1

                               Page 1 of 12 Pages




                UNITED STATES 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 December 27, 1997

                                       OR

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

                        For the transition period from to

                               File Number 0-20539

                            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 January 12, 1998.

                            Common Stock - 1,749,647







<PAGE>



                                                                 2

                          PART I. FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

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

(Dollars in Thousands)

                                                                    Three Months Ended                   Six Months Ended
                                                             December 27,     December 28,        December 27,        December 28,
                                                                 1997             1996                1997                1996

<S>                                                            <C>              <C>                 <C>                 <C>     
Net sales                                                      $202,672         $208,186            $379,069            $382,186
Cost of sales                                                  (140,092)        (148,630)           (270,840)           (280,939)
Gross profit                                                     62,580           59,556             108,229             101,247
Selling, administrative, and general expense                    (41,462)         (41,881)            (74,220)            (74,797)
Gain on sale of Finger Lakes Packaging                                0            3,565                   0               3,565
Other Income                                                        960                0                 960                   0
Operating income                                                 22,078           21,240              34,969              30,015
Interest expense                                                 (7,971)          (9,561)            (15,741)            (19,442)
Income before taxes, dividends, allocation of net
   proceeds, and cumulative effect of an accounting change       14,107           11,679              19,228              10,573
Tax provision                                                    (3,681)          (3,126)             (5,503)             (3,653)
Income before cumulative effect of an accounting
   change, dividends, and allocation of net proceeds             10,426            8,553              13,725               6,920
Cumulative effect of an accounting change                             0                0                   0               4,516
Net income                                                     $ 10,426         $  8,553            $ 13,725           $  11,436

Allocation of Net Proceeds:
   Net income                                                  $ 10,426         $  8,553            $ 13,725           $  11,436
   Dividends on common and preferred stock                       (1,403)          (1,343)             (3,253)             (2,678)
   Net proceeds                                                   9,023            7,210              10,472               8,758
   Allocation to earned surplus                                  (3,373)          (3,247)             (4,161)             (4,282)
   Net proceeds available to members                           $  5,650         $  3,963            $  6,311          $    4,476

Net Proceeds Available to Members:
   Estimated cash payment                                      $  1,413         $    792            $  1,578         $       895
   Qualified retains                                              4,237            3,171               4,733               3,581
   Net proceeds available to members                           $  5,650         $  3,963            $  6,311          $    4,476

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


<PAGE>
                                                                 3

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

<CAPTION>
(Dollars in Thousands)                                        ASSETS
                                                                                       December 27,       June 28,     December 28,
                                                                                           1997             1997          1996
<S>                                                <C>         <C>         <C>           <C>            <C>             <C>
Current assets:
   Cash and cash equivalents                                                             $  6,678       $  2,838        $  7,653
   Accounts receivable, trade, net                                                         59,209         48,661          57,633
   Accounts receivable, other                                                               2,637          2,795           4,857
   Inventories -
     Finished goods                                                                       138,318         87,904         142,545
     Raw materials and supplies                                                            32,161         27,001          35,128
           Total inventories                                                              170,479        114,905         177,673
   Current investment in Bank                                                                 316            946               0
   Prepaid manufacturing expense                                                                0          8,265               0
   Prepaid expenses and other current assets                                               12,519          6,323           9,243
   Current deferred tax assets                                                             12,312         12,312           9,995
           Total current assets                                                           264,150        197,045         267,054
Investment in Bank                                                                         24,320         24,321          24,439
Investment in Great Lakes Kraut Company                                                     7,545              0               0
Property, plant, and equipment, net                                                       208,102        217,923         250,002
Assets held for sale                                                                        3,453          3,259             903
Goodwill and other intangible assets, net                                                  94,551         96,429          99,842
Other assets                                                                               13,928          7,700          11,304
           Total assets                                                                  $616,049       $546,677        $653,544

            LIABILITIES AND SHAREHOLDERS' AND MEMBERS' CAPITALIZATION
Current liabilities:
   Notes payable                                                                         $ 58,700       $      0        $ 32,000
   Current portion of obligations under capital leases                                        558            558             547
   Current portion of long-term debt                                                        8,071          8,075           8,075
   Accounts payable                                                                        42,589         49,256          44,582
   Income taxes payable                                                                     7,287          5,672           5,723
   Accrued interest                                                                         8,717          8,663           9,444
   Accrued employee compensation                                                            9,265         11,063           8,551
   Accrued manufacturing expense                                                            1,601              0           2,771
   Other accrued expenses                                                                  26,269         21,956          30,234
   Dividends payable                                                                           20             61              40
   Amounts due members                                                                     22,345         15,791          21,469
           Total current liabilities                                                      185,422        121,095         163,436
Obligations under capital leases                                                              817            817           1,125
Long-term debt                                                                             66,188         69,829         133,342
Senior subordinated notes                                                                 160,000        160,000         160,000
Deferred income tax liabilities                                                            39,591         39,591          40,537
Other non-current liabilities                                                              22,661         22,682          20,693
           Total liabilities                                                              474,679        414,014         519,133
Commitments and contingencies
Class B cumulative  redeemable  preferred stock  liquidation  preference $10 per
   share, authorized - 500,000 shares; issued and
     outstanding 33,053, 31,435, and 36,531 shares, respectively                              331            315             365
Common stock, par value $5, authorized - 5,000,000 shares
                                                  December 27,   June 28,  December 28,
                                                     1997          1997       1996
Shares issued                                      1,749,647   1,788,815   1,800,371
Shares subscribed                                     44,741      54,557      49,422
           Total subscribed and issued             1,794,388   1,843,372   1,849,793
Less subscriptions receivable in installments        (44,741)    (54,557)    (49,422)

                                                   1,749,647   1,788,815   1,800,371        8,748          8,944           9,002
Shareholders' and members' capitalization:
   Retained earnings allocated to members                                                  36,646         31,920          35,899
   Non-qualified allocation to members                                                      2,960          2,960           3,275
   Non-cumulative preferred stock, par value $25; authorized - 5,000,000 shares;
     issued and outstanding - 53,797,
       53,797, and 61,597, respectively                                                     1,345          1,345           1,540
   Class A cumulative preferred stock, liquidation preference
     $25 per share; authorized - 49,500,000 shares; issued and
       outstanding 3,215,709, 3,215,709 and 3,076,895 shares,
          respectively                                                                     80,393         80,393          76,923
   Earned surplus                                                                          10,947          6,786           7,407
           Total shareholders' and members' capitalization                                132,291        123,404         125,044
           Total liabilities and capitalization                                          $616,049       $546,677        $653,544

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


<PAGE>

                                                                 4

<TABLE>
Pro-Fac Cooperative Inc.
Consolidated Statement of Cash Flows
(Unaudited)
<CAPTION>
                                                                                                          Six Months Ended
(Dollars in Thousands)                                                                             December 27,        December 28,
                                                                                                       1997                1996


<S>                                                                                               <C>                    <C>     
Cash flows from operating activities:
   Net income                                                                                     $ 13,725               $ 11,436
   Amounts payable to members                                                                       (1,578)                  (895)
   Adjustments  to  reconcile  net  income  to net cash  provided  by  operating
activities:
     Cumulative effect of an accounting change                                                           0                 (4,516)
     Gain on sale of Finger Lakes Packaging                                                              0                 (3,565)
     Amortization of goodwill and other intangibles                                                  1,956                  2,051
     Amortization of debt issue costs                                                                  400                    400
     Depreciation                                                                                    9,102                 11,897
     Equity in undistributed earnings from Great Lakes Kraut Company                                  (960)                     0
     Change in assets and liabilities:
       Accounts receivable                                                                         (10,390)               (14,572)
       Inventories                                                                                 (57,749)               (51,790)
       Accounts payable and accrued expenses                                                         5,789                 11,304
       Amounts due to members                                                                        6,554                 12,699
       Income taxes payable                                                                          1,615                  3,620
       Other assets and liabilities                                                                (13,456)                (2,131)
Net cash used in operating activities                                                              (44,992)               (24,062)

Cash flows from investing activities:
   Purchase of property, plant, and equipment                                                       (6,803)                (6,466)
   Disposals of property, plant, and equipment                                                         362                 34,439
   Proceeds from investment in CoBank                                                                  631                      0
Net cash (used in)/provided by investing activities                                                 (5,810)                27,973

Cash flows from financing activities:
   Proceeds from short-term debt                                                                    58,700                 32,000
   Proceeds from long-term debt                                                                      1,700                      0
   Proceeds from Great Lakes Kraut Company                                                           3,000                      0
   Payments on long-term debt                                                                       (5,345)               (34,341)
   (Repurchases)/issuances of common stock                                                            (180)                  (152)
   Cash dividends paid                                                                              (3,233)                (2,638)
Net cash provided by/(used in) financing activities                                                 54,642                 (5,131)
Net change in cash and cash equivalents                                                              3,840                 (1,220)
Cash and cash equivalents at beginning of period                                                     2,838                  8,873
Cash and cash equivalents at end of period                                                        $  6,678               $  7,653

Supplemental Disclosure of Cash Flow Information:

Investment in Great Lakes Kraut Company:
     Inventories                                                                                  $  2,175
     Prepaid expenses and other current assets                                                         409
     Property, plant and equipment                                                                   6,966
     Other accrued expenses                                                                            (62)
                                                                                                  $  9,488
<FN>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
</FN>
</TABLE>
<PAGE>



                                                                 5

                            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 and, in the opinion
of management,  include all  adjustments  (consisting  only of normal  recurring
adjustments)  necessary for a fair presentation of the results of operations for
these periods.  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 the Pro-Fac Cooperative,  Inc. ("Pro-Fac" or
the "Cooperative") Form 10-K/A-1 for the fiscal year ended June 28, 1997.

Consolidation:  The consolidated  financial  statements  include Pro-Fac and its
wholly-owned  subsidiary,  Agrilink  Foods,  Inc.  ("Agrilink" 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.  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.

NOTE 2. AGREEMENTS WITH AGRILINK

The  contractual  relationship  between  Agrilink  and Pro-Fac 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 Agrilink,  it
may be more or less than the price  Agrilink would pay in the open market in the
absence of the Agreement.

Under the Agreement, Agrilink 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.

Pro-Fac  agrees to sell and  deliver  fruits  and  vegetables  needed to support
anticipated  sales and production  outlined in the Agrilink  annual profit plan.
The profit plan crop  requirements  are determined by the Boards of Directors of
Pro-Fac and  Agrilink.  Approval of the profit plan by the Board of Directors of
Agrilink  requires  the  affirmative  vote of a  majority  of the  Disinterested
Directors.  Subject only to its inability to deliver  because of the vagaries of
weather or other causes  validly  preventing  growing such crops as set forth in
the agreements  between Pro-Fac and its members,  Pro-Fac is required to deliver
to Agrilink  the crops  described in the profit  plan,  and  Agrilink  agrees to
process and market such crops.

In addition,  in any year in which  Agrilink has earnings on products which were
processed from crops supplied by Pro-Fac ("Pro-Fac Products"),  Agrilink 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).  In  years in which
Agrilink 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).
Additional  patronage  income  is paid  to  Pro-Fac  for  services  provided  to
Agrilink,  including the provision of a long term, stable crop supply, favorable
payment terms for crops 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.  Under the terms of
the Senior  Subordinated  Notes,  Pro-Fac is  required  to  reinvest at least 70
percent of the additional patronage income in Agrilink.



<PAGE>

                                                                 6

NOTE 3. OTHER MATTERS

Formation  of New  Sauerkraut  Company:  Effective  July 1, 1997 the Company and
Flanagan Brothers,  Inc. of Bear Creek,  Wisconsin  contributed all their assets
involved in sauerkraut  production to form a new  sauerkraut  company.  This new
company,  Great Lakes Kraut  Company,  operates as a New York limited  liability
company with ownership and earnings divided between the two companies.

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 $1.5 million and were paid on January 30, 1998.

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

The purpose of this discussion is to outline the significant reasons for changes
in the  Consolidated  Statement  of  Operations  and Net  Proceeds in the second
quarter and first half of fiscal 1998 versus fiscal 1997.

                         PRO-FAC'S RESULTS OF OPERATIONS

Pro-Fac  Cooperative,  Inc.'s  ("Pro-Fac"  or  the  "Cooperative")  wholly-owned
subsidiary, Agrilink Foods, Inc. ("Agrilink" or the "Company") has three primary
business units:  Curtice Burns Foods ("CBF"),  Nalley Fine Foods,  and its Snack
Foods  Group.  Each  business  unit  offers  different  products  and is managed
separately. The majority of each of the business units' net sales are within the
United States. In addition, all of the Company's operating facilities are within
the United States.

The CBF business unit produces  products in several food  categories,  including
fruit fillings and toppings;  aseptically-produced  products;  canned and frozen
fruits and  vegetables,  and popcorn.  The Nalley  business unit produces canned
meat products  (such as chilies and stews),  pickles,  salad  dressings,  peanut
butter,  salsa,  and syrup.  The Company's snack foods business unit consists of
the  Snyder of  Berlin,  Husman  Snack  Foods,  and Tim's  Cascade  Potato  Chip
businesses. This business unit produces and markets potato chips and other snack
items.

The following  tables  illustrate the results of operations by business unit for
the three- and six-month  periods ended December 27, 1997 and December 28, 1996,
and the  Company's  total  assets by business  unit as of December  27, 1997 and
December 28, 1996.

<TABLE>
Net Sales
<CAPTION>

(Dollars in Millions)

                                                   Three Months Ended                                Six Months Ended
                                           December 27,            December 28,            December 27,             December 28,
                                              1997                     1996                    1997                     1996
                                                    % of                     % of                    % of                     % of
                                           $        Total          $         Total         $         Total          $         Total

<S>                                     <C>          <C>         <C>          <C>        <C>          <C>        <C>          <C>  
CBF                                     $139.9       69.1%       $133.0       63.9%      $252.1       66.5%      $232.1       60.7%
Nalley Fine Foods                         45.6       22.5          45.5       21.9         92.5       24.4         89.8       23.5
Snack Foods Group                         17.2        8.4          16.3        7.8         34.5        9.1         33.5        8.8
     Subtotal ongoing operations         202.7      100.0         194.8       93.6        379.1      100.0        355.4       93.0
Businesses sold1                           0.0        0.0          13.4        6.4          0.0        0.0         26.8        7.0
     Total                              $202.7      100.0%       $208.2      100.0%      $379.1      100.0%      $382.2      100.0%

<FN>
1    Includes  the  activity of Finger  Lakes  Packaging  and the portion of the
     canned vegetable business sold in fiscal 1997.
</FN>
</TABLE>
<PAGE>

                                                                 7

<TABLE>
Operating Income
<CAPTION>

(Dollars in Millions)

                                                    Three Months Ended                                   Six Months Ended
                                            December 27,            December 28,             December 27,          December 28,
                                                1997                    1996                     1997                  19961
                                                    % of                     % of                     % of                  % of
                                            $       Total          $         Total           $       Total         $        Total

<S>                                       <C>       <C>          <C>          <C>         <C>         <C>         <C>        <C>  
CBF                                       $20.1     90.9%        $14.8        69.8%       $29.1       83.1%       $21.1      70.3%
Nalley Fine Foods                           3.8      17.2          3.0        14.2          7.5       21.4          5.1      17.1
Snack Foods Group                           1.9       8.6          1.6         7.5          4.0       11.5          3.1      10.3
Corporate overhead                         (3.7)    (16.7)        (2.4)      (11.3)        (5.6)     (16.0)        (4.1)    (13.7)
     Subtotal                              22.1     100.0         17.0        80.2         35.0      100.0         25.2      84.0
Business sold and other nonrecurring2       0.0       0.0          4.2        19.8          0.0        0.0          4.8      16.0
     Total                                $22.1     100.0%       $21.2       100.0%       $35.0      100.0%       $30.0     100.0%

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

2   Includes the earnings and gain on sale related to Finger Lakes Packaging and
    the  activity  from the  portion of the canned  vegetable  business  sold in
    fiscal 1997.  Also, in fiscal 1997,  amounts  include  strategic  consulting
    fees, a loss on the disposal of property held for sale, and final settlement
    of an insurance claim.
</FN>
</TABLE>

<TABLE>
EBITDA1
<CAPTION>

(Dollars in Millions)

                                                    Three Months Ended                                   Six Months Ended
                                            December 27,            December 28,             December 27,          December 28,
                                                1997                    1996                     1997                  19962
                                                    % of                     % of                     % of                  % of
                                            $       Total          $         Total           $       Total         $        Total

<S>                                      <C>         <C>          <C>         <C>         <C>         <C>         <C>         <C>  
CBF                                      $23.7       86.2%        $18.8       67.4%       $36.4       79.1%       $29.4       67.0%
Nalley Fine Foods                          5.2       18.9           4.5       16.1         10.3       22.4          8.1       18.4
Snack Foods Group                          2.3        8.4           2.0        7.2          4.9       10.7          4.1        9.3
Corporate overhead                        (3.7)     (13.5)         (2.4)      (8.6)        (5.6)     (12.2)        (4.1)      (9.3)
     Subtotal                             27.5      100.0          22.9       82.1         46.0      100.0         37.5       85.4
Business sold and other nonrecurring3      0.0        0.0           5.0       17.9          0.0        0.0          6.4       14.6
     Total                               $27.5      100.0%        $27.9      100.0%       $46.0      100.0%       $43.9      100.0%

<FN>
1    Earnings before interest, taxes, depreciation,  and amortization ("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.  The EBITDA calculation begins with Income/(loss) before taxes,
     dividends,  allocation  of  net  proceeds,  and  cumulative  effect  of  an
     accounting change and adds to such amount interest  expense,  depreciation,
     and  amortization of goodwill and other  intangibles.  Management  believes
     EBITDA is a  measurement  that allows the  operations of the business to be
     measured in a consistent manner.

2    The above  information  excludes  the  cumulative  effect of an  accounting
     change. See NOTE 1 - "Summary of Accounting Policies - Change in Accounting
     Principle."

3    Includes the  earnings  and gain on sale related to Finger Lakes  Packaging
     and the activity from the portion of the canned vegetable  business sold in
     fiscal 1997.  Also, in fiscal 1997,  amounts include  strategic  consulting
     fees,  a loss  on the  disposal  of  property  held  for  sale,  and  final
     settlement of an insurance claim.
</FN>
</TABLE>


<PAGE>



                                                                 8

<TABLE>
Total Assets
<CAPTION>

(Dollars in Millions)

                                             December 27,       December 28,
                                                 1997               1996
                                                   % of                 % of
                                         $         Total       $       Total

<S>                                   <C>           <C>     <C>         <C>  
CBF                                   $384.5        62.4%   $378.5      57.9%
Nalley Fine Foods                      153.8        25.0     155.0      23.7
Snack Foods Group                       26.9         4.4      26.9       4.1
Corporate                               50.8         8.2      56.7       8.7
     Subtotal ongoing operations       616.0       100.0     617.1      94.4
Business sold1                           0.0         0.0      36.5       5.6
     Total                            $616.0       100.0%   $653.6     100.0%

<FN>
1    Reflects the portion of the canned vegetable business sold in fiscal 1997.
</FN>
</TABLE>

      CHANGES FROM SECOND QUARTER FISCAL 1998 TO SECOND QUARTER FISCAL 1997

Net Sales:  Net sales from ongoing  operations  increased in the second  quarter
compared to the prior year by $7.9 million or 4 percent.  This increase reflects
improvements at all three of the Company's business units.

The most significant  increases were noted in the fruit and aseptic  categories.
Net sales for the CBF aseptic category  increased $9.7 million,  while the fruit
business increased $4.1 million.  The increase in aseptic sales results from new
business, while the increase in the fruit business is attributable to changes in
product mix resulting in improvements in  volume/pricing.  Decreases  within the
vegetable  and  other   categories  of  $6.9  million  offset  such   increases.
Approximately $4.4 million of the vegetable decrease  represents  sauerkraut net
sales  accounted for by the newly created  joint  venture.  The net sales of the
joint venture are excluded  from the  Company's  net sales.  See NOTE 3 - "Other
Matters - Formation of New Sauerkraut Company."

The pickle and canned  categories at Nalley also increased $1.0 million and $0.3
million,  respectively,  due to increased  sales  volume.  Decreases  within the
dressing  category  of $1.3  million  were,  however,  realized  due to  current
competitive pressure.

Gains in the Snack Foods Group of $0.9  million  resulted  from new business and
new product introductions.

Total net sales  decreased  in the  second  quarter  by $5.5  million.  This net
decrease  reflects both the reduction of businesses  sold ($13.4 million) offset
by the increases in ongoing operations ($7.9 million) described above.

Gross Profit:  Gross profit of $62.6 million for the quarter ended  December 27,
1997  increased  $3.0  million or 5 percent  from $59.6  million for the quarter
ended  December 28, 1996.  Excluding  the  businesses  sold in fiscal 1997,  the
increase in gross profit is  approximately  $4.4 million.  This increase results
from  improvements  in pricing  and  volume,  changes in product  mix,  and cost
efficiencies.

Selling,  Administrative,  and General Expenses:  Selling,  administrative,  and
general  expenses have  decreased  $0.4 million as compared with the prior year.
The net  decrease  is  attributable  to a $1.5  million  decrease in selling and
advertising   expenses  ($1.0  million)  and  trade  promotions  ($0.5  million)
primarily  related to reductions of approximately  $1.0 million and $0.8 million
at the CBF and Nalley  business  units,  respectively.  The  reduction at CBF is
primarily  attributable  to the sale of the  canned  vegetable  business  in the
spring  of 1997.  The  reduction  at  Nalley is  attributable  to the  timing of
promotional programs offered. Such reductions were offset by a minor increase of
approximately $0.3 million at the Snack Foods Group.

In addition,  in the prior year, selling,  administrative,  and general expenses
were offset by  approximately  $1.0  million  relating to the  settlement  of an
outstanding insurance claim.

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                                                                 9


Interest  Expense:  Interest  expense for the quarter  ended  December  27, 1997
decreased  $1.6 million or 16.6 percent  from the prior year.  This  significant
improvement  is  primarily  the  result  of the  focus on debt  reduction  which
occurred  throughout  fiscal 1997.  Activities  in fiscal 1997 that reduced debt
included the sale of Finger Lakes  Packaging,  the sale of the canned  vegetable
business,  and the  sale  of the  Georgia  distribution  center.  Reductions  in
outstanding debt accounted for a decrease of $1.2 million while changes in rates
accounted for a decrease of $0.4 million.

Provision for Taxes:  The provision for taxes in the quarter ended  December 27,
1997 of $3.7 million  increased $0.6 million from the quarter ended December 28,
1996. The increase  reflects the  improvement  in earnings of $2.4 million.  The
Cooperative's  effective tax rate is impacted by the net proceeds distributed to
members and the non-deductibility of goodwill.

Gain on Sale of  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. A gain of approximately $3.6 million was recognized. The
Company received  proceeds of approximately  $30.0 million which were applied to
Bank debt. The transaction also included a long-term supply agreement.

Other Income:  Other income is primarily comprised of earnings received from the
investment  made in Great Lakes  Kraut  Company.  See NOTE 3 - "Other  Matters -
Formation of New Sauerkraut Company."

    CHANGES FROM FIRST SIX MONTHS FISCAL 1998 TO FIRST SIX MONTHS FISCAL 1997

Net Sales: Net sales from ongoing  operations for the first six months increased
$23.7 million or 6.6 percent as compared to the prior year.

The most  significant  increase was noted within the CBF aseptic  category.  Net
sales for the aseptic category increased $18.9 million.  The increase in aseptic
sales results from new business.

The pickle category at Nalley increased $2.8 million for the first six months as
compared to the prior year. This increase results from increased sales volume in
the foodservice channel.

Gains in the Snack Foods Group of $1.0  million  resulted  from new business and
new product introductions.

Total net sales  decreased  in the first six  months by $3.1  million.  This net
decrease  reflects both the reduction of businesses  sold ($26.8 million) offset
by the increase in ongoing operations ($23.7 million) described above.

Gross Profit:  Gross profit of $108.2  million for the six months ended December
27, 1997  increased  $7.0 million or 6.9 percent from $101.2 million for the six
months ended December 28, 1996.  Excluding the  businesses  sold in fiscal 1997,
the  increase in gross  profit is  approximately  $9.5  million.  This  increase
results  from  improvements  in pricing and volume,  changes in product mix, and
cost efficiencies.

Selling,  Administrative,  and General Expenses:  Selling,  administrative,  and
general expenses have decreased $0.6 million as compared with the prior year.

This  reduction  is  comprised  of  a  $1.7  million  decrease  in  selling  and
advertising  expenses offset by an increase in trade promotions of $0.3 million.
Decreases within these categories were  highlighted at CBF  (approximately  $2.3
million), while increases were primarily at Nalley (approximately $0.9 million).
The sale of the canned  vegetable  business in the spring of 1997  accounted for
$1.5 million of the reduction at CBF. The increase at Nalley is  attributable to
current competitive pressure.

Expenses were also reduced in the current year due to the  favorable  settlement
of an outstanding tax claim with the state of Washington ($1.4 million).

The above  reductions  in  fiscal  1998  were  offset  by the cost for  employee
incentive plans ($1.2 million) and the inclusion of a favorable settlement of an
outstanding insurance claim in the prior year ($1.0 million).
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                                                                 10


Interest  Expense:  Interest  expense for the six months ended December 27, 1997
decreased  $3.7 million or 19.0 percent  from the prior year.  This  significant
improvement  is  primarily  the  result  of the  focus on debt  reduction  which
occurred  throughout  fiscal 1997.  Activities  in fiscal 1997 that reduced debt
included the sale of Finger Lakes  Packaging,  the sale of the canned  vegetable
business,  and the  sale  of the  Georgia  distribution  center.  Reductions  in
outstanding debt accounted for a decrease of $3.2 million while changes in rates
accounted for a decrease of $0.5 million.

Provision for Taxes:  The  provision for taxes in the six months ended  December
27, 1997 of $5.5 million  increased  $1.9 million from the prior year  resulting
from an increase  in  earnings  before tax of $8.7  million.  The  Cooperative's
effective  tax rate is impacted by the net proceeds  distributed  to members and
the non-deductibility of goodwill.

Gain on Sale of  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. A gain of approximately $3.6 million was recognized. The
Company received  proceeds of approximately  $30.0 million which were applied to
Bank debt. The transaction also included a long-term supply agreement.

Other Income:  Other income is primarily comprised of earnings received from the
investment  made in Great Lakes  Kraut  Company.  See NOTE 3 - "Other  Matters -
Formation of New Sauerkraut Company."

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.  The favorable
cumulative  effect of the change (net of 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 six months of fiscal  1998
compared to the first six months of fiscal 1997.

Net cash used in operating activities increased  approximately $20.9 million due
to several factors.  Additional funds were used in the current year to liquidate
payments for crops. Crops in the current year were available earlier for harvest
than in the prior year. The change in cash from  inventories is  attributable to
the sale of Finger  Lakes  Packaging in the second  quarter of fiscal 1997.  The
additional  uses of funds  were  offset by the  increase  in net  income and the
timing of the liquidation of outstanding receivables. In addition, proceeds were
utilized in the first half of fiscal 1998 in  conjunction  with the obtaining of
new business. In October of 1997, the Company became the sole supplier of frozen
vegetables  for a national  club  store.  The  executed  contract  extends for a
two-year  period and required a $11.0 million  prepayment for volume  discounts.
Due to the time frame required to implement full distribution,  this contract is
not  anticipated  to  significantly   impact  fiscal  1998  earnings.   However,
management  anticipates  this arrangement will have a favorable impact on fiscal
1999 earnings.

Net cash provided by investing  activities decreased in the first half of fiscal
1998 due to the disposal of Finger Lakes  Packaging and other idle facilities in
fiscal 1997.  The purchase of property,  plant,  and equipment in both years was
for general operating purposes.

Net cash provided by financing  activities  increased from the prior year due to
the  receipt  of  proceeds  from Great  Lakes  Kraut and  additional  borrowings
incurred in the first half of fiscal 1998 for operating needs.

Borrowings:  Under the Company's New Credit Agreement with the Bank, as amended,
$66.0  million is available  for seasonal  working  capital  purposes  under the
Seasonal  Facility,  subject to a  borrowing  base  limitation,  and up to $18.0
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 December  27, 1997,  (i) cash  borrowings  outstanding  under the Seasonal
Facility were $58.7 million and (ii) additional  availability under the Seasonal
Facility,  after  taking  into  account  the  amount of the  borrowing  was $7.3
million.  In addition to its seasonal  financing,  as of December 27, 1997,  the
Company had $26.9 million available for long-term borrowings under the Term Loan
Facility.  The  Cooperative  believes that the cash flow generated by operations
and the amounts  available under the Seasonal and Term Loan Facilities should be
sufficient to fund working  capital needs,  fund capital  expenditures,  service
debt, and pay dividends for the foreseeable future.

Certain  financing  arrangements  require that Pro-Fac and Agrilink meet certain
financial  tests and ratios and  comply  with  certain  other  restrictions  and
limitations.  As of December 27, 1997,  Pro-Fac is in  compliance  with all such
covenants, restrictions and limitations.

Short- and  Long-Term  Trends:  The  vegetable  portion of the  business  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 that year's
crops.  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 1997 growing season on fiscal 1998 financial results cannot be
estimated  until early  calendar  1998 when  harvesting is complete and national
supplies can be determined.

                                  OTHER MATTERS

The Cooperative is currently working to resolve the potential impact of the year
2000  on the  processing  of  date-sensitive  information  by the  Cooperative's
computerized  information systems.  Based on preliminary  information,  costs of
addressing  potential  problems  are not  currently  expected to have a material
adverse impact on the Cooperative's  financial position,  results of operations,
or cash flows in future periods. However, if the Cooperative,  its customers, or
vendors are unable to resolve  such  processing  issues on a timely  manner,  it
could result in a material financial risk. Accordingly, the Cooperative plans to
devote the necessary  resources to resolve all significant year 2000 issues in a
timely manner.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     (a) EXHIBITS

         EXHIBIT
         NUMBER                        DESCRIPTION

         Exhibit 27            Financial Data Schedule

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


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                                                                 12









                                   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:     February 2, 1998     BY:/s/             Stephen R. Wright
                                                  STEPHEN R. WRIGHT,
                                                    GENERAL MANAGER




Date:     February 2, 1998     BY:/s/               Earl L. Powers
                                                    EARL L. POWERS,
                                               VICE PRESIDENT FINANCE AND
                                                   ASSISTANT TREASURER
                                            (Principle Financial Officer and
                                               Principle Accounting Officer)

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