February 26, 2006, balance sheet. We will continue to supply the purchaser with agricultural inputs per a supply agreement negotiated as part of
the sales contract. This divestiture decreased sales by approximately $0.7 million and $20.2 million during the thirteen and thirty-nine weeks ended November 26, 2006, when compared with the thirteen and thirty-nine weeks ended
November 27, 2005.

3. Royalties, Service Charges and Other Income and Expenses

Royalties, service charges and other income and expenses consist of the following:



|                                                         |                   |                        |        |                   |                         |   |                   |   |  |                   |         |   |  |   |         |  
|-------------------------------------------------------- | ----------------- | ---------------------- | ------ | ----------------- | ----------------------- | - | ----------------- | - |  | ----------------- | ------- | - |  | - | ------- | -
|Royalties, service charges and other income and expenses |                   | Thirteen Weeks Ended   |        |                   | Thirty-Nine Weeks Ended |  
|                                                         | November 26, 2006 |                        |        | November 27, 2005 |                         |   | November 26, 2006 |   |  | November 27, 2005 |        
|                                                         |                   | (dollars in thousands) |       
|Royalty (income)                                         |                   | $                      | (610   | )                 |                         | $ | (200              | ) |  | $                 | (5,929  | ) |  | $ | (9,154  | )
|Service charges (income)                                 |                   |                        | (1,863 | )                 |                         |   | (1,470            | ) |  |                   | (7,659  | ) |  |   | (5,510  | )
|Other (income) and expenses                              |                   |                        | (1,847 | )                 |                         |   | (1,245            | ) |  |                   | (6,358  | ) |  |   | (6,075  | )
|                                                         |                   |                        |        |                   |                         |   |                   |   |  |                   |         |   |  |   |         |  
|Total                                                    |                   | $                      | (4,320 | )                 |                         | $ | (2,915            | ) |  | $                 | (19,946 | ) |  | $ | (20,739 | )
|                                                         |                   |                        |        |                   |                         |   |                   |   |  |                   |         |   |  |   |         |  

4. Certain Asset Accounts

Receivables and Allowance for Doubtful Accounts.Our receivables include receivables from customers net of allowances for doubtful accounts, vendor rebates receivable, and miscellaneous receivables. As
of November 26, 2006, February 26, 2006, and November 27, 2005, the net receivables from customers were $567.7 million, $228.4 million, and 484.1 million, respectively, vendor rebates receivable were $137.3 million, $44.2
million, and $122.0 million, respectively, and miscellaneous receivables were $19.9 million, $16.3 million, and $10.8 million, respectively. Net receivables from customers include receivables from unconsolidated affiliates in the amounts of $0.0
million, $1.1 million, and $2.5 million as of November 26, 2006, February 26, 2006, and November 27, 2005, respectively. At November 26, 2006, February 26, 2006, and November 27, 2005, the allowance for doubtful
accounts totaled $16.6 million, $12.8 million, and $16.1 million, respectively.

Inventory. Inventory consists primarily of chemicals,
fertilizer, and seed products purchased from our suppliers for resale to our customers. We record inventory at the lower of cost or market.

Our reserves
for slow-moving and obsolete inventory items were $6.8 million, $5.4 million, and $6.6 million, as of November 26, 2006, February 26, 2006, and November 27, 2005, respectively.

Inventories are comprised of the following:



|                                  |  |                        |         |                   |   |                   |  |   |        
|--------------------------------- |  | ---------------------- | ------- | ----------------- | - | ----------------- |  | - | -------
|Inventory                         |  | November 26, 2006      |         | February 26, 2006 |   | November 27, 2005
|                                  |  | (dollars in thousands)
|Raw materials and work in process |  | $                      | 13,019  |                   | $ | 15,986            |  | $ | 9,525  
|Finished goods                    |  |                        | 586,455 |                   |   | 714,785           |  |   | 527,116
|                                  |  |                        |         |                   |   |                   |  |   |        
|Total                             |  | $                      | 599,474 |                   | $ | 730,771           |  | $ | 536,641
|                                  |  |                        |         |                   |   |                   |  |   |        



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Goodwill.Goodwill represents the excess of the purchase price paid (including the cost of acquisition)
over the fair value of the net assets acquired in connection with business acquisitions. At November 26, 2006, February 26, 2006, and November 27, 2005, goodwill totaled $41.6 million, $27.2 million, and $32.4 million, respectively.
The $14.4 million increase during fiscal 2007 is related to acquisitions. (See Acquisitions and Divestments Note 2). During 2006, we reduced goodwill $7.4 million to reflect the reduction of the deferred tax liability established in the
initial UAP acquisition purchase price allocation based on further refinement of our best estimate of the tax basis of various assets and liabilities.

Debt Issuance Costs. Our debt issuance costs net of amortization were $5.7 million, $17.2 million, and $18.0 million at November 26, 2006, February 26, 2006, and November 27, 2005, respectively. Our debt
issuance costs as of November 26, 2006 consist of costs associated with our new revolving credit facility and term loan. Both of these facilities were entered into on June 1, 2006. Debt issue costs are being amortized on a straight-line
basis over the terms of the debt, which approximates the effective interest method, to which the costs relate, and the related amortization is recorded to interest expense and other amortization expenses. In conjunction with the June 2006
refinancing of our prior credit facility and the tender of senior notes, $16.0 million of debt issue costs were written-off and expensed during our second fiscal quarter (See Note 9. Debt).

5. Costs Associated with Exit or Disposal Activities

During fiscal
year 2006, we consolidated ten regional distribution centers into five, closed one regional finance center, and centralized and consolidated various administrative functions. We also closed two regional sales offices and two formulating plants
during fiscal 2005.

We have incurred $1.8 million of the estimated $2.0 million of costs for the restructuring activities which began in fiscal year 2006.
The restructuring activities which began in fiscal year 2005 were completed during the first quarter of fiscal 2007.

6. Hedging Activities

Derivative Instruments.In July 2006, in compliance with the terms of our new credit facility, we entered into two interest rate swaps to
manage exposure to changes in cash flows related to changes in the variable interest rate on a portion of our long term debt. Under the terms of the swaps, we will pay a designated fixed rate and receive a variable rate which is based on LIBOR. The
rate received is expected to offset the variable rate to be paid on the long term debt which is also based on LIBOR.

The hedge transactions are designated
as cash flow hedges. Since the critical terms of the cash flow hedge match the critical terms of the hedged item, using the critical terms test under SFAS 133, Accounting for Derivative Instruments and Hedging Activities, we have
concluded that there is no hedge ineffectiveness as changes in cash flows attributable to the risk being hedged are expected to be offset completely by the changes in the hedging relationship. During the second quarter of fiscal 2007, the critical
terms of the hedge and the hedged items did not change and there has been no adverse change in the risk of default by counterparties to the swap since inception. As such, no gain or loss has been recognized due to hedge ineffectiveness.

As of November 26, 2006, we had two outstanding interest rate swaps with a total notional value of $165 million. These are amortizing swaps and their notional
values will decline to $90 million prior to expiration in July 2011. The fair value of the interest rate swaps at November 26, 2006, was ($3.5) million and is classified as Other non-current liabilities on the balance sheet. The
mark-to-market loss, net of taxes, deferred in other comprehensive income at November 26, 2006, is $2.2 million.

7. Share-based Compensation

Stock Compensation Plans.UAPs share-based compensation programs include non-qualified stock options, restricted stock units, and
deferred compensation. At November 26, 2006, our stock compensation programs were in accordance with the equity compensation plans maintained by the company: the 2004 Long-Term Incentive Plan (the 2004 Plan), the 2003 Stock Option
Plan (the 2003 Plan), the 2004 Non-Executive Director Stock Option Plan (the Director Option Plan), the 2003 Deferred Compensation Plan (the 2003 DCP), the 2004 Deferred Compensation Plan (the 2004
DCP), and the Director Deferred Compensation Plan (the Director DCP).



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##### Table of Contents

Stock Options.Our stock option plans provide non-qualified stock options to purchase authorized but
unissued shares of common stock at an exercise price, term, and other terms and conditions as determined by our board of directors (or compensation committee) at the time of grant of the options. To date, the exercise price of each stock option has
equaled the market price of UAPs stock on the date of the grant.

Most options are scheduled to vest over five years and current outstanding unvested
options are scheduled to vest within the next three years.

Had compensation expense been recognized for stock-based compensation plans in accordance with
provisions of SFAS 123, as amended, for the first thirteen and thirty-nine weeks ended November 27, 2005, the Company would have recorded net income and earnings per share as follows (in thousands, except per share data):



|                                                                                                                              |  |                                      |        |   |                                         |   |        |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ------ | - | --------------------------------------- | - | ------ | -
|                                                                                                                              |  | Thirteen Weeks EndedNovember 27,2005 |        |   | Thirty-Nine Weeks EndedNovember 27,2005 |  
|Net income (loss) as reported                                                                                                 |  | $                                    | (9,348 | ) |                                         | $ | 63,347 |  
|Add: Stock-based employee compensation included in reported net income, net of tax (represents restricted stock expense)      |  | $                                    | 128    |   |                                         | $ | 351    |  
|Less: Total stock-based employee compensation expense determined under the fair-value-based method for all awards, net of tax |  | $                                    | (127   | ) |                                         | $ | (374   | )
|                                                                                                                              |  |                                      |        |   |                                         |   |        |  
|Pro forma net income (loss)                                                                                                   |  | $                                    | (9,347 | ) |                                         | $ | 63,324 |  
|                                                                                                                              |  |                                      |        |   |                                         |   |        |  
|Basic earnings (loss) per share:                                                                                              |  |                                      |        |   |                                         |   |        |  
|As reported                                                                                                                   |  | $                                    | (0.19  | ) |                                         | $ | 1.26   |  
|Pro forma                                                                                                                     |  | $                                    | (0.19  | ) |                                         | $ | 1.26   |  
|Diluted earnings (loss) per share:                                                                                            |  |                                      |        |   |                                         |   |        |  
|As reported                                                                                                                   |  | $                                    | (0.19  | ) |                                         | $ | 1.21   |  
|Pro forma                                                                                                                     |  | $                                    | (0.19  | ) |                                         | $ | 1.21   |  

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option pricing
model.

The weighted average assumptions used in the model are outlined in the following table:



|                                       |  |            |      |   |               |   |      |  
|-------------------------------------- |  | ---------- | ---- | - | ------------- | - | ---- | -
|Date of grant                          |  | April 2004 |      |   | November 2003 |  
|Expected volatility                    |  |            | 0.00 | % |               |   | 0.00 | %
|Expected life (years)                  |  |            | 5.00 |   |               |   | 5.00 |  
|Risk-free interest rate                |  |            | 3.39 | % |               |   | 3.28 | %
|Dividend yield                         |  |            | 0.00 | % |               |   | 0.00 | %
|Weighted average fair value of options |  | $          | 0.39 |   |               | $ | 0.38 |  

The following table summarizes information concerning options outstanding, including the related transactions
under the option plans, for the thirty-nine weeks ended November 27, 2005, and November 26, 2006:



|                                                                       |  |                         |   |  |                                          |     
|---------------------------------------------------------------------- |  | ----------------------- | - |  | ---------------------------------------- | ----
|Stock options                                                          |  | Shares Subjectto Option |   |  | Weighted-Average ExercisePrice Per Share
|Balance at February 27, 2005 (2,531,000 shares vested and exercisable) |  | 3,359,535               |   |  | $                                        | 2.56
|Granted                                                                |  |                        |   |  | $                                        |    
|Exercised                                                              |  | (38,977                 | ) |  | $                                        | 2.56
|Forfeited / lapsed                                                     |  | (138,205                | ) |  | $                                        | 2.56
|                                                                       |  |                         |   |  |                                          |     
|Balance at November 27, 2005 (2,662,837 shares vested and exercisable) |  | 3,182,353               |   |  | $                                        | 2.56
|                                                                       |  |                         |   |  |                                          |     
|Balance at February 26, 2006 (2,321,756 shares vested and exercisable) |  | 2,841,272               |   |  | $                                        | 2.56
|Granted                                                                |  |                        |   |  | $                                        |    
|Exercised                                                              |  | (117,254                | ) |  | $                                        | 2.56
|Forfeited / lapsed                                                     |  |                        |   |  | $                                        |    
|                                                                       |  |                         |   |  |                                          |     
|Balance at November 26, 2006 (2,374,379 shares vested and exercisable) |  | 2,724,018               |   |  | $                                        | 2.56
|                                                                       |  |                         |   |  |                                          |     



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##### Table of Contents

As of November 26, 2006, the aggregate intrinsic value (market value of the stock less option exercise price), which
is the total pretax intrinsic value that would have been received by the option holders had all option holders exercised their options as of that date, is $59.1 million and is based on the Companys average stock price on November 26,
2006. The total number of options exercisable (all of which were in-the-money) on November 26, 2006, was 2.4 million. The weighted average remaining contractual life was 5.0 years on November 26, 2006, for both outstanding and exercisable
options.

Restricted Stock Units. Restricted stock units (RSUs) have been granted to eligible employees and management pursuant
to our 2004 Plan and are converted into shares of UAP common stock upon vesting on a one-for-one basis. Typically, vesting of RSUs is subject to employees continuing service to UAP. The compensation expense related to these awards is
determined using the value of UAPs common stock on the date of the grant, and; compensation is recognized over the requisite service period on a straight-line basis and is adjusted for estimated forfeitures before vesting. Restricted stock
units generally vest over three or four years.

The following is a summary of unvested RSU activity for the thirty-nine weeks ended November 26, 2006:



|                                     |  |                        |   |  |                            |      
|------------------------------------ |  | ---------------------- | - |  | -------------------------- | -----
|                                     |  | Restricted Stock Units |   |  | Weighted-Average FairValue
|Balance at February 26, 2006         |  | 224,050                |   |  | $                          | 15.94
|Granted                              |  | 515,350                |   |  | $                          | 21.12
|Vested                               |  | (56,261                | ) |  | $                          | 15.94
|Cancelled                            |  | (13,137                | ) |  | $                          | 19.51
|                                     |  |                        |   |  |                            |      
|Non-vested RSUs at November 26, 2006 |  | 670,002                |   |  | $                          | 19.85
|                                     |  |                        |   |  |                            |      

As of November 26, 2006, there was approximately $9.0 million of unrecognized compensation expense, before
taxes and net of estimated forfeitures, related to RSU grants, which will be recognized over a weighted average period of 2.8 years. Compensation cost related to RSUs was $1.0 million and $2.7 million for the thirteen and thirty-nine weeks
ended November 26, 2006 and $0.2 million and $0.7 million for the thirteen and thirty-nine weeks ended November 27, 2005.

Deferred
Compensation.We maintained two deferred compensation plans for the benefit of certain members of management, the 2003 DCP, which provided for the crediting of deferred shares for each executive who entered into a retention agreement at the
time of UAPs acquisition of certain of Con Agra Foods Agricultural Products Businesses, and the 2004 DCP, which provided for the crediting of deferred shares for each member of management who waived the right to receive a portion of
their cash bonus for the 2004 fiscal year. The company established a trust (the rabbi trust) to hold the assets of the 2003 DCP and the 2004 DCP. The assets of the rabbi trust were subject to the claims of the companys creditors in
the event of the companys insolvency.

As of November 26, 2006, all of the shares had been transferred from the trust to the recipients and no
shares of our common stock remaining in the rabbi trust. The Company received an $8.5 million income tax benefit during the thirty-nine weeks ended November 26, 2006 for common stock transferred from the trust to recipients. Income tax benefit
for the comparable period in fiscal year 2006 was $0.7 million.



14



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##### Table of Contents

8. Income Taxes

The
following table summarizes the factors causing our income taxes to differ from U.S. federal statutory rates for the thirteen and thirty-nine weeks ended November 26, 2006, and the thirteen and thirty-nine weeks ended November 27, 2005:



|                                                 |                   |                        |        |                   |                         |   |                   |   |  |                   |        |   |  |   |        |  
|------------------------------------------------ | ----------------- | ---------------------- | ------ | ----------------- | ----------------------- | - | ----------------- | - |  | ----------------- | ------ | - |  | - | ------ | -
|Income taxes                                     |                   | Thirteen Weeks Ended   |        |                   | Thirty-Nine Weeks Ended |  
|                                                 | November 26, 2006 |                        |        | November 27, 2005 |                         |   | November 26, 2006 |   |  | November 27, 2005 |       
|                                                 |                   | (dollars in thousands) |       
|Tax at U.S. federal statutory rate               |                   | $                      | (7,610 | )                 |                         | $ | (5,124            | ) |  | $                 | 23,566 |   |  | $ | 37,043 |  
|Dividends on shares of stock held in rabbi trust |                   |                        | 25     |                   |                         |   | (100              | ) |  |                   | (76    | ) |  |   | (285   | )
|State income taxes                               |                   |                        | (901   | )                 |                         |   | (221              | ) |  |                   | 2,308  |   |  |   | 5,012  |  
|Foreign credits and other                        |                   |                        | (106   | )                 |                         |   | 153               |   |  |                   | 666    |   |  |   | 720    |  
|                                                 |                   |                        |        |                   |                         |   |                   |   |  |                   |        |   |  |   |        |  
|Total                                            |                   | $                      | (8,592 | )                 |                         | $ | (5,292            | ) |  | $                 | 26,464 |   |  | $ | 42,490 |  
|                                                 |                   |                        |        |                   |                         |   |                   |   |  |                   |        |   |  |   |        |  

We currently estimate that there is a foreign tax credit carryover of approximately $0.6 million, which will begin
to expire in fiscal year 2015. We do not have a valuation allowance against the deferred tax asset for this credit carryover because, based on current projections and tax planning options, we believe it is more likely than not we will utilize these
credits before they expire.

9. Debt

On June 1,
2006, our wholly owned subsidiary, United Agri Products, Inc. refinanced its existing revolving credit facility and entered into a new senior secured credit facility. The new credit facility provides for a new six-year $175 million term loan
facility and a five-year senior secured asset based revolving credit facility in an aggregate principal amount of $675 million, including $50 million for letters of credit. Availability of the revolving credit facility is subject to a borrowing base
formula, which includes availability of an over-advance during certain periods. The new credit facility provides that interest rates are based on, at United Agri Products, Inc.s option, (a) LIBOR plus the applicable margin or (b) the
base rate, which will be the higher of (i) the rate publicly quoted by the Wall Street Journal as the base rate on corporate loans posted by at least 75% of the nations 30 largest banks or (ii) the Federal Funds rate plus
0.50%, plus applicable margin.

The applicable margin for the term facility is 2.00% for LIBOR advances and 0.75% for base rate advances. The applicable
margin for the revolving facility is 1.25% for LIBOR advances and 0.00% for base rate advances. The revolving facility is secured by a first-priority lien on all accounts, inventory, general intangibles related to accounts and inventory, and all
proceeds of the foregoing (Current Asset Collateral) of UAP Holdings and its subsidiaries, and a second priority lien (subject to certain exclusions and exceptions) on other assets and proceeds of such other assets. The term facility is
secured by a first-priority lien (subject to certain exclusions and exceptions) in all assets of UAP Holdings and its subsidiaries, and all proceeds thereof other than the Current Asset Collateral, and a second-priority lien in the Current Asset
Collateral.

Additionally, on June 1, 2006, UAP Holding Corp. and United Agri Products, Inc. completed tender offers and consent solicitations for the
103/4% Senior Discount Notes due 2012 issued by UAP Holding Corp. and the 81/4% Senior Notes due 2011 issued by United Agri Products, Inc. (collectively, the Senior Notes). The
companies accepted for purchase $123.1 million principal amount at maturity of the 103/4% Senior Discount Notes (representing 98.5% of the previously outstanding 103/4% Senior
Discount Notes) and $203.5 million principal amount of the 81/4% Senior Notes representing approximately 99.9% of the previously outstanding 81/4% Senior Notes. Total
consideration paid for the notes tendered plus accrued interest thereon was $120.6 million for the 103/4% Senior Discount Notes and $227.2 million for the 81/4% Senior Notes. These
payments and related expenses were financed through borrowings under the new credit facility.

As
of November 24, 2006, UAP Holding Corp. had repurchased in brokered market transactions all of the $1.9 million principal amount at maturity of its 103/4% Senior Discount Notes due 2012 that had remained outstanding following the completion on June 1, 2006 of the tender offer and consent solicitation. Accordingly, all of the 103/4% Senior Discount Notes previously issued and authenticated under the indenture dated as of January 26, 2004,
as supplemented (the Indenture), between UAP Holding Corp. and The Bank of New York (formerly JPMorgan Chase Bank, N.A.), as trustee (the Trustee), had been delivered by UAP Holding Corp. to the Trustee and cancelled. In
accordance with Section 11.01 of the Indenture, UAP Holding Corp. satisfied and discharged the Indenture, which satisfaction and discharge was acknowledged by the Trustee on November 24, 2006. Upon satisfaction and discharge, the Indenture
ceased to be of further effect (except for certain rights of the Trustee).

In connection with the refinancing and early extinguishment of
the senior notes, the Company recorded a pretax charge to finance related and other charges of approximately $47.8 million, of which $0.1 million was recognized during the third fiscal quarter. These costs include approximately $31.7 million for
tender premiums and related transaction costs to acquire the debt and $16.1 million for the write-off of unamortized debt issue costs.



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As of November 26, 2006, under the new credit facility entered into on June 1, 2006, we believe that the
permitted distributions available to pay dividends under the new restricted payment covenant would be approximately $64.0 million before giving effect to the December 1, 2006, dividend payment of $9.6 million.

Total current and long-term debt as of November 26, 2006, February 26, 2006, and November 27, 2005, consisted of the following:



|                                                     |  |                        |         |                   |   |                   |  |   |        
|---------------------------------------------------- |  | ---------------------- | ------- | ----------------- | - | ----------------- |  | - | -------
|Debt                                                 |  | November 26, 2006      |         | February 26, 2006 |   | November 27, 2005
|                                                     |  | (dollars in thousands)
|Total debt                                           |  |                        |         |                   |   |                   |  |   |        
|Senior Secured Asset Based Revolving Credit Facility |  | $                      | 371,865 |                   | $ |                  |  | $ | 148,965
|Term Loan Facility                                   |  |                        | 174,563 |                   |   |                  |  |   |       
|81/4% Senior Notes                                   |  |                        | 15      |                   |   | 203,500           |  |   | 203,500
|103/4% Senior Discount Notes, at accreted value      |  |                        |        |                   |   | 102,839           |  |   | 100,213
|                                                     |  |                        |         |                   |   |                   |  |   |        
|Total debt                                           |  |                        | 546,443 |                   |   | 306,339           |  |   | 452,678
|Less: current portion                                |  |                        |         |                   |   |                   |  |   |        
|Senior Secured Asset Based Revolving Credit Facility |  | $                      | 371,865 |                   | $ |                  |  | $ | 148,965
|Term Loan Facility                                   |  |                        | 1,750   |                   |   |                  |  |   |       
|                                                     |  |                        |         |                   |   |                   |  |   |        
|Total long-term debt                                 |  | $                      | 172,828 |                   | $ | 306,339           |  | $ | 303,713
|                                                     |  |                        |         |                   |   |                   |  |   |        

Maturities of senior debt the next five fiscal years are as follows:



|                                          |  |                   |        
|----------------------------------------- |  | ----------------- | -------
|Fiscal Year Ending (dollars in thousands) |  | November 26, 2006
|2007                                      |  | $                 | 438    
|2008                                      |  |                   | 1,750  
|2009                                      |  |                   | 1,750  
|2010                                      |  |                   | 1,750  
|2011                                      |  |                   | 1,750  
|2012 and thereafter                       |  |                   | 167,125
|                                          |  |                   |        
|Total                                     |  | $                 | 174,563
|                                          |  |                   |        

10. Commitments and Contingencies

We are a party to a number of lawsuits and claims arising out of the operation of our businesses. After taking into account liabilities recorded, we believe the ultimate resolution of such matters should not have a
material adverse effect on our financial condition, results of operations, or liquidity.

11. Employee Benefit Plans

Management Incentive Program. We have a management incentive plan for key officers and employees based on growth, profitability, operating center
performance, and key performance metrics. Amounts charged (credited) to expense totaled ($4.1) million and $0.4 million for the thirteen and thirty-nine weeks ended November 26, 2006, respectively, and $1.0 million and $20.3 million for the
thirteen and thirty-nine weeks ended November 27, 2005, respectively.

12. Dividends

Dividends Declared and Paid.We paid a $0.1875 per share dividend on March 1, 2006, June 1, 2006, September 1, 2006, and
December 1, 2006.

13. Business Segment and Related Information

The company has one reporting segment engaged in the sale of agricultural inputs to growers and regional dealers.



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##### Table of Contents

Net sales and long-lived assets by geographical area are as follows:



|              |                   |                        |                   |                         |                   |         |                   |   |           |  |   |          
|------------- | ----------------- | ---------------------- | ----------------- | ----------------------- | ----------------- | ------- | ----------------- | - | --------- |  | - | ---------
|Net sales     |                   | Thirteen Weeks Ended   |                   | Thirty-Nine Weeks Ended
|              | November 26, 2006 |                        | November 27, 2005 |                         | November 26, 2006 |         | November 27, 2005
|              |                   | (dollars in thousands)
|United States |                   | $                      | 367,811           |                         | $                 | 311,536 |                   | $ | 2,485,501 |  | $ | 2,361,386
|Canada        |                   |                        | 7,916             |                         |                   | 11,553  |                   |   | 56,041    |  |   | 76,072   
|              |                   |                        |                   |                         |                   |         |                   |   |           |  |   |          
|Total         |                   | $                      | 375,727           |                         | $                 | 323,089 |                   | $ | 2,541,542 |  | $ | 2,437,458
|              |                   |                        |                   |                         |                   |         |                   |   |           |  |   |          



|                  |  |                        |         |                   |   |                   |  |   |        
|----------------- |  | ---------------------- | ------- | ----------------- | - | ----------------- |  | - | -------
|Long-lived assets |  | November 26, 2006      |         | February 26, 2006 |   | November 27, 2005
|                  |  | (dollars in thousands)
|United States     |  | $                      | 185,065 |                   | $ | 175,380           |  | $ | 176,484
|Canada            |  |                        | 814     |                   |   | 580               |  |   | 4,033  
|                  |  |                        |         |                   |   |                   |  |   |        
|Total             |  | $                      | 185,879 |                   | $ | 175,960           |  | $ | 180,517
|                  |  |                        |         |                   |   |                   |  |   |        

Long-lived assets consist of property, plant and equipment, net of depreciation, goodwill, indefinite life and
amortizable intangibles, and other assets. Long-lived assets by geographical area are based on the location of facilities.

Net sales by product category
are as follows:



|                              |                   |                        |                   |                         |                   |         |                   |   |           |  |   |          
|----------------------------- | ----------------- | ---------------------- | ----------------- | ----------------------- | ----------------- | ------- | ----------------- | - | --------- |  | - | ---------
|Net sales by product category |                   | Thirteen Weeks Ended   |                   | Thirty-Nine Weeks Ended
|                              | November 26, 2006 |                        | November 27, 2005 |                         | November 26, 2006 |         | November 27, 2005
|                              |                   | (dollars in thousands)
|Chemicals                     |                   | $                      | 218,278           |                         | $                 | 180,229 |                   | $ | 1,499,040 |  | $ | 1,474,224
|Fertilizer                    |                   |                        | 116,180           |                         |                   | 112,867 |                   |   | 606,981   |  |   | 596,138  
|Seed                          |                   |                        | 19,319            |                         |                   | 14,940  |                   |   | 362,535   |  |   | 313,909  
|Other                         |                   |                        | 21,950            |                         |                   | 15,053  |                   |   | 72,986    |  |   | 53,187   
|                              |                   |                        |                   |                         |                   |         |                   |   |           |  |   |          
|Total                         |                   | $                      | 375,727           |                         | $                 | 323,089 |                   | $ | 2,541,542 |  | $ | 2,437,458
|                              |                   |                        |                   |                         |                   |         |                   |   |           |  |   |          

14. Related Party Transactions

On March 9, 2006, certain funds affiliated with Apollo Management V, L.P., a major stockholder of the Company, and current and former employees, including certain members of our management sold 9,322,858 of the
Companys common shares in a secondary offering pursuant to an existing registration statement. The sale, from which the Company received no proceeds, represented approximately 18.5% of the current shares outstanding. Following this sale,
Apollo beneficially owned approximately 17% of our outstanding common stock. Our management teams beneficial ownership of the Company, including vested options, decreased to approximately 6%.

On November 2, 2006, certain funds affiliated with Apollo Management V, L.P., and current and former employees, including certain members of our management sold an
additional 9,322,857 of the Companys common shares in a secondary offering pursuant to an existing registration statement. The sale, from which the Company received no proceeds, represented approximately 18.3% of the current shares
outstanding. Following this sale, Apollo no longer beneficially owned any of our outstanding common stock. Our management teams beneficial ownership of the Company, including vested options, decreased to approximately 4.4%.

15. Subsequent Events

On December 15, 2006, UAP Distribution,
Inc. entered into a definitive agreement to acquire certain retail and service assets of AGSCO, Inc. and AG Depot, Inc., which agreement is subject to customary closing conditions. We expect the acquisition to close in our fourth fiscal quarter.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------

Unless the context requires otherwise, all references to Company, UAP,
we, us, and our refer specifically to UAP Holding Corp. and its consolidated subsidiaries. Additionally, all references to UAP Holding Corp. refer specifically only to UAP Holding Corp., excluding its
subsidiaries, and all references to United Agri Products refer specifically only to United Agri Products, Inc., and its subsidiaries, and all references to United Agri Products, Inc. refer specifically to United Agri
Products, Inc., excluding its subsidiaries.

We intend for this Managements Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) to provide the reader with information that will assist in understanding UAP, our consolidated financial condition, liquidity and capital resources, and results of operations for the periods presented. You should
read this MD&A in conjunction with our condensed consolidated financial statements and the accompanying notes thereto appearing elsewhere in this Report. The results of operations for the thirteen and thirty-nine weeks ended November 26,
2006, are not necessarily indicative of the results to be expected for other interim periods or for the full fiscal year. This section should also be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 26,
2006.

In addition, the statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our
business, our liquidity and capital resources, and the other non-historical statements in the discussion and analysis are forward-looking statements. See Forward Looking Statements.

Our Business

We are the largest independent distributor of
agricultural inputs and professional non-crop products in the United States and Canada. We strive to be the distributor of choice in our industry and earn the trust of our customers and suppliers by providing high quality products at competitive
prices, supported by consistent and reliable service, and expertise. Our customers include farmers, commercial growers, regional dealers, and consumers in the professional non-crop market. Over 90,000 customers purchased products or services from us
during fiscal 2006.

We market a comprehensive line of products, including chemicals, fertilizer, and seed manufactured by the worlds leading
agricultural input companies, including BASF, Bayer, ConAgra International Fertilizer Company, Dow, DuPont, Monsanto, and Syngenta. In addition to our product offering, we provide a broad array of value-added services including crop management,
biotechnology advisory services, custom blending, inventory management, and custom applications of crop inputs. The products and services we offer are critical to our customers because they lower the overall cost of crop production and improve crop
quality and yield.

In addition to the products we purchase from our suppliers for resale, we also source, formulate, package, market, and distribute over
220 brands of proprietary and private label products. These products typically allow us to obtain a higher gross margin than we obtain from the other branded products we distribute.

Our operations entail a network of approximately 340 sales and distribution facilities and three formulation plants strategically located in major crop-producing areas of the United States and Canada. Our integrated
distribution network enables our approximately 1,100 salespeople to provide our customers with a broad range of products and reliable service. As a result of our broad scale, we provide leading agricultural and professional product input companies
with an efficient means to access a highly fragmented customer base of farmers, growers, and professional non-crop consumers.

Our and our customers
businesses are highly seasonal, based upon the planting, growing, and harvesting cycles. During the last three fiscal years, greater than 75% of our net sales occurred during the first and second fiscal quarters of each year because of the condensed
nature of the planting season. As a result of the seasonality of sales, we experience significant fluctuations in our revenues, net income, and net working capital levels throughout our fiscal year.

The Agricultural Inputs Distribution Industry

We operate in the
highly competitive agricultural inputs distribution industry. Our industry depends on farm expenditures for crop inputs, which in turn is dependent upon planted acreage in the United States and Canada. Over the last fifteen years, agricultural input
expenses in the United States grew at a compound annual growth rate of 3.7%, based on historical data obtained from the Economic Research Service of the USDA. Planted acreage has been relatively flat over the last fifteen years, leading to a
relatively stable but very competitive industry for crop inputs.

The key drivers of our industry include continued world population growth; the use of
more effective chemicals and fertilizer; stable planted acreage; the trend towards larger and more efficient farms; the increased production of renewable fuels from corn, soybeans, and other crops; and the increased use of biotechnology in the
production of seed. The three primary product areas of the agricultural input and professional non-crop markets are chemicals, fertilizer, and seed.



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##### Table of Contents

Our principal competitors in the distribution of crop production inputs include agricultural cooperatives, national and
international fertilizer producers, major grain companies, independent distributors, and brokers. We, along with other agricultural input distributors, represent the main route-to-market for agricultural and professional non-crop input manufacturers
and fill a critical need in the U.S. and Canadian agricultural and professional non-crop input markets by allowing suppliers to economically access a highly fragmented customer base of growers, dealers, and professional non-crop customers. In each
of our local markets, we typically compete with two or more distributors on the basis of breadth of product offering, the ability to provide one-stop shopping with customized local products and services, our sales-forces knowledge
of and relationships with our customers, and price. Additionally, we compete with our industry peers for talented employees in the areas of sales and operations.

Our industry in general is affected by a number of factors including, but not limited to, cost to distribute products, customer financial condition, local and national laws and regulations, economic conditions, employment, inflation,
political climate, interest rates, fuel prices, and weather patterns.

Our opportunities within the industry include the use of our national distribution
network to further participate in the growing fertilizer and seed markets as we extend those product offerings to existing customers, expanding our proprietary and private label lines of chemicals and seed, grow market share where gaps exist through
sales-force penetration, adding or acquiring locations, and gaining additional efficiencies in working capital and expenses.

Strategic Initiatives

We will continue to seek to grow our business, improve profitability, and improve working capital through the following principal strategies:



| |  |  | Expanding our distribution network and leveraging our scale;
| | - |  | ------------------------------------------------------------



| |  |  | Growing our presence in fertilizer, seed, and our proprietary and private label products; and
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | Targeting continued profitability enhancement through working capital and expense management.
| | - |  | ---------------------------------------------------------------------------------------------

Building upon our Distribution NetworkOne of our key initiatives is to grow our business by leveraging our size and leading market share across the United States. We study our market share by
state, county, and customer, and develop sales initiatives at local and regional levels to address any gaps and opportunities we have in our distribution network for chemicals, fertilizer, and seed. Where our data indicates an opportunity, we have
the potential to add sales personnel and/or locations and assets to fill in gaps in our coverage.

Since the beginning of the fiscal year we have made the
following acquisitions:



| |  |  | During the first fiscal quarter of 2007, we purchased the remaining 50% share of our joint venture in UAP Timberland and we acquired a retail distribution location from an
independent retail distributor.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the third fiscal quarter of 2007, we closed on the acquisition of Terral AgriServices, Inc. and certain assets of Terral FarmService, Inc. and Wisner Elevator, Inc.
(collectively, Terral). In addition to the Terral acquisition, we acquired two retail distribution locations from independent retail distributors.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Following the end of our third fiscal quarter, we entered into a definitive agreement to acquire certain retail and service assets of AGSCO, Inc. and AG Depot, Inc., which agreement
is subject to customary closing conditions. We expect the acquisition to close in our fourth fiscal quarter. In addition, shortly after the end of our third fiscal quarter, we acquired two retail distribution locations from two independent retail
distributors.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We will continue to analyze and pursue additional acquisition candidates as appropriate opportunities arise.

Fertilizer and Seed GrowthWe believe there are continued growth opportunities in both fertilizer and seed. As seed varieties continue to be enhanced
through biotechnology, we believe they will serve as a growth platform due to the increased value-added nature of their sale to the customer. We intend to leverage our growth in the seed business through advanced technical training of our
sales-force, hiring and strategically placing experienced salespeople, using incentive compensation plans incorporating seed-specific performance goals, nurturing our relationships with our seed suppliers, and targeting new retail and wholesale
opportunities to enhance our sales presence in regions where gaps exist. We believe we can grow our fertilizer business by nurturing relationships with fertilizer suppliers and by making investments in storage and blending facilities in regions
where gaps exist.

Proprietary and Private Label BusinessOur proprietary and private label products typically offer higher gross
margins than the supplier branded products we sell. We currently market over 220 proprietary branded products and have a broad proprietary product offering in each of our core product areas, including professional non-crop. We continue to work with
nearly all of our key suppliers on additional private label opportunities.



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Working Capital and Expense ManagementWe believe we are well positioned to continue to improve the
financial performance of our business. We regularly monitor performance on key operating statistics such as inventory efficiency, credit, operating expenses, gross profit generation, and overall return on invested capital. This information should
continue to enable us to manage expenses and average levels of working capital as a percent of net sales by concentrating on the following: continuing inventory efficiencies through SKU reduction efforts and centralized purchasing, managing and
evaluating our suppliers on a total return basis including working capital management, continuing to focus on credit policies and procedures to maximize profitability, and using competition and best practices among our operating divisions to drive
overall focus on working capital and expense management that are tied to variable compensation plans.

Factors Impacting Our Results for the Thirteen
and Thirty-Nine Weeks Ended November 26, 2006

During the first three quarters of fiscal 2007, several events took place that had or may have an
impact on our business.

On March 3, 2006, we purchased the remaining 50% share of our joint venture in UAP Timberland. This purchase had no impact on
our fiscal 2006 results of operations. In conjunction with this purchase, we began accounting for UAP Timberland on a consolidated basis; previously our ownership interest was accounted for using the equity method. In the first thirty-nine weeks of
fiscal year 2006, $1.9 million of our income from the royalties, service charges and other income and expenses category was from our 50% share of the unconsolidated earnings of our affiliate UAP Timberland. See Note 2 in Notes to Condensed
Consolidated Financial Statements for additional information.

On June 1, 2006, United Agri Products, Inc. replaced its existing revolving credit
facility and entered into a new senior secured credit facility. The new credit facility provides for a six-year $175 million term loan facility and a five-year senior secured asset based revolving credit facility in an aggregate principal amount of
$675 million, including $50 million for letters of credit. Additionally, on June 1, 2006, UAP Holding Corp. and United Agri Products, Inc. completed tender offers and consent solicitations for the 103/4% Senior Discount
Notes due 2012 issued by UAP Holding Corp. and the 81/4% Senior Notes due 2011 issued by United Agri Products, Inc. UAP Holding Corp. paid total consideration of $118.8 million for the $123.1 million principal
amount at maturity of 103/4% Senior Discount Notes accepted for purchase and United Agri Products, Inc. paid total consideration of $227.2 million for the $203.5 million principal amount of 81/4% Senior
Notes accepted for purchase. Such payments were financed through borrowings under the new credit facility. This refinancing resulted in an after-tax charge of approximately $29.5 million or ($0.56) per diluted share on a year to date basis for the
thirty-nine weeks ended November 26, 2006. See Note 9 in Notes to Condensed Consolidated Financial Statements for more details.

Since mid-year fiscal 2006, we have enhanced our rebate tracking and forecasting systems and methodology. Through these enhancements, we are able to match chemical and seed rebate income that is probable and reasonably estimable more
closely with the sale of those rebate generating products than we have been able to in the past. This improved matching, and changes in vendor rebate programs, allowed us to accelerate rebate income recognition by approximately $20.2 million in the
thirty-nine weeks ended November 26, 2006, compared to the same period last year. The impact to the thirteen weeks ended November 26, 2006, compared to the same period last year was a decrease in rebate income of $4.9 million. See the
discussion in Critical Accounting Policies and Estimates on page 26 for further discussion of this item.

During the most recent growing
season, many of our most productive regions have been impacted by drought conditions ranging from severe to exceptional according to the U.S. Drought Monitor, released on August 24, 2006, by the National Drought
Mitigation Center. Drought conditions throughout Texas, Oklahoma, Mississippi, Alabama, and Georgia had a significant impact on cotton crop production. Additionally, drought conditions in the Dakotas, eastern Montana, Wyoming, western Nebraska,
eastern Colorado, and central Missouri had a significant impact on the wheat and corn crop production in those regions. Based on the Crop Production report published by the National Agricultural Statistics Service of the USDA, cotton acres harvested
are estimated to be 2.5 million acres less than total cotton acres planted. The 2006 Crop Production forecast projects a disaster rate of 16.1% of all cotton acres planted, compared to a disaster rate of 3.1% in 2005. Wheat acres estimated to
be harvested are 10.5 million acres less than were planted, for a disaster rate of 18.4%, compared to a 12.4% disaster rate in 2005. Early corn crop estimates report that harvested acres of corn for grain were 4.1 million acres or 5.4%
less than last year. Planted acres of corn were down 3.2 million acres or 3.9% lower than last year, so the additional reduction in harvested acres was due to drought conditions during the growing season. All of these scenarios had a negative
impact on our business during the first three quarters of fiscal 2007 as compared to last year. As drought conditions turn potential crops into disaster acres, growers reduce purchases of crop inputs leading to reduced annual industry revenues and
increased sales competition within our industry.



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Recent Developments

On December 15, 2006, UAP Distribution, Inc. entered into a definitive agreement to acquire certain retail and service assets of AGSCO, Inc. and AG Depot, Inc., which agreement is subject to customary closing conditions. We expect the
acquisition to close in our fourth fiscal quarter.

RESULTS OF OPERATIONS

Analysis of Condensed Consolidated Statements of Earnings



|                                                           |  |                                           |         |   |                  |   |         |                         |                  |        |               |                  |   |           |   |  |   |           |   |  |        |  
|---------------------------------------------------------- |  | ----------------------------------------- | ------- | - | ---------------- | - | ------- | ----------------------- | ---------------- | ------ | ------------- | ---------------- | - | --------- | - |  | - | --------- | - |  | ------ | -
|                                                           |  | Thirteen Weeks Ended                      |         |   | PercentChange    |   |         | Thirty-Nine Weeks Ended |                  |        | PercentChange |                 
|                                                           |  | November 26,2006                          |         |   | November 27,2005 |   |         |                         | November 26,2006 |        |               | November 27,2005 |   |          
|                                                           |  | (dollars in thousands, except share data) |        
|Net sales                                                  |  | $                                         | 375,728 |   |                  | $ | 323,089 |                         |                  | 16.3   | %             |                  | $ | 2,541,542 |   |  | $ | 2,437,458 |   |  | 4.3    | %
|Cost of goods sold                                         |  |                                           | 335,107 |   |                  |   | 272,547 |                         |                  | 23.0   | %             |                  |   | 2,206,926 |   |  |   | 2,107,891 |   |  | 4.7    | %
|                                                           |  |                                           |         |   |                  |   |         |                         |                  |        |               |                  |   |           |   |  |   |           |   |  |        |  
|Gross profit                                               |  |                                           | 40,621  |   |                  |   | 50,542  |                         |                  | -19.6  | %             |                  |   | 334,616   |   |  |   | 329,567   |   |  | 1.5    | %
|Selling, general and administrative expenses               |  |                                           | 54,746  |   |                  |   | 56,301  |                         |                  | -2.8   | %             |                  |   | 209,954   |   |  |   | 216,362   |   |  | -3.0   | %
|(Gain) loss on sale of assets                              |  |                                           | 56      |   |                  |   | (59     | )                       |                  | -194.9 | %             |                  |   | 45        |   |  |   | (1,532    | ) |  | -102.9 | %
|Restructuring costs                                        |  |                                           | 85      |   |                  |   | 970     |                         |                  | -91.2  | %             |                  |   | 429       |   |  |   | 1,460     |   |  | -70.6  | %
|Royalties, service charges and other (income) and expenses |  |                                           | (4,320  | ) |                  |   | (2,915  | )                       |                  | 48.2   | %             |                  |   | (19,946   | ) |  |   | (20,739   | ) |  | -3.8   | %
|                                                           |  |                                           |         |   |                  |   |         |                         |                  |        |               |                  |   |           |   |  |   |           |   |  |        |  
|Operating income (loss)                                    |  |                                           | (9,946  | ) |                  |   | (3,755  | )                       |                  | -164.9 | %             |                  |   | 144,134   |   |  |   | 134,016   |   |  | 7.5    | %
|Interest expense                                           |  |                                           | 11,472  |   |                  |   | 10,885  |                         |                  | 5.4    | %             |                  |   | 28,631    |   |  |   | 28,179    |   |  | 1.6    | %
|Finance related and other charges                          |  |                                           | 325     |   |                  |   |        |                         |                  | NM     |               |                  |   | 48,172    |   |  |   |          |   |  | NM     |  
|                                                           |  |                                           |         |   |                  |   |         |                         |                  |        |               |                  |   |           |   |  |   |           |   |  |        |  
|Income (loss) before income taxes                          |  |                                           | (21,743 | ) |                  |   | (14,640 | )                       |                  | 48.5   | %             |                  |   | 67,331    |   |  |   | 105,837   |   |  | -36.4  | %
|Income tax expense (benefit)                               |  |                                           | (8,592  | ) |                  |   | (5,292  | )                       |                  | 62.4   | %             |                  |   | 26,464    |   |  |   | 42,490    |   |  | -37.7  | %
|                                                           |  |                                           |         |   |                  |   |         |                         |                  |        |               |                  |   |           |   |  |   |           |   |  |        |  
|Net income (loss)                                          |  | $                                         | (13,151 | ) |                  | $ | (9,348  | )                       |                  | 40.7   | %             |                  | $ | 40,867    |   |  | $ | 63,347    |   |  | -35.5  | %
|                                                           |  |                                           |         |   |                  |   |         |                         |                  |        |               |                  |   |           |   |  |   |           |   |  |        |  
|Basic earnings (loss) per share                            |  | $                                         | (0.26   | ) |                  | $ | (0.19   | )                       |                  | 36.8   | %             |                  | $ | 0.80      |   |  | $ | 1.26      |   |  | -36.5  | %
|Diluted earnings (loss) per share                          |  | $                                         | (0.26   | ) |                  | $ | (0.19   | )                       |                  | 36.8   | %             |                  | $ | 0.78      |   |  | $ | 1.21      |   |  | -35.5  | %
|Effective tax rate                                         |  |                                           | 39.5    | % |                  |   | 36.1    | %                       |                  |        |               |                  |   | 39.3      | % |  |   | 40.1      | % |  |        |  
|Comparison as a Percent of Net Sales:                      |  |                                           |         |   |                  |   |         |                         |                  |        |               |                  |   |           |   |  |   |           |   |  |        |  
|Gross margin                                               |  |                                           | 10.8    | % |                  |   | 15.6    | %                       |                  |        |               |                  |   | 13.2      | % |  |   | 13.5      | % |  |        |  
|Selling, general and administrative expenses               |  |                                           | 14.6    | % |                  |   | 17.4    | %                       |                  |        |               |                  |   | 8.3       | % |  |   | 8.9       | % |  |        |  
|Operating income (loss)                                    |  |                                           | -2.6    | % |                  |   | -1.2    | %                       |                  |        |               |                  |   | 5.7       | % |  |   | 5.5       | % |  |        |  
|Income (loss) before income taxes                          |  |                                           | -5.8    | % |                  |   | -4.5    | %                       |                  |        |               |                  |   | 2.6       | % |  |   | 4.3       | % |  |        |  
|Net income (loss)                                          |  |                                           | -3.5    | % |                  |   | -2.9    | %                       |                  |        |               |                  |   | 1.6       | % |  |   | 2.6       | % |  |        |  
|NM = Not Meaningful                                        |  |                                           |         |   |                  |   |         |                         |                  |        |               |                  |   |           |   |  |   |           |   |  |        |  

Thirteen Weeks Ended November 26, 2006, Compared to Thirteen Weeks Ended November 27, 2005

Net Sales.Sales increased 16.3% to $375.7 million for the thirteen weeks ended November 26, 2006, compared to $323.1 million for
the thirteen weeks ended November 27, 2005.

Sales of chemicals increased to $218.3 million in the thirteen weeks ended November 26, 2006, from
$180.2 million in the thirteen weeks ended November 27, 2005. For comparison purposes, fiscal 2007 third quarter sales of chemicals increased a net of $41.0 million due to acquisition and divestiture activity. Most notably, chemical sales in
the thirteen weeks ended November 26, 2006, related to the acquisition of UAP Timberland were $37.9 million. Specifically, increased sales of herbicides, including glyphosate, and fewer returns of soybean rust fungicides compared to last year
contributed to the increase which was partially offset by lower insecticide sales compared to last year. Higher volumes of glyphosate herbicides more than offset lower end user unit prices.



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Sales of fertilizer increased to $116.2 million in the thirteen weeks ended November 26, 2006, from $112.9 million
in the thirteen weeks ended November 27, 2005. Increased volumes of base fertilizer products sold helped to offset slightly lower per ton prices compared to last year. Divested sales in Western Canada of $0.9 million in the third quarter last
year were more than offset by subsequent acquisitions of retail distribution locations in the United States.

Sales of seed increased to $19.3 million in
the thirteen weeks ended November 26, 2006, from $14.9 million in the thirteen weeks ended November 27, 2005. The increase was due to favorable sales of wheat seed compared to last year. Additionally, increased sales of grass seed to our
non-crop customers and fewer corn seed returns in the quarter compared to last year also contributed.

Other sales increased to $21.9 million in the
thirteen weeks ended November 26, 2006, from $15.1 million in the thirteen weeks ended November 27, 2005. Additional contract service revenue from the UAP Timberland acquisition offset lower transportation and warehousing revenue from our
Canadian business compared to last year.

Cost of Goods Sold.Cost of goods sold was $335.1 million in the thirteen weeks ended
November 26, 2006, compared to $272.5 million in the thirteen weeks ended November 27, 2005. The increase in cost of goods sold corresponds to the increase in sales across the board in chemicals, seed, fertilizer, and application compared
to last year. Gross profit (net sales less cost of goods sold) was $40.6 million in the thirteen weeks ended November 26, 2006, compared to $50.5 million in the thirteen weeks ended November 27, 2005. Gross margin (gross profit as a
percentage of net sales) was 10.8% in the thirteen weeks ended November 26, 2006, compared to 15.6% in the thirteen weeks ended November 27, 2005. Due to changes in vendor rebate programs and enhanced rebate tracking ability, we recognized
more rebates in the first two quarters of fiscal 2007, compared to the first two quarters of fiscal 2006. This contributed to $4.9 million fewer rebates being recognized in the third quarter of fiscal 2007, compared to the third fiscal quarter of
fiscal 2006. These changes also contributed to cost of goods sold being greater in the third fiscal quarter of fiscal 2007 than last year. Excluding rebate timing, gross profit was negatively affected by lower gross profit on sales of chemicals and
seed due to competitive pressure and lower gross profit per ton on fertilizer sales compared to last year due to lower per ton selling prices. These gross profit items were partially offset by our acquisition activity.

Selling, General and Administrative Expenses.Selling, general and administrative (SG&A) expenses decreased to $54.7 million (14.6% of
sales) for the thirteen weeks ended November 26, 2006, from $56.3 million (17.4% of sales) for the thirteen weeks ended November 27, 2005. The decrease was due primarily to lower salary and benefit expenses, due to lower incentive program
accruals commensurate with company performance and by lower bad debt expense compared to last year. These decreases were partially offset by additional expenses brought on by our acquisition activity.

Royalties, Service Charges and Other Income and Expenses.These items include royalty income, service charge income paid by customers who do business with
us on terms, and equity earnings in UAP Timberland when it was an unconsolidated subsidiary in fiscal 2006, as well as other items. Other income increased to $4.3 million in the thirteen weeks ended November 26, 2006, from $2.9 million in the
thirteen weeks ended November 27, 2005. Increased royalty income and customer service charge income during the thirteen weeks ended November 26, 2006, compared to the thirteen weeks ended November 27, 2005, offset the lack of equity
earnings from UAP Timberland, which amounted to $0.9 million in the third quarter of fiscal 2006. Royalty income was higher than last year due to increased sales of products that make up our royalty stream. Service charge income increased due to
additional receivables on hand during the quarter from increased year to date sales and our acquisition activity.

Interest Expense.Interest
expense increased to $11.5 million in the thirteen weeks ended November 26, 2006, compared to $10.9 million for the thirteen weeks ended November 27, 2005. Increased short-term borrowings, related to our acquisition activity and increased
working capital needs offset the favorable interest rate change as a result of the refinancing.

Finance Related and Other Charges.Finance
related and other charges in the thirteen weeks ended November 26, 2006, were $0.3 million, which relates to the secondary offering of our common stock consummated on November 2, 2006, and the refinancing of our long-term debt. We had no
finance related and other charges during the third quarter of fiscal 2006.

Income Taxes.The effective income tax rate was 39.5% for the
thirteen weeks ended November 26, 2006, versus 36.1% for the thirteen weeks ended November 27, 2005. The higher tax rate for the thirteen weeks ended November 26, 2006, reflects a higher tax benefit being realized on the loss for the
quarter. The higher tax benefit is mostly a result of the timing of recording the return to provision true up for permanent tax adjustments.



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Thirty-Nine Weeks Ended November 26, 2006, Compared to Thirty-Nine Weeks Ended November 27, 2005

Net Sales.Sales increased 4.3% to $2,541.5 million for the thirty-nine weeks ended November 26, 2006, compared to $2,437.5 million
for the thirty-nine weeks ended November 27, 2005. Sales of proprietary chemical and seed products were 15.5% of total chemical and seed sales in the first three quarters of fiscal 2007 compared to 14.5% in the same period last year.

Sales of chemicals increased to $1,499.0 million in the thirty-nine weeks ended November 26, 2006, from $1,474.2 million in the thirty-nine weeks
ended November 27, 2005. For comparison purposes, fiscal 2007 included a net $101.0 million of chemical sales from acquisition and divestiture activity. Most notably, the acquisition of UAP Timberland contributed $100.1 million to chemical
sales in the first three quarters of fiscal 2007. The divesture of retail locations in Western Canada decreased sales by $7.7 million, which was the amount of sales from these locations included in the first three quarters of fiscal 2006. Without
sales from acquisitions, decreased sales of fungicides compared to last year contributed to the shortfall as the demand for products that control Asian Soybean Rust was not as strong as last year. Increased sales of chemical seed treatments helped
offset lower insecticide sales compared to last year. Sales of herbicides increased from last year, however the increased adoption of Roundup Ready corn negatively impacted certain herbicide products. The increase in herbicides included an increase
in sales of glyphosate products. Higher volumes of glyphosate herbicides more than offset lower end user unit prices.

Sales of fertilizer increased to
$607.0 million in the thirty-nine weeks ended November 26, 2006, from $596.1 million in the thirty-nine weeks ended November 27, 2005. For comparison purposes, sales of fertilizer from retail locations divested in Western Canada totaled
$10.6 million in the first three quarters of fiscal 2006. These sales were only partially offset by additional retail locations subsequently acquired in the United States. The overall increase in fertilizer sales was due to higher per ton selling
prices on slightly lower volumes sold compared to last year. Fertilizer is typically applied either in the fall or spring seasons. Our third and fourth quarters of fiscal 2006 showed fertilizer volume increases as favorable weather conditions
allowed more fertilizer to be applied in the fall and winter months. These increased fall and winter volumes replaced tons that otherwise would have been applied in the planting season during early fiscal 2007. Additionally, a 3.9% reduction in corn
acres planted compared to last year, as well as severe drought conditions in many cotton and wheat producing areas, reduced the opportunity for increased fertilizer volumes. We believe higher fertilizer per ton prices during the first half of fiscal
2007, the traditional planting and growing seasons, caused some of our customers to reduce fertilizer purchases compared to prior years. During our third fiscal quarter of 2007, we saw this trend start to change, with higher sales volumes on
slightly lower prices, as growers begun to prepare for their future crop nutrient needs.

Sales of seed increased to $362.5 million in the thirty-nine
weeks ended November 26, 2006, from $313.9 million in the thirty-nine weeks ended November 27, 2005. The increase was due to volume growth in both third party and proprietary brands of corn, cotton, and soybeans and higher selling prices
in corn and cotton due to increased sales of seeds which include a technology fee due to the seeds enhanced traits. Higher selling prices were partially offset by competitive pressure on third party branded seed.

Other sales increased to $73.0 million in the thirty-nine weeks ended November 26, 2006, from $53.2 million in the thirty-nine weeks ended November 27, 2005,
due to additional contract service revenue from the UAP Timberland acquisition, increased application fees, and increased transportation and warehousing revenue from our Canadian business.

Cost of Goods Sold.Cost of goods sold was $2,206.9 million in the thirty-nine weeks ended November 26, 2006, compared to $2,107.9 million in the
thirty-nine weeks ended November 27, 2005. Gross profit (net sales less cost of goods sold) was $334.6 million in the thirty-nine weeks ended November 26, 2006, compared to $329.6 million in the thirty-nine weeks ended November 27,
2005. Gross margin (gross profit as a percentage of net sales) was 13.2% in the thirty-nine weeks ended November 26, 2006, compared to 13.5% in the thirty-nine weeks ended November 27, 2005. The increase in gross profit dollars was
primarily due to our acquisition activity and the timing of third party rebate income. Due to changes in vendor rebate programs and our enhanced rebate tracking ability, we accelerated the timing of our rebate income accrual in the first three
quarters of fiscal 2007 by an estimated $20.2 million (0.8% of sales) compared to the same period last year. Excluding rebate timing, gross profit was negatively affected by lower fertilizer sales volumes and lower gross profit per ton. The higher
average sales price per ton did not offset the higher average cost per ton. Lower gross profit on supplier branded seed, due to competitive pressure, was partially offset by increased gross profit on application and contract services compared to
last year. Gross profit on chemicals was down as decreases in fungicide and insecticide sales and margins were only partially offset by acquisitions.

Selling, General and Administrative Expenses.Selling, general and administrative (SG&A) expenses decreased to $210.0 million (8.3% of sales) in the thirty-nine weeks ended November 26, 2006, from $216.4
million (8.9% of sales) in the thirty-nine weeks ended November 27, 2005. The decrease was due primarily to lower salary and benefit expenses due to lower incentive program accruals commensurate with company performance and lower insurance
expenses. These decreases were partially offset by additional expenses brought on by our acquisition activity, most notably UAP Timberland and Terral, higher bad debt expense from fewer collections of accounts previously written off, and increased
fuel expenses.



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Royalties, Service Charges and Other Income and Expenses.These items include royalty income, service
charge income paid by customers who do business with us on terms, and equity earnings in UAP Timberland when it was an unconsolidated subsidiary in fiscal 2006, as well as other items. Other income decreased to $19.9 million in the thirty-nine weeks
ended November 26, 2006, from $20.7 million in the thirty-nine weeks ended November 27, 2005. We had no equity earnings from UAP Timberland in fiscal 2007, compared to $1.9 million in fiscal 2006. Lower royalty income was partially offset
by increased customer service charge income during the thirty-nine weeks ended November 26, 2006, compared to the thirty-nine weeks ended November 27, 2005. Service charge income increased due to additional receivables on hand during the
year from increased year to date sales and our acquisition activity. Royalty income was lower compared to the same period last year due to slower international and domestic sales of products that make up our royalty stream.

Interest Expense.Interest expense was slightly higher at $28.6 million in the thirty-nine weeks ended November 26, 2006, compared to $28.2 million
for the thirty-nine weeks ended November 27, 2005. A reduction in interest rates as a result of the refinancing was offset by increased short-term borrowings related to our acquisition activity and increased working capital needs.

Finance Related and Other Charges.Finance related and other charges in the thirty-nine weeks ended November 26, 2006, were $48.2 million, $47.8
million of which relates to the refinancing of our long-term debt. We had no finance related and other charges during the first three quarters of fiscal 2006.

Income Taxes.The effective income tax rate was 39.3% for the thirty-nine weeks ended November 26, 2006, versus 40.1% for the thirty-nine weeks ended November 27, 2005.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our principal liquidity requirements are for working capital, consisting primarily of receivables, inventories, pre-paid expenses, reduced by accounts payable and accrued
expenses, capital expenditures, debt service, and dividends on our common stock. We will fund our liquidity needs, including dividend payments, with cash generated from operations and, to the extent necessary, through borrowings under our revolving
credit facility. In addition, we expect to fund any growth capital expenditures with cash generated from operations, reductions in working capital and incremental debt.

We believe that our cash flows from operating activities and borrowing capacity under our revolving credit facility will be sufficient to meet our liquidity requirements in the foreseeable future, including funding of
capital expenditures, debt service payments, and our intended dividend payments on our common stock. If our cash flows from operating activities are insufficient to fund dividend payments at intended levels, we will need to reduce or eliminate
dividends or, to the extent we are permitted to do so under our debt agreements, fund dividends with borrowings or from other sources. If we use working capital or permanent borrowings to fund dividends, we will have less cash available for future
dividends and other purposes, which could negatively impact our financial condition, our results of operations, and our ability to maintain or expand our business. Additionally, our new revolving credit facility will mature in 2011 and our new term
loan facility will mature in 2012. If we are unable to refinance any such existing or future indebtedness prior to its stated maturity, we will be required to use cash to repay such indebtedness, and we may not have sufficient cash available to us
at that time. Even if we have sufficient cash, such a repayment would sufficiently decrease the amount of cash, if any, that is available to pay dividends.

Cash Flows

Cash flows used for operating activities totaled $197.0 million in the thirty-nine weeks ended November 26, 2006, compared
to $169.2 million provided from operations in the thirty-nine weeks ended November 27, 2005. The increase in net cash used for operating activities in the current period versus the prior period is mostly due to an increase in accounts
receivable and inventory that was only partially offset by an increase in accounts payable. Accounts receivable increased due to increased sales, specifically in the area of seed, additional accruals for vendor rebate receivables, partially due to
our accelerated rebate timing compared to last year, and an increase in customers with extended terms, as well as our acquisition activity. Inventory also increased over last year, partially due to our acquisition activity. Additionally, lower than
expected sales of certain herbicide and insecticide chemical products created an increase in those products on hand at the end of the quarter compared to last year. The current fiscal year increase in accounts payable is due to our acquisition
activity and working capital initiatives.

Cash flows used for investing activities totaled $41.0 million for the thirty-nine weeks ended November 26,
2006, and $7.6 million for the thirty-nine weeks ended November 27, 2005. Cash used for business acquisitions was $31.5 million in the first three quarters of fiscal 2007 compared to no such spending in the same time period of fiscal 2006.
Fiscal 2007 acquisition spending was primarily for the acquisitions of UAP Timberland and Terral. Additions to property, plant and equipment were $17.0 million in the thirty-nine weeks ended November 26, 2006, compared to $10.2 million for the
thirty-nine weeks ended



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##### Table of Contents

November 27, 2005. This capital spending during the first three quarters of fiscal 2007 was for a variety of projects, the majority of which relates to
spending on property, plant and equipment for acquisition, expansion, infrastructure replacement, and cost reduction projects. Capital spending during the first three quarters of fiscal 2006 was for a variety of projects, the largest being a
fertilizer terminal expansion project. Proceeds from the sale of assets were $9.4 million, for the thirty-nine weeks ended November 26, 2006 versus $2.2 million for the thirty-nine weeks ended November 27, 2005. The reason for this
increase in proceeds is the sale of some of our retail locations in Western Canada.

Cash flows provided by financing activities were $193.8 million in the
thirty-nine weeks ended November 26, 2006, compared to $141.9 million in the thirty-nine weeks ended November 27, 2005. Redeeming our Senior Notes and revolving credit facility used cash of $338.5 million and replacing it provided cash of
$175.0 million from borrowings under our new term loan facility and $371.9 million from net short-term borrowings under the new revolving credit facility. Cash flows used for financing activities also reflect $28.7 million of dividends paid to
stockholders during the first three quarters of fiscal 2007 compared to $14.5 million in the same period last year. We actively manage our cash balances, which results in a check float on zero balance accounts. The net change in float (checks not
yet presented) was an increase of $11.0 million and $8.1 million for the periods ending November 26, 2006, and November 27, 2005, respectively.

Credit Facility.At November 26, 2006, there was $371.9 million of borrowings outstanding under the senior secured asset based revolving credit facility and United Agri Products, Inc. had additional borrowing capacity of
$287.7 million after giving effect to $15.4 million of letters of credit under the sub-facility. At November 27, 2005, we had $148.9 million debt outstanding under our prior revolving credit facility. Our previous credit facility was refinanced
on June 1, 2006. (See Note 9 in Notes to Financial Statements.)

Since inception of the credit facility, we have been in compliance with its financial
covenants. During the fifty-two weeks ended November 26, 2006, short-term borrowings (net of offsetting cash and cash equivalents) reached a daily peak of $569.2 million on September 25, 2006, while cash on hand reached a daily peak of
$79.2 million on February 26, 2006. Due to the refinancing of our Senior Notes and revolving credit facility on June 1, 2006, our short-term borrowings will trend higher over the next several quarters. In the refinancing, we replaced
$304.6 million of long-term debt with $175.0 million of long-term debt and increased short-term borrowings by $167.5 million, including short-term borrowings used to pay tender offer premiums and other refinancing costs. As a result of our
refinancing and future acquisition activity, we expect that our short-term borrowings, in the near term, will be higher than historical periods.

Obligations and Commitments

As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under
contracts such as lease agreements, debt agreements and unconditional purchase obligations (i.e., obligations to transfer funds in the future for fixed or minimum quantities of goods or services at fixed or minimum prices, such as
take-or-pay contracts). We enter into unconditional purchase obligation arrangements in the normal course of business to ensure that adequate levels of sourced product are available to us.

The following is a summary of our contractual obligations as of November 26, 2006:



|                                              |  |                        |         |                |   |        |  |         |        |         |   |         |  |              |        |  |   |        |  |   |        
|--------------------------------------------- |  | ---------------------- | ------- | -------------- | - | ------ |  | ------- | ------ | ------- | - | ------- |  | ------------ | ------ |  | - | ------ |  | - | -------
|                                              |  | Payments Due by Period
|Contractual Obligations:                      |  | Total                  |         | Lessthan 1year |   | 1 year |  | 2 years |        | 3 years |   | 4 years |  | After 5years
|                                              |  | (dollars in thousands)
|Long-term debt (including short term portion) |  | $                      | 174,562 |                | $ | 1,750  |  | $       | 1,750  |         | $ | 1,750   |  | $            | 1,750  |  | $ | 1,750  |  | $ | 165,812
|Interest payments on long term debt           |  |                        | 68,317  |                |   | 13,148 |  |         | 12,639 |         |   | 12,478  |  |              | 12,559 |  |   | 11,164 |  |   | 6,329  
|Operating lease obligations                   |  |                        | 21,177  |                |   | 6,053  |  |         | 4,925  |         |   | 3,296   |  |              | 2,281  |  |   | 1.073  |  |   | 3,549  
|Other long-term obligations                   |  |                        | 3,703   |                |   | 528    |  |         | 912    |         |   | 500     |  |              | 714    |  |   | 639    |  |   | 410    
|Unconditional purchase obligations            |  |                        | 5,486   |                |   | 2,286  |  |         | 800    |         |   | 800     |  |              | 800    |  |   | 800    |  |   | 0      
|Capital lease obligations                     |  |                        | 487     |                |   | 60     |  |         | 60     |         |   | 60      |  |              | 307    |  |   |       |  |   |       
|                                              |  |                        |         |                |   |        |  |         |        |         |   |         |  |              |        |  |   |        |  |   |        
|Total Contractual Cash Obligations            |  | $                      | 273,732 |                | $ | 23,825 |  | $       | 21,086 |         | $ | 18,884  |  | $            | 18,411 |  | $ | 15,426 |  | $ | 176,100
|                                              |  |                        |         |                |   |        |  |         |        |         |   |         |  |              |        |  |   |        |  |   |        

We have excluded from the above table potential lease and other potential contract obligations because the
relevant contracts are cancelable within one year.

The most significant changes to our obligations and commitments since 2006 fiscal year-end are the
reduction in our long-term debt ($153.9 million total) and the interest payments thereon ($93.2 million).



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Holding Company

As a
holding company, our investments in our operating subsidiaries, including United Agri Products, constitute substantially all of our operating assets. Consequently, our subsidiaries conduct all of our consolidated operations and own substantially all
of our operating assets. Our principal source of the cash required to pay our and our subsidiaries obligations is the cash that our subsidiaries generate from their operations and their borrowings under the new revolving credit facility. Our
subsidiaries are separate and distinct legal entities and have no obligations to make funds available to us. The terms of the agreements governing our new senior secured credit facility generally restrict our subsidiaries from paying dividends,
making loans or other distributions and otherwise transferring assets to us. Furthermore, our subsidiaries are permitted under the terms of the senior secured credit facilities to incur additional indebtedness that may severely restrict or prohibit
the making of distributions, the payment of dividends, or the making of loans by such subsidiaries to us. We cannot assure you that the agreements governing our current and future indebtedness will permit our subsidiaries to provide us with
sufficient dividends, distributions, or loans to fund scheduled interest and principal payments on our indebtedness when due. As we consummate additional acquisitions, our debt service requirements could increase. We may need to refinance all or a
portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

Dividend Policy

We currently intend to pay quarterly cash dividends on our common stock at an annual rate of $0.75
per share. On October 5, 2006, our board of directors declared a quarterly dividend on our common stock in the amount of $0.1875 per share. The record date for the dividend payment was November 15, 2006, and the payment date was
December 1, 2006. Additionally, we paid a $0.1875 per share dividend on March 1, 2006, June 1, 2006, and September 1, 2006.

There are
no assurances that we will declare or pay any cash dividends in the future. The declaration and payment of future dividends to holders of our common stock is at the discretion of our board of directors and depends upon many factors, including our
financial condition, earnings, legal requirements, restrictions in our debt agreements, and other factors our board of directors deems relevant. The terms of our new senior secured credit facility (see Note 9 in Notes to Financial Statements), may
also restrict us from paying cash dividends on our common stock under some circumstances. As of November 26, 2006, under the new credit facility, management believes that approximately $64.0 million of permitted distributions were available to
pay dividends under restricted payment covenants of the new credit facility entered into on June 1, 2006, before giving effect to the December 1, 2006 dividend payment of $9.6 million.

Cash flow provided by our operating activities is highly variable due to the seasonality of our business, resulting in negative cash flow during certain periods. Because
of the variability, if our cash flows from operating activities are insufficient to fund dividend payments at intended levels, we may need to reduce or eliminate dividends or, to the extent permitted by our debt agreements, fund all or part of the
dividends with additional debt or other sources of cash. To the extent we pay dividends, the amount of cash available to us to pay the principal and interest on our outstanding debt will be reduced. A failure to pay the principal or interest on our
debt would constitute an event of default under the applicable debt agreements, giving the holders of the debt the right to accelerate its maturity. If any of our debt is accelerated, we may not have sufficient cash available to repay it in full and
we may be unable to refinance it on satisfactory terms or at all. An event of default under debt agreements, or an acceleration of the debt, could also trigger an event of default under other debt agreements. Furthermore, if we fund dividends with
additional debt, our interest expense will increase, which may cause a further reduction in the amount of cash available to us.

CRITICAL ACCOUNTING
POLICIES AND ESTIMATES

The process of preparing our condensed consolidated financial statements in accordance with U.S. generally accepted accounting
principles (GAAP), requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and the accompanying note disclosures. The estimates made by management are based on
historical experience combined with managements understanding of current facts and circumstances. Actual results could differ from these estimates, and changes in these estimates are recorded when known. Management identifies critical
accounting estimates as:



| |  |  | those that require the use of assumptions about matters that are inherently and highly uncertain at the time the estimates are made; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | those for which changes in the estimates, judgments, or assumptions, or the use of different estimates, judgments, and assumptions, could have a material impact on our condensed
consolidated results of operations or financial condition.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management has discussed the development, selection, and disclosure of critical
accounting policies and estimates with the Audit Committee of our board of directors. We believe that our most critical accounting policies and estimates, those which are



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both important to the portrayal of our financial condition and results of operations and require the most difficult, subjective, complex, or significant
judgment on the part of management, are the following:



| |  |  | Allowance for Doubtful Accounts;
| | - |  | --------------------------------



| |  |  | Inventory Valuation and Reserves; and
| | - |  | -------------------------------------



| |  |  | Vendor Rebates Receivable.
| | - |  | --------------------------

There has been no material change in
accounting policies considered critical by our management. However we have refined our methodology for estimating chemical rebates earned in response to changes in supplier rebate programs through the use of an internally developed tracking system.
Under GAAP, rebates are recorded when it is probable that we will earn the rebate, the amount is reasonably estimable and the rebate is covered by a written agreement with the supplier. Due to changes in vendor programs and enhancements to our
rebate tracking system, we accrued more rebate earnings in the first two quarters of fiscal 2007 as compared to the same periods in fiscal 2006. This also contributed to rebates recognized in the third quarter of fiscal year 2007 being less than
those recognized for the same period in fiscal year 2006. This has partially contributed to our improved operating results. Decisions as to when and how much rebate earnings should be recorded are estimates, which require significant judgment by
management, based on an analysis of vendor programs (especially those with tiered levels of rebates which can be earned), operating performance to date, and expectations of operating performance for the balance of the crop year, all of which can
vary from year-to-year. Because the probable and reasonably estimable concepts imply that a relatively high level of assurance should exist before accruing rebates, true-ups of rebate accruals, if required, will tend to be
positive. Where uncertainty exists such that the rebate is not reasonably estimated or probable, rebates are recognized as the related milestones are achieved. Given our operating cycle and the crop-year basis of all significant rebate programs,
true-ups of rebate accruals, if required, usually occur in the third or fourth quarter of our fiscal year.

For a discussion of the Companys critical
accounting policies and estimates, please see our Annual Report on Form 10-K for the year ended February 26, 2006. We have not changed these policies and estimates from those previously disclosed.

Forward-Looking Statements

This report includes
forward-looking statements that involve risks and uncertainties. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures,
financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information and, in particular, appear under the heading Managements Discussion and Analysis of Financial
Condition and Results of Operations. When used in this report, the words estimates, expects, anticipates, projects, plans, intends, believes,
forecasts, foresees, likely, may, should, goal, target, and variations of such words or similar expressions are intended to identify forward-looking statements. All
forward-looking statements are based upon information available to us on the date of this report.

These forward-looking statements are subject to risks,
uncertainties and other factors, many of which are outside of our control that could cause actual results to differ materially from the results discussed in the forward-looking statements including, among other things, the matters discussed in this
report under this Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations. Such risks, uncertainties and other factors may include, among others:



| |  | general economic and business conditions;
|- |  | -----------------------------------------



| |  | industry trends;
|- |  | ----------------



| |  | restrictions contained in our debt agreements;
|- |  | ----------------------------------------------



| |  | our substantial leverage, including the inability to generate the necessary amount of cash to service our existing debt and the incurrence of substantial indebtedness in the future;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the seasonality of our business and weather conditions;
|- |  | -------------------------------------------------------



| |  | the possibility of liability for pollution and other damage that is not covered by insurance or that exceeds our insurance coverage;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  | increased competition in the markets in which we operate;
|- |  | ---------------------------------------------------------



| |  | our dependence on rebate programs to attain profitability;
|- |  | ----------------------------------------------------------



| |  | our dependence on a limited number of key executives who we may not be able to adequately replace if they leave our company;
|- |  | ----------------------------------------------------------------------------------------------------------------------------



| |  | changes in government regulations, agricultural policy, and environmental, health, and safety laws and regulations;
|- |  | -------------------------------------------------------------------------------------------------------------------



| |  | changes in business strategy, development plans, or cost savings plans;
|- |  | -----------------------------------------------------------------------



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| |  | our ability to build upon our distribution network through ongoing acquisitions:
|- |  | --------------------------------------------------------------------------------



| |  | our ability to integrate newly acquired operations into our existing operations;
|- |  | --------------------------------------------------------------------------------



| |  | the loss of any of our major suppliers or the bankruptcy or financial distress of our customers;
|- |  | ------------------------------------------------------------------------------------------------



| |  | the ability to attain and maintain any price increases for our products;
|- |  | ------------------------------------------------------------------------



| |  | availability, terms, and deployment of capital; and
|- |  | ---------------------------------------------------



| |  | other factors over which we have little or no control.
|- |  | ------------------------------------------------------

These risks and
certain other uncertainties are discussed in more detail in our Annual Report on Form 10-K for the fiscal year ended February 26, 2006, under the caption Item 1A. Risk Factors.

There may be other factors, including those discussed elsewhere in this report, which could cause our actual results to differ materially from the results referred to in
the forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in this
report. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------- | -----------------------------------------------------------

Market risks affecting our business are exposure to changes in energy prices, foreign currency risks, and
interest rate risks.

Our average daily borrowings under the revolving credit agreement (net of offsetting cash and cash equivalents) for the fifty-two
weeks ended November 26, 2006, were approximately $210.3 million. The revolving credit facility is affected by changes in interest rates. Based upon the amount of our average daily borrowings (net of offsetting cash and cash equivalents) for
the fifty-two weeks ended November 26, 2006, a one percentage point change in the assumed weighted average interest rate on such credit facility would change our annual interest expense by $2.1 million. Additionally, we have long-term debt of
$174.6 million that is variable rate debt. As part of our debt agreements, we are required to hedge at least 50% of our interest rate exposure on our long-term debt. We currently have $165 million of our long-term debt hedged, reducing interest rate
risk on that amount of long-term debt.

Our foreign currency risk is limited primarily to the exchange rate differential in the Canadian and US dollar. The
exchange rate was 0.8816, 0.8711, and 0.8553, at November 26, 2006, February 26, 2006, and November 27, 2005, respectively. The exchange rate has been between 0.8493 and 0.9148 for the thirty-nine weeks ended November 26, 2006. A
1% change in the exchange rate, if not hedged, has approximately a $0.2 million impact on the balance sheet value.

Changes in energy prices have a direct
impact on our fuel costs. The national average per gallon price of diesel fuel has increased from $2.48 to $2.57 and gasoline has increased from $2.12 to $2.22 from November 27, 2005 to November 26, 2006, respectively. These price
increases impact our supply chain and selling expenses. Based on our usage mix of these two fuels, we estimate that on average, we have experienced nearly an 11.5% increase in fuel prices year over year through the third quarter, contributing to an
increase in our fuel expenses of $2.4 million during the thirty-nine weeks ended November 26, 2006, compared to last year. Based on our estimated annual usage, a $0.13 increase in the annual average per gallon price of fuel would increase our
fuel expense by $1.0 million. Higher fuel prices also affect our customers such that higher expenses for fuel and higher prices for fertilizer inputs may reduce the cash or credit available to them with which to purchase other inputs or services
from us.

Our inventory of fertilizer products has price risk related to changes in natural gas prices. Our total fertilizer inventories on hand were
approximately $88.6 million, $140.4 million, and $104.1 million as of November 26, 2006, February 26, 2006, and November 27, 2005, respectively. Of our total fertilizer inventory, approximately $40.2 million, $77.0 million, and $45.5
million as of November 26, 2006, February 26, 2006, and November 27, 2005, respectively, were considered by the fertilizer industry to be nitrogen based and therefore price sensitive to the price of natural gas. Natural gas is the key
ingredient in the manufacture of these products. While a direct relationship cannot be established due to alternative sources of fertilizer products, such as imports or substitute products, price risk does exist.



|ITEM 4. | CONTROLS AND PROCEDURES.
|------- | ------------------------

As of the end of the period covered by
this report, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as they related to our business (Disclosure Controls). This evaluation (Controls Evaluation) was
done under the supervision and with the participation of management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO).



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Our management, including the CEO and CFO, does not expect that our Disclosure Controls or our internal controls
over financial reporting (Internal Controls) will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may
become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.

Based upon the Controls Evaluation, the CEO and CFO have concluded that the Disclosure Controls are effective as of the end of the
period covered by this report. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out this evaluation. In addition, there have been
no changes in our internal control over financial reporting that have occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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P
ART II. OTHER INFORMATION

Items 1, 1A, 2, 3, 4 and 5 are not applicable and have been omitted.



|ITEM 6. | EXHIBITS
|------- | --------



|     |  |                                                                                                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|     | 
|32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                       
|     | 
|32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                       



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SIGNATU
RES

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

Date: January 4, 2007



|                  |  |                                                                                    
|----------------- |  | -----------------------------------------------------------------------------------
|UAP HOLDING CORP.
|(Registrant)     
|                  | 
|By:               |  | /s/ David W. Bullock                                                               
|                  |  | David W. Bullock                                                                   
|                  |  | Executive Vice President and Chief Financial Officer                               
|                  |  | (Principal Financial Officer and duly authorized signatory on behalf of Registrant)
|                  | 
|By:               |  | /s/ Alan Kessock                                                                   
|                  |  | Alan Kessock                                                                       
|                  |  | Chief Accounting Officer                                                           
|                  |  | (Principal Accounting Officer)                                                     



31