10

                               Page 1 of 13 Pages




                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    Form 10-Q


          Quarterly Report under Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

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

                For the quarterly period ended September 28, 1996

                                       OR

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

                        For the transition period from to

                Registration Statement (Form S-1) Number 33-60273

                            PRO-FAC COOPERATIVE, INC.
             (Exact Name of Registrant as Specified in its Charter)

          New York                                        16-6036816
 (State or other jurisdiction of                         (IRS Employer
 incorporation or organization                        Identification Number)

                90 Linden Place, PO Box 682, Rochester, NY 14603
               (Address of Principal Executive Offices) (Zip Code)

        Registrant's Telephone Number, Including Area Code (716) 383-1850

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  twelve  months (or 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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of October 15, 1996.

                            Common Stock - 1,855,329





<PAGE>
                                                                 4
                          PART I. FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

<TABLE>
Pro-Fac Cooperative, Inc.
Consolidated Statement of Operations and Net Proceeds

(Dollars in Thousands)
<CAPTION>

                                                                          Quarter Ended
                                                                  September 28,   September 23,
                                                                      1996            1995

<S>                                                                  <C>             <C>     
Net sales                                                            $174,000        $165,178
Cost of sales                                                         132,309         122,646
Gross profit                                                           41,691          42,532
Selling, administrative, and general expense                          (32,916)        (36,715)
Operating income                                                        8,775           5,817
Interest expense                                                       (9,881)        (10,046)
Loss before taxes, dividends, allocation of net proceeds, and
   cumulative effect of an accounting change                           (1,106)         (4,229)
Tax (provision)/benefit                                                  (527)          1,796
Loss before cumulative effect of an accounting change,
   dividends, and allocation of net proceeds                           (1,633)         (2,433)
Cumulative effect of an accounting change                               4,516               0
Net income/(loss)                                                    $  2,883        $ (2,433)

Allocation of Net Proceeds:
   Net income/(loss)                                                 $  2,883        $ (2,433)
   Dividends on common and preferred stock                             (1,335)         (5,035)
   Net proceeds/(deficit)                                               1,548          (7,468)
   Allocation (to)/from earned surplus                                 (1,035)          7,468
   Net proceeds available to members                                 $    513        $      0

Net Proceeds Available to Members:
   Estimated cash payment                                            $    103        $      0
   Qualified retains                                                      410               0
   Net proceeds available to members                                 $    513        $      0

<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>




<TABLE>
Pro-Fac Cooperative, Inc.
Consolidated Balance Sheet

(Dollars in Thousands)
<CAPTION>
                                                                                           September 28,    June 29,  September 23,
                                                                                               1996           1996        1995

<S>                                                                                          <C>             <C>         <C>     
Assets
Current assets:
  Cash and cash equivalents                                                                  $  6,682        $  8,873    $  5,221
   Accounts receivable, trade, net                                                             62,020          47,259      60,913
   Accounts receivable, other                                                                   6,268           6,814      12,780
   Income taxes refundable                                                                          0               0      11,679
   Current deferred tax assets                                                                 13,731          13,731       3,954
   Inventories -
     Finished goods                                                                           158,474          97,018     179,559
     Raw materials and supplies                                                                35,161          33,556      52,387
           Total inventories                                                                  193,635         130,574     231,946
   Prepaid manufacturing expense                                                                1,111          11,339           0
   Prepaid expenses and other current assets                                                    8,742           1,066       4,944
           Total current assets                                                               292,189         219,656     331,437
Investment in Bank                                                                             24,439          24,439      22,907
Property, plant, and equipment, net                                                           269,254         271,574     279,669
Assets held for sale                                                                            5,113           5,368       5,521
Goodwill and other intangible assets, net                                                     102,734         103,760      79,375
Other assets                                                                                   12,550          12,500      13,692
           Total assets                                                                      $706,279        $637,297    $732,601
Liabilities and Shareholders and Members Capitalization
Current liabilities:
   Notes payable                                                                             $ 63,000        $      0      86,000
   Current portion of obligations under capital leases                                            548             547         764
   Current portion of long-term debt                                                            8,075           8,075       8,008
   Accounts payable                                                                            46,188          54,791      59,122
   Income taxes payable                                                                         3,961           2,289           0
   Accrued interest                                                                             4,767           9,447       4,525
   Accrued employee compensation                                                                8,143           8,368       7,042
   Accrued manufacturing expense                                                                    0               0         787
   Other accrued expenses                                                                      27,554          24,775      19,288
   Dividends payable                                                                                0             128           0
   Amounts due members                                                                         27,051           7,875      16,303
           Total current liabilities                                                          189,287         116,295     201,839
Long-term debt                                                                                162,164         167,683     185,274
Senior subordinated notes                                                                     160,000         160,000     160,000
Obligations under capital leases                                                                1,125           1,125       1,650
Deferred income tax liabilities                                                                44,753          44,753      27,457
Other non-current liabilities                                                                  20,713          20,741      18,593
           Total liabilities                                                                  578,042         510,597     594,813
Commitments and contingencies
Class B cumulative redeemable preferred stock liquidation
   preference $10 per share, authorized - 500,000 shares; issued
     and outstanding 33,364, 33,364, and 0 shares, respectively                                   334             334           0
Common stock, par value $5, authorized - 5,000,000 shares
                                                    September 28,    June 29,  September 23,
                                                        1996           1996        1995

Shares issued                                        1,855,329      1,836,963    1,886,424
Shares subscribed                                       57,859         59,359       51,638
           Total subscribed and issued               1,913,188      1,896,322    1,938,062
Less subscriptions receivable in installments          (57,859)       (59,359)     (51,638)
                                                     1,855,329      1,836,963    1,886,424      9,277           9,185       9,432
Shareholders' and members' capitalization:
   Retained earnings allocated to members                                                      32,728          32,318      34,242
   Non-qualified allocation to members                                                          3,275           3,275       3,851
   Non-cumulative preferred stock, par value $25; authorized -
     5,000,000 shares; issued and outstanding - 105,788,
       105,788, and 3,043,325, respectively                                                     2,645           2,645      76,083
   Class A cumulative preferred stock, liquidation preference
     $25 per share; authorized - 49,500,000 shares; issued and
       outstanding 3,032,704, 3,032,704 and 0 shares,
          respectively                                                                         75,818          75,818           0
   Earned surplus                                                                               4,160           3,125      14,180
           Total shareholders' and members' capitalization                                    118,626         117,181     128,356
           Total liabilities and capitalization                                              $706,279        $637,297    $732,601

<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>


<TABLE>
Pro-Fac Cooperative Inc.
Consolidated Statement of Cash Flows

(Dollars in Thousands)
<CAPTION>

                                                                                                        Quarter Ended
                                                                                                 September 28,    September 23,
                                                                                                     1996             1995

<S>                                                                                              <C>               <C>      
 Cash flows from operating activities:
  Net income/(loss)                                                                             $  2,883          $ (2,433)
   Adjustments to reconcile net income to net cash provided by operating activities:
     Cumulative effect of an accounting change                                                     (4,516)                0
     Amortization of goodwill, other intangibles, and financing fees                                1,226             1,180
     Depreciation                                                                                   6,202             6,374
     Change in assets and liabilities:
       Accounts receivable                                                                        (14,215)           (5,137)
       Inventories                                                                                (63,061)          (67,486)
       Accounts payable and accrued expenses                                                         (629)             (549)
       Amounts due to members                                                                      19,073             2,955
       Federal and state taxes refundable                                                             471            (1,573)
       Other assets and liabilities                                                                (2,236)           (3,892)
       Deferred taxes                                                                                   0              (122)
Net cash used in operating activities                                                             (54,802)          (70,683)

Cash flows from investing activities:
   Purchase of property, plant, and equipment                                                      (3,920)           (6,696)
   Disposals of property, plant, and equipment                                                        293             4,790
   Cash paid for acquisition                                                                            0            (5,400)
Net cash used in investing activities                                                              (3,627)           (7,306)

Cash flows from financing activities:
   Proceeds from short-term debt                                                                   63,000            86,000
   Proceeds from long-term debt                                                                         0             5,400
   Payments on long-term debt                                                                      (5,519)           (7,335)
   Issuances of common stock, net of repurchases                                                       92                37
   Cash paid in lieu of fractional shares                                                               0                (9)
   Cash dividends paid                                                                             (1,335)           (5,035)
Net cash provided by financing activities                                                          56,238            79,058
Net change in cash and cash equivalents                                                            (2,191)            1,069
Cash and cash equivalents at beginning of period                                                    8,873             4,152
Cash and cash equivalents at end of period                                                       $  6,682          $  5,221

Fiscal 1996 amounts above exclude the effects of the acquisition of Packer Foods as detailed in
   the Supplemental  Disclosure of Cash Flow Information
Supplemental Disclosure of Cash Flow Information
   Cash paid/(received) during the year for:
     Interest                                                                                    $ 14,476          $ 14,694
     Income taxes, net                                                                           $     56          $    (82)

   Acquisition of Packer Foods in July 1995:
     Accounts receivable                                                                                           $  1,375
     Inventories                                                                                                      4,278
     Prepaid expenses and other current assets                                                                          270
     Property, plant and equipment                                                                                    5,884
     Goodwill                                                                                                           128
     Accounts payable                                                                                                (4,954)
     Accrued expenses                                                                                                  (257)
     Deferred income tax                                                                                               (226)
     Other non-current liabilities                                                                                   (1,098)
     Cash paid for acquisition                                                                                     $  5,400

<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>


                           PRO-FAC COOPERATIVE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.       SUMMARY OF ACCOUNTING POLICIES

The accompanying  unaudited consolidated financial statements have been prepared
in accordance  with  generally  accepted  accounting  principles.  The following
summarizes the significant accounting policies applied in the preparation of the
accompanying financial statements.  These financial statements should be read in
conjunction with the financial  statements and  accompanying  notes contained in
Pro-Fac's Form 10-K for the fiscal year ended June 29, 1996.

Consolidation: As of all dates after November 3, 1994, and for all periods after
such date, the consolidated financial statements include the Cooperative and its
wholly-owned  subsidiary,  Curtice-Burns  Foods,  Inc.  (Curtice Burns or the
Company) after elimination of intercompany transactions and balances.

Change in Accounting  Principle:  Effective June 30, 1996, accounting procedures
were  changed  to  include  in  prepaid   expenses  and  other  current  assets,
manufacturing spare parts previously charged directly to expense. This change is
preferable because it provides a better matching of costs with related revenues.
In addition,  the  independent  accountants of the Company have agreed that this
change in accounting  is  preferable.  Their report,  relative to this change in
accounting,  is attached  to this filing as Exhibit 18. The Senior  Subordinated
Note  agreement of the Company allows that if holders of greater than 25 percent
of the Notes  object to this  change,  the Company  would return to its previous
accounting  practice.  The  favorable  cumulative  effect of the change  (net of
income  taxes of $1.2  million)  was $4.5  million.  Pro forma  amounts  for the
cumulative effect of the accounting change on prior periods are not determinable
due to the lack of physical inventory counts required to establish quantities at
the respective dates.

Reclassification:  Certain  items for  fiscal  1996 have  been  reclassified  to
conform with fiscal 1997 presentation.

NOTE 2.       AGREEMENTS WITH CURTICE BURNS

The contractual  relationship  between the two parties is defined in the Pro-Fac
Marketing and  Facilitation  Agreement  (Agreement).  Under the  Agreement,  the
Company pays Pro-Fac the commercial market value (CMV) for all crops supplied by
Pro-Fac.  CMV is defined as the weighted  average price paid by other commercial
processors  for similar  crops sold under  preseason  contracts  and in the open
market in the same or competing  market area.  Although CMV is intended to be no
more than the fair market value of the crops  purchased by Curtice Burns, it may
be more or less than the price Curtice Burns would pay in the open market in the
absence of the Agreement. Under the Agreement the Company is required to have on
its board of directors  some persons who are neither  members of nor  affiliated
with Pro-Fac (Disinterested  Directors).  The number of Disinterested  Directors
must at least equal the number of  directors  who are  members of  Pro-Fac.  The
volume and type of crops to be  purchased by Curtice  Burns under the  Agreement
are determined  pursuant to its annual profit plan,  which requires the approval
of a majority of the Disinterested  Directors. In addition, in any year in which
the Company has earnings on products which were processed from crops supplied by
Pro-Fac (Pro-Fac Products), the Company pays to Pro-Fac up to 90 percent of such
earnings,  but in no case more than 50 percent of all  pretax  earnings  (before
dividing with Pro-Fac) of the Company.  In years in which the Company has losses
on Pro-Fac  Products,  the  Company  reduces the CMV it would  otherwise  pay to
Pro-Fac  by up to 90  percent  of such  losses,  but in no case by more  than 50
percent of all pretax  losses  (before  dividing  with  Pro-Fac) of the Company.
Additional  patronage income is paid to Pro-Fac for services provided to Curtice
Burns,  including  the provision of a long term,  stable crop supply,  favorable
payment terms for crops and access to cooperative bank financing and the sharing
of risks of losses of certain  operations of the  business.  Earnings and losses
are  determined  at the end of the fiscal year,  but are accrued on an estimated
basis during the year.

Some of the additional  patronage income received by Pro-Fac from the Company is
not paid in cash by Pro-Fac to its  members  but is  instead  allocated  to them
through  notices of  allocation  (Retains).  Funds  represented  by Retains have
historically  been  reinvested by Pro-Fac in the Company.  Under the  Indentures
related to the Notes, Pro-Fac is required to reinvest at least 70 percent of the
additional Patronage income in Curtice Burns.

NOTE 3.       OTHER MATTERS

Finger Lakes  Packaging:  On October 9, 1996, the Company  completed the sale of
Finger  Lakes  Packaging  to  Silgan   Containers   Corporation,   an  indirect,
wholly-owned  subsidiary of Silgan  Holdings,  Inc.,  headquartered in Stamford,
Connecticut.  The transaction price was approximately $30.0 million and includes
a  long-term  supply  agreement  between  Silgan and  Curtice  Burns.  A gain of
approximately  $4.0 million will be recognized in the second quarter earnings of
the Company. Proceeds from this sale were applied to debt.
<PAGE>


Dividends:  Subsequent to quarter end, the Cooperative  declared a cash dividend
of $.43 per share on the Class A Cumulative  Preferred  Stock.  These  dividends
amounted to $1.3 million and were paid on October 30, 1996.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The purpose of this review is to highlight the more  significant  changes in the
major items of Pro-Fac's  statement of operations  and net proceeds in the first
quarter of fiscal 1997 and 1996.

                         PRO-FAC'S RESULTS OF OPERATIONS

Changes  From the First  Quarter of Fiscal  1996 to the First  Quarter of Fiscal
1997:  For the quarter  ended  September  28,  1996,  the change in net proceeds
compared to the prior year is summarized below in millions of dollars:

<TABLE>
<S>                                                                <C>   
Change in gross profit                                             $(0.8)
Change in selling, general and administrative expenses               3.8
Change in interest expense                                           0.1
Change in income before taxes, dividends, allocations
  of net proceeds, and cumulative effect of an accounting change     3.1
Change in taxes on income                                           (2.3)
Cumulative effect of an accounting change                            4.5
Change in net income                                               $ 5.3
</TABLE>

                       CURTICE BURNS RESULTS OF OPERATIONS

The following tables  illustrate the Company's results of operations by business
for the quarters  ended  September  28, 1996 and  September  23,  1995,  and the
Company's  total assets by business as of September  28, 1996 and  September 23,
1995.

<TABLE>
Net Sales

(Dollars in Millions)
<CAPTION>

                                                   Quarter Ended
                                        September 28,           September 23,
                                            1996                    1995
                                                % of                   % of
                                        $       Total          $       Total

<S>                                 <C>          <C>       <C>          <C>  
Comstock Michigan Fruit (CMF)     $ 78.0       44.8%     $ 68.7       41.6%
Nalley Fine Foods                     44.2       25.4        46.4       28.1
Southern Frozen Foods                 22.4       12.9        22.9       13.9
Snack Foods Group                     17.2        9.9        15.4        9.3
Brooks Foods                           7.1        4.1         6.9        4.2
  Subtotal ongoing operations        168.9       97.1       160.3       97.1
Business to be sold1                   5.1        2.9         4.9        2.9
  Total                             $174.0      100.0%     $165.2      100.0%

<FN>
1  Subsequent to quarter end, the Company sold Finger Lakes Packaging.  See NOTE 3 - Other Matters.
</FN>
</TABLE>
<PAGE>



<TABLE>
Operating Income1


(Dollars in Millions)
<CAPTION>

                                                                                            Quarter Ended
                                      September 28,        September 23,
                                          1996                 1995
                                              % of                  % of
                                       $      Total         $       Total

<S>                                <C>         <C>       <C>         <C>  
CMF                                $ 3.7       42.0%     $ 3.9       67.2%
Nalley Fine Foods                    2.1       23.9        1.0       17.2
Southern Frozen Foods                1.9       21.6        1.0       17.2
Snack Foods Group                    1.5       17.0        1.0       17.2
Brooks Foods                         0.5        5.7        0.4        6.9
Corporate overhead                  (1.1)     (12.5)      (2.2)     (37.8)
  Subtotal ongoing operations        8.6       97.7        5.1       87.9
Business to be sold2                 0.2        2.3        0.7       12.1
  Total                            $ 8.8      100.0%     $ 5.8      100.0%

<FN>
1   Excludes  cumulative  effect of an  accounting  change.  See NOTE 1 - Summary  of  Accounting  Policies - Change in  Accounting
    Principle.

2   Subsequent to quarter end, the Company sold Finger Lakes Packaging.  See NOTE 3 - Other Matters.
</FN>
</TABLE>

<TABLE>
EBITDA1

(Dollars in Millions)
<CAPTION>

                                                Quarter Ended
                                      September 28,        September 23,
                                          1996                 1995
                                               % of                  % of
                                        $      Total         $       Total

<S>                                 <C>         <C>      <C>          <C>  
CMF                                 $  7.1      44.4%    $  7.4       56.5%
Nalley Fine Foods                      3.6      22.5        2.3       17.6
Southern Frozen Foods                  3.0      18.7        2.3       17.6
Snack Foods Group                      2.0      12.5        1.5       11.4
Brooks Foods                           0.7       4.4        0.6        4.6
Corporate overhead                    (1.0)     (6.3)      (2.2)     (16.8)
  Subtotal ongoing operations         15.4      96.2       11.9       90.9
Business to be sold2                   0.6       3.8        1.2        9.1
  Total                              $16.0     100.0%     $13.1      100.0%

<FN>
1   EBITDA does not  represent  information  prepared in accordance  with  generally  accepted  accounting  principles,  nor is such
    information considered superior to information presented in accordance with generally accepted accounting  principles.  Excludes
    cumulative effect of an accounting change.  See NOTE 1 - Summary of Accounting Policies - Change in Accounting Principle.

2   Subsequent to quarter end, the Company sold Finger Lakes Packaging.  See NOTE 3 - Other Matters.
</FN>
</TABLE>
<PAGE>



<TABLE>
Total Assets


(Dollars in Millions)
<CAPTION>

                                                                                            Quarter Ended
                                      September 28,           September 23,
                                          1996                    1995
                                                % of                    % of
                                       $       Total            $       Total

<S>                                <C>          <C>         <C>         <C>  
CMF                                $313.4       44.4%       $338.2      46.6%
Nalley Fine Foods                   154.7       21.9         161.5      22.3
Southern Frozen Foods                90.6       12.8          99.2      13.7
Snack Foods Group                    27.6        3.9          28.0       3.9
Brooks Foods                         24.2        3.4          23.4       3.2
Corporate                            61.7        8.8          37.4       5.1
  Subtotal ongoing operations       672.2       95.2         687.7      94.8
Business to be sold1                 34.0        4.8          37.5       5.2
  Total                            $706.2      100.0%       $725.2     100.0%

<FN>
1   Subsequent to quarter end, the Company sold Finger Lakes Packaging.  See NOTE 3 - Other Matters.
</FN>
</TABLE>

The following  table  illustrates  the Company's  income  statement data and the
percentage  of net  sales  represented  by these  items for the  quarters  ended
September 28, 1996 and September 23, 1995.

<TABLE>
Consolidated Statement of Operations

(Dollars in Millions)
<CAPTION>

                                                                                          Quarter Ended
                                                                           September 28,                   September 23,
                                                                               1996                            1995
                                                                                    % of                       % of
                                                                         $        Net Sales         $        Net Sales

<S>                                                                   <C>           <C>          <C>           <C>   
Net sales                                                             $174.0        100.0%       $165.2        100.0%
Cost of sales                                                          132.3         76.0         122.6         74.2
Gross profit                                                            41.7         24.0          42.6         25.8
Selling, administrative and general expenses                           (32.9)       (18.9)        (36.8)       (22.3)
Operating income before dividing with Pro-Fac                            8.8          5.1           5.8          3.5
Interest expense                                                        (9.4)        (5.4)        (10.0)        (6.0)
Pretax loss before dividing with Pro-Fac and before
   cumulative effect of an accounting change                            (0.6)        (0.3)         (4.2)        (2.5)
Pro-Fac share of loss before cumulative effect of an
   accounting change                                                     0.3          0.2           2.1          1.3
Loss before taxes and cumulative effect of an accounting change         (0.3)        (0.1)         (2.1)        (1.2)
Tax benefit/(provision)                                                 (0.1)        (0.1)          0.3          0.1
Cumulative effect of an accounting change before dividing
   with Pro-Fac                                                          4.5          2.6           0.0          0.0
Pro-Fac share of accounting change                                      (2.6)        (1.5)          0.0          0.0
Net income/(loss)                                                     $  1.5          0.9%       $ (1.8)        (1.1)%
</TABLE>


       CHANGES FROM FIRST QUARTER FISCAL 1995 TO FIRST QUARTER FISCAL 1996

Net Sales:  The net sales  increase in the first  quarter  compared to the prior
year of $8.8 million is primarily  attributable to increased volume and improved
pricing at both CMF and the Snack Foods Group.
<PAGE>



More  specifically,  the  vegetable  category  at CMF has  experienced  improved
pricing  due to  several  industry  factors as well as  increasing  sales to new
customers.  Net sales for the CMF  vegetable  category  increased  $5.0 million.
Higher product costs have increased  pricing in the canned-fruit  category which
along with incremental  sales from the Packer Foods acquisition have resulted in
net sales increases of approximately $1.4 million for the quarter.


Increases   at  the  Snack   Foods   Group  are   attributable   to   successful
sales/marketing efforts and the acquisition of Matthews Candy Company during the
fourth quarter of fiscal 1996.

Canned meats and salads at Nalley have  increased  $1.8 million due to sales and
marketing efforts. These increases were, however, offset by a net sales decrease
in the pickle ($2.5 million) and salad  dressing  ($1.1 million)  product lines.
These  decreases  were the  result of a decline  in sales  volume as a result of
competitive  new product  introductions.  Sales and marketing  efforts for these
categories are currently being reviewed to ensure  opportunities  for growth are
obtained.

Gross Profit:  Gross profit of $41.7 million in the quarter ended  September 28,
1996  decreased  $0.9 million or 2.1 percent  from $42.6  million in the quarter
ended  September  23,  1995.  This  decrease is  primarily  attributable  to the
competitive  pressures  experienced  in the salad dressing  category,  primarily
offset by stronger pricing in most other product lines.

Selling,  Administrative,  and General Expenses:  Selling,  Administrative,  and
General  expenses have decreased $3.8 million as compared with the prior year. A
$1.3  million  decrease  in trade  promotions  related  primarily  to  decreased
spending at the Nalley  division.  Reductions in other  administrative  expenses
accounted for $2.3 million and were primarily attributable to the elimination of
consulting and legal  expenses  incurred in the prior year and benefits from the
restructuring initiative that began late in fiscal 1996.

Interest  Expense:  The decrease in interest  expense was a benefit of inventory
reduction and cash flow management programs initiated in fiscal 1996.

Provision for Taxes:  The provision for taxes in the quarter ended September 28,
1996 of $0.1  million  changed  $0.4 million from the benefit of $0.3 million in
the quarter ended September 23, 1995. The tax provision was negatively  impacted
by the non-deductibility of goodwill.

Cumulative Effect of a Change in Accounting: Effective June 30, 1996, accounting
procedures were changed to include in prepaid expenses and other current assets,
manufacturing spare parts previously charged directly to expense. This change is
preferable because it provides a better matching of costs with related revenues.
In addition,  the  independent  accountants of the Company have agreed that this
change in accounting  is  preferable.  Their report,  relative to this change in
accounting,  is attached  to this filing as Exhibit 18. The Senior  Subordinated
Note  agreement of the Company allows that if holders of greater than 25 percent
of the Notes  object to this  change,  the Company  would return to its previous
accounting  practice.  The favorable cumulative effect of the change (net of the
Pro-Fac  share  of $2.6  million  and  income  taxes of $1.2  million)  was $1.9
million. Pro forma amounts for the cumulative effect of the accounting change on
prior periods are not determinable due to the lack of physical  inventory counts
required to establish quantities at the respective dates.

                         LIQUIDITY AND CAPITAL RESOURCES

The following  discussion  highlights  the major  variances in the  Consolidated
Statement of Changes in Cash Flows for the first quarter of fiscal 1997 compared
to the first quarter of fiscal 1996.

Net cash used in operating  activities  decreased  $15.9 million or 22.5 percent
from $70.7  million in fiscal 1996 to $54.8  million in fiscal 1997.  Net income
excluding the cumulative  effect of an accounting  change increased $0.8 million
from the prior year. The decrease in net cash used in operations was also due to
a $4.4 million  reduction for inventories as a result of an  inventory-reduction
program initiated in fiscal 1996; a $9.1 million increase in cash usage relating
to accounts  receivable  due to the receipt of  insurance  proceeds in the prior
year; and a $16.1 million  change in cash usage  relating to amounts  payable to
members is primarily  due to increased  deliveries  and changes in the timing of
deliveries  from year to year. In July of each year,  members  receive the final
payment for crops  processed in the prior fiscal  year.  The crops  processed in
fiscal 1996 were less than the prior  year,  and  payments  of the members  were
further  reduced by 10 percent due to losses for fiscal  1996.  Changes in other
assets and liabilities used $3.7 million less than the prior year.

Net cash used by  investing  activities  amounted to $3.6 million in fiscal 1997
compared to $7.3 million in fiscal 1996.  In fiscal 1997,  $3.9 million was used
for the purchase of property,  plant, and equipment  compared to $6.7 million in
fiscal  1996.  Also in fiscal  1996,  $5.4  million was used for the purchase of
Packer  Foods,  and disposals  provided  $4.8  million.  The sale of Nalley Ltd.
accounted for the majority of the proceeds  from  disposals in the first quarter
of fiscal 1996.
<PAGE>


Net cash  provided by financing  activities  amounted to $56.2 million in fiscal
1997 compared to $79.1 million provided in fiscal 1996. Proceeds from short- and
long-term debt amounted to $63.0 million in fiscal 1997 and $91.4 in fiscal 1996
($5.4  million of which was used to finance  the  Packer  acquisition  in fiscal
1996).   The  decreased   loan  proceeds  were   primarily  the  result  of  the
inventory-reduction   program,   reduced   dividend   payments,   and   improved
profitability.  Long-term debt payments  amounted to $5.5 million in fiscal 1997
and $7.3 million in fiscal 1996.  Dividends paid in fiscal 1997 amounted to $1.3
million  compared to $5.0 million in fiscal 1996.  The decreased  dividends were
due to the conversion of non-cumulative  preferred stock to cumulative preferred
stock and the Nasdaq  listing  requirement  of  quarterly  dividend  payments as
opposed to the annual payment  previously  made in July. In addition,  the prior
year  included a common  dividend of $0.5  million  which was not made in fiscal
1997.


Borrowings: Under the New Credit Agreement, as amended, Curtice Burns is able to
borrow up to $84.0  million for  seasonal  working  capital  purposes  under the
Seasonal  Facility,  subject to a borrowing  base  limitation,  and obtain up to
$14.2 million in aggregate face amount of letters of credit pursuant to a Letter
of Credit Facility. The borrowing base is defined as the lesser of (i) the total
line and (ii) the sum of 60  percent of  eligible  accounts  receivable  plus 50
percent of eligible inventory.

As of September 28, 1996,  (i) cash  borrowings  outstanding  under the Seasonal
Facility were $63.0 million and (ii) additional  availability under the Seasonal
Facility,  after  taking  into  account  the amount of the  borrowing  was $21.0
million.  In addition to its seasonal  financing,  as of September 28, 1996, the
Company had $15.1 million available for long-term borrowings under the Term Loan
Facility.  Because of the additional  debt as a result of the acquisition of the
Company by Pro-Fac,  the cash flow of the Company is the single,  most important
measure of performance. The Cooperative believes that the cash flow generated by
its  operations  and the  amounts  available  under the  Seasonal  and Term Loan
Facilities  should be sufficient  to fund its working  capital  needs,  fund its
capital  expenditures,  service its debt, and pay dividends for the  foreseeable
future.

Certain  financing  arrangements  require  that  Pro-Fac and Curtice  Burns meet
certain  financial  tests and ratios and comply with certain other  restrictions
and limitations. As of September 28, 1996, Pro-Fac is in compliance with, or has
obtained waivers for, all such covenants, restrictions and limitations.

Short- and  Long-Term  Trends:  The  vegetable  portion of the  business,  which
includes CMF and Southern Frozen Foods, can be positively or negatively affected
by  weather  conditions  nationally  and the  resulting  impact on crop  yields.
Favorable  weather  conditions  can produce  high crop yields and an  oversupply
situation. This results in depressed selling prices and reduced profitability on
the  inventory  produced  from the crops  that year.  Excessive  rain or drought
conditions can produce low crop yields and a shortage situation.  This typically
results in higher selling prices and increased profitability. While the national
supply situation controls the pricing,  the supply can differ regionally because
of variations in weather.

The effect of the 1996 growing season on fiscal 1997 financial results cannot be
estimated until late 1996 or early calendar 1997 when harvesting is complete and
national  supplies can be  determined.  The Company began fiscal 1997 with $29.6
million less inventories than the beginning of fiscal 1996 and at the end of the
first quarter of fiscal 1997  inventories were $38.3 million less than the prior
year. The reduction in  inventories  was primarily  accomplished  as a result of
decreased  production and increased  sales and was planned to correct the higher
carryover  inventory  situation  from  the  previous  year  and to  improve  the
utilization  of capital.  The spring of 1996 produced  excessive rain in some of
the growing areas of the Company and drought  conditions  in some others.  These
adverse  weather  conditions  delayed or reduced the processing of certain early
1996 crops which further reduced inventory levels and increased costs.

Other Matters:

Finger Lakes  Packaging:  On October 9, 1996, the Company  completed the sale of
Finger  Lakes  Packaging  to  Silgan   Containers   Corporation,   an  indirect,
wholly-owned  subsidiary of Silgan  Holdings,  Inc.,  headquartered in Stamford,
Connecticut.  The transaction price was approximately $30.0 million and includes
a  long-term  supply  agreement  between  Silgan and  Curtice  Burns.  A gain of
approximately  $4.0 million will be recognized in the second quarter earnings of
the Company. Proceeds from this sale were applied to Bank debt.

Deferred  Taxes:  During the first quarter of fiscal 1996 the net deferred taxes
liabilities of Pro-Fac were reduced by approximately $22 million. The adjustment
was made in conjunction  with the Curtice Burns  obtaining its  cooperative  tax
status and was  applied  against  goodwill,  as it  represented  an  uncertainty
related to income taxes  outstanding  at the date of the  acquisition.  Based on
further  guidance from outside  counsel,  it was later  determined  that such an
adjustment  was not warranted.  Accordingly,  the adjustment was reversed at the
end of fiscal 1996.
<PAGE>



ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K


     (a) EXHIBITS

         EXHIBIT
         NUMBER                        DESCRIPTION

         Exhibit 18            Change in Accounting Method
         Exhibit 27            Financial Data Schedule

     (b)  No current  report on Form 8-K was filed  during the fiscal  period to
          which this report relates.
<PAGE>











                                   SIGNATURES



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



                                              PRO-FAC COOPERATIVE, INC.




Date:  October 30, 1996       BY:/s/            Stephen R. Wright
                                                STEPHEN R. WRIGHT,
                                                 GENERAL MANAGER




Date:  October 30, 1996       BY:/s/             William D. Rice
                                                 WILLIAM D. RICE,
                                              ASSISTANT TREASURER AND
                                       CHIEF MANAGEMENT FINANCIAL OFFICER
                                         (PRINCIPAL ACCOUNTING OFFICER)
<PAGE>