U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  FORM 10-KSB
(Mark One)
[ X ]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [FEE REQUIRED]

     For the Fiscal Year Ended August 31, 1996
                                      OR
[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

     For the transition period from                    to                  .

                       Commission file number: 0000927536

                     ALLIANCE FARMS COOPERATIVE ASSOCIATION
                 (Name of small business issuer in its charter)

COLORADO                      84-1270685
(State or other jurisdiction              (I.R.S. Employer Identification No.)
of incorporation or organization)

                  302 IDLEWILD STREET, YUMA, COLORADO  80759
          (Address of principal executive offices)       (Zip Code)

                  Issuer's telephone number:  (970) 848-3231

        SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:

                                   Name of Each Exchange
            Title of Each Class               on Which Registered

                     None                           N/A

SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:

                                      None

                                (Title of Class)

     CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH
SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2)
HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.  YES [X]
NO [  ]

     CHECK IF THERE IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM
405 OF REGULATION S-B CONTAINED IN THIS FORM, AND NO DISCLOSURE WILL BE
CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR
INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-KSB
OR ANY AMENDMENT TO THIS FORM 10-KSB. [ X]

     STATE ISSUER'S REVENUES FOR ITS MOST RECENT FISCAL YEAR:  $7,037,927.

     THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE ISSUER HELD BY NON-
AFFILIATES COMPUTED BY REFERENCE TO THE OFFERING  PRICE FOR THE ISSUER'S COMMON
STOCK IN THE ISSUER'S ONGOING PUBLIC OFFERING AS OF  NOVEMBER 25, 1996, IS
$1,840,000.  AS OF NOVEMBER 25, 1996, THE ISSUER HAD 102 SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE, OUTSTANDING.

                     DOCUMENTS INCORPORATED BY REFERENCE

     None
     TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:  YES [  ]    No [X]


                                    PART I


ITEM 1.  DESCRIPTION OF BUSINESS.


GENERAL

     Alliance Farms Cooperative Association ("Alliance" or the "Company") is a
cooperative association engaged in the production of feeder pigs for sale to its
members.  The Company was formed as a cooperative association under the laws of
the state of Colorado on May 3, 1994, but did not engage in any business
activity until July, 1994.  The Company's predecessor, Yuma Feeder Pig Limited
Liability Company ("Yuma LLC"), was formed in October, 1991 and commenced
shipment of feeder pigs from its 2,450-sow feeder pig production facility in
March, 1993.  On July 13, 1994 (July 9, 1994 for accounting purposes), the
Company acquired the entire equity ownership rights and interests in Yuma LLC
from Farmland Industries, Inc. ("Farmland") and Yuma Farmers Milling and
Mercantile Cooperative Company ("Yuma Cooperative"), and thereupon Yuma LLC was
dissolved and liquidated and its assets, liabilities and feeder pig production
operations were assigned to and assumed by Alliance.

     The Company's principal executive offices are located at 302 Idlewild
Street, Yuma, Colorado 80759, and its telephone number is (970) 848-3231.
Unless the context otherwise requires, the terms "Alliance" and the "Company,"
as used in this report, refer to Alliance Farms Cooperative Association and its
predecessor, Yuma LLC.

DESCRIPTION OF BUSINESS

     GENERAL.  The Company is a cooperative association engaged in the
production of feeder pigs for sale to its members.  As of August 31, 1996, the
Company owned and operated five 2,450-sow feeder pig production facilities
located in Yuma County, Colorado (approximately 150 miles east of Denver), and
was in the process of developing one facility of comparable size in Wayne
County, Illinois (approximately 100 miles east of St. Louis, Missouri).  As of
the date of this report, the Company has commenced preliminary development
activities with respect to a second 2,450-sow facility in Wayne County,
Illinois.  See "Description of Business--Expansion" and "Description of
Property" under Item 2.

     The Company's business strategy is to produce feeder pigs for sale to its
members at competitive prices by utilizing modern facilities, management
practices designed to maximize productivity and high quality genetically
consistent breeding stock.  The Company intends to expand its existing feeder
pig production operations by completing the development of its sixth feeder pig
production facility and by using the net proceeds from the sale of additional
shares of its Common Stock, together with term debt borrowings, to develop or
acquire and thereafter operate additional 2,450-sow feeder pig production
facilities.  In this regard, the Company intends to use the net proceeds from
the sale of each block of 17 shares of Common Stock, together with term debt
borrowings, to develop or acquire one such feeder pig production facility.  As
of the date of this report, however, the Company was engaged in negotiations
concerning the possible provision by the Company=s existing lender and Farmland
of full debt financing for the development of a second Illinois facility, until
the Company's next issuance and sale of a block of 17 shares of Common Stock.
See "Description of Business--Financing."  No assurances can be given that the
Company will develop additional feeder pig production facilities, that the
Company will obtain the financing required for any such development, whether
through the sale of additional shares of Common Stock or the incurrence of
additional indebtedness, or that the Company will sell any additional shares of
Common Stock.

     Operation of the Company's facilities is the responsibility of the
management staff of the Company.  The Company has contracted with Farmland to
provide certain administrative services to the Company, including accounting,
production record keeping, feed and other input purchasing, employee training,
and breeding stock replacement logistics.  See "Description of Business --
Employees," "Directors and Executive Officers" under Item 9, and "Certain
Relationships and Related Transactions" under Item 12.

     The Company has entered into contractual arrangements with certain of its
members, including Farmland and Yuma Cooperative.  Pursuant to the Swine
Production Services Agreement between the Company and Farmland, Farmland has
agreed to provide certain administrative, advisory and consulting services to
the Company.  Pursuant to the Feed Purchase Agreement between the Company and
Yuma Cooperative, Yuma Cooperative has agreed to provide Alliance with
feed-grains and feed additives for the production of feed at Yuma Cooperative's
contract rates.  Farmland and Yuma Cooperative, as members, have contracted to
purchase a share of the feeder pigs to be produced by the Company under the same
terms required of the Company's other members except that during the period
commencing on July 13, 1994 and ending on August 11, 1995, the date the Company
first produced and shipped feeder pigs pursuant to the Feeder Pig Purchase
Agreements with the Company's existing members, the price paid by Farmland and
Yuma Cooperative for feeder pigs was based only on the Company's operating cost
per pig; provided, however, that such price was increased by $4.50 per feeder
pig after July 13, 1995.  Commencing on August 11, 1995, the date the Company
first produced and shipped feeder pigs pursuant to the Feeder Pig Purchase
Agreements with the Company's existing members (other than Farmland and Yuma
Cooperative), the price paid by Farmland and Yuma Cooperative for feeder pigs
has been under terms comparable to those applicable to the Company's members
pursuant to the Feeder Pig Purchase Agreements.  Finally, the Company has agreed
to provide Farmland the first opportunity to purchase any feeder pigs produced
by the Company in excess of the Company's supply commitments to other members or
that other members have failed to purchase during the term of the Swine
Production Services Agreement (and in no event less than the five-year period
ending July 13, 1999).  See "Certain Relationships and Related Transactions"
under Item 12 and "Description of Business -- Feeder Pig Purchase Agreement."

     Hog production is subject to substantial risks.  Success is dependent upon
obtaining high levels of breeding stock productivity, controlling the cost and
efficiency of purchased feed and other inputs while minimizing herd exposure to
disease or other factors which can adversely impact the operation.  See "Factors
That May Affect Future Results of Operations, Financial Condition or Business"
under Item 6.

     BUSINESS ENVIRONMENT.  The pork industry has undergone substantial change
in recent years, with respect to the production and processing of hogs.  The
Company believes that current economics of the industry favor large,
well-capitalized hog producers, which use consistent, high-quality breeding
stock and employ management practices designed to maximize productivity.  As a
result, hog production has become increasingly differentiated between
large-scale farrowing operations producing feeder pigs and less capital
intensive smaller-scale hog finishing operations.

     Concentration of Production.  The last decade saw a dramatic increase in
the concentration of hog production in larger scale facilities and a
corresponding decline in the number of farms producing hogs.  Based on data
available from the U.S. Department of Agriculture, the number of farms producing
hogs in the United States has declined, while the percentage of the nation's
total hog inventory held on farms having more than a 500 head inventory, as well
as the average number of hogs per farm, has increased.

     The Company believes there are several causes for the increasing
concentration of hog production into the hands of larger producers.  Large,
specialized hog producers may be able to produce hogs for lower cost than
smaller scale independent farmers through economies of scale and the use of
improved genetics, nutrition, and management practices, many of which are more
easily implemented in modern, large-scale facilities.  Since this cost advantage
would seem to be more readily available to those making a substantial investment
in facilities, efficient hog production has become a capital-intensive industry.
The Company believes that in the wake of the "agricultural crisis" of the
mid-1980s, capital for hog production has become more difficult to obtain and
has presented an increasingly large barrier to entry.  Additionally, packers
generally pay premiums to producers both for the supply of a large volume of
hogs and for providing hogs of superior carcass merit with respect to the yield,
leanness and consistency.  Larger operations populated with genetically
consistent stock bred for high productivity and carcass quality therefore may be
able to obtain a premium on the sale of their hogs that may not be available to
smaller producers.

     Production Differentiation.  In addition to the increasing concentration of
hog production in larger scale facilities, hog production increasingly has
become differentiated between feeder pig production operations and pig finishing
operations.  The Company believes that this is partly the result of three-site
management practices which dictate the separation of production into three
stages:  breeding through farrowing; nursery; and finishing; with each phase of
production being conducted in separate locations to minimize the risk of
transmission of disease.

     Production of feeder pigs -- which is less dependent upon variable feed
cost and more dependent upon herd health, facilities and breeding stock
investment -- is increasingly being conducted in specialized facilities.
Finishing of hogs to market weight, the economics of which are principally
driven by feed cost, is increasingly handled by producers engaged exclusively in
the finishing of hogs, with many of those producers finishing hogs under
contract to the producer of the feeder pig.  The Company believes that this
increasing specialization is attributable to the capital intensive nature of
farrowing operations and the complexity of management.

     BREEDING STOCK.  Fully populated, each of the Company's feeder pig
production facilities which is either in existence, under development or
proposed is anticipated to be stocked with approximately 2,450 sows.  The
Company intends to maintain an adequate population of female-line grandparent
stock in its multiplier units to produce commercial gilts for use by the Company
in any future facilities development or to replace the commercial herd as it is
culled or lost to death.  Barrows and any excess gilts from the multiplier units
will be sold by the Company as feeder pigs.

     The Company's feeder pigs have been and will continue to be produced from
genetically consistent breeding stock.  The Company currently utilizes breeding
stock from both DeKalb Swine Breeders and Pig Improvement Company, but intends
to discontinue the use of breeding stock obtained from DeKalb Swine Breeders 
and repopulate its Colorado facilities by the Autumn of 1997.  As further 
improvements in genetics are recognized, the characteristics of the Company's 
breeding stock may change.  The Company intends to continually evaluate the 
cost and characteristics of breeding stock developed by other producers, and, 
in the Company's discretion, to populate all or a portion of its facilities 
with such breeding stock.

     The Company continually culls a portion of its breeding herd and replaces
these animals with new breeding stock in order to maintain the productivity of
its breeding herd.  The selection of animals to be culled is based on subjective
determinations as to the animal's productivity, which generally declines as the
animals mature.  The Company believes that it is positioned to generate all or
substantially all of its breeding stock replacements through its breeding stock
multiplier herd.  The Company believes that its multiplier units are and will be
able to produce virtually all of the replacement gilts and initial breeding
stock populations required by the Company for the foreseeable future. The
Company believes that its internal production of replacement gilts will result
in the cost of its breeding stock replacements being lower than could be
obtained from outside sources and will preserve the Company's control over its
entire operation.  No assurance can be given that the Company will be successful
in producing any portion of its required breeding stock replacements or that the
cost for such replacements will be lower than could be obtained from outside
sources.

     With respect to each facility under development or proposed, the Company
intends to place breeding stock in the facility over a five month period
beginning with the completion of the facility's breeding building.  It is
anticipated that approximately 800 head of breeding stock will be delivered to
the facility in the first month followed by deliveries of 400 to 450 head over
the remaining four months until the facility is fully stocked.  Following an
initial resting period of 45 to 60 days in order to acclimate and monitor each
group of breeding stock, breeding will be commenced.

     PURCHASE OF FEED AND OTHER INPUTS.  Farmland has agreed to assist the
Company in arranging for the provision of the Company's requirements for feed
and other inputs, including animal health products, pursuant to the Swine
Production Services Agreement between the Company and Farmland.  The Company
intends to purchase a portion of these products from Yuma Cooperative upon the
prices and terms set forth in the Feed Purchase Agreement between the Company
and Yuma Cooperative.  Farmland will establish the specifications of all
supplies purchased, as well as for the purchasing and delivery of all
requirements in coordination with the Company.  See  "Certain Relationships and
Related Transactions" under Item 12.

     The Company's Feed Purchase Agreement with Yuma Cooperative provides for
the Company's purchase of feed manufactured by Yuma Cooperative on a delivered
cost basis to be determined based upon a fixed charge for the grinding, mixing,
and delivery of feed ($14 per ton as of November 1, 1996), in addition to the
actual delivered cost of the feed ingredients.   Feed rations which are pelleted
are subject to a surcharge ($7 per ton as of November 1, 1996).  Both the fixed
charge and the surcharge are subject to annual increases in November of each
year corresponding to any increases in the Consumer Price Index -- Retail Items.
Corn provided by Yuma Cooperative for use in feed generally is sold to the
Company at delivered cost plus, in the absence of available Company grain
storage facilities, a $.10 per bushel handling fee.  The Company has the right
under the Feed Purchase Agreement, in its sole discretion, to purchase and
provide its own corn for feed manufacturing.  Corn and soybean meal may be
substituted from time to time with other ingredients meeting equivalent
nutritional requirements based upon temporal price differentials.  See
"Description of Business -- Sale of Animals," "Certain Relationships and Related
Transactions" under Item 12 and "Description of Business -- Feeder Pig Purchase
Agreement."

     The Company believes that feed costs presently account for approximately
35% to 40% of the cost of producing a feeder pig.  The principal components of
swine feed are corn and soybean meal, which are commodities subject to
substantial fluctuations in cost due to changing market conditions, seasonality,
and regional variations.  While the Company intends to recover changes in feed
costs by making corresponding adjustments in the selling prices for its feeder
pigs, the actual changes in the sales price of feeder pigs will lag changes in
feed cost because the Company determines the cost of feeder pigs on a twelve
month historical rolling average basis.  This pricing method may adversely
impact the Company's operations in the event of sudden movements, or continual
increases, in the cost of feed or other inputs.  See "Certain Relationships and
Related Transactions" under Item 12, "Description of Business -- Sale of
Animals" and "Description of Business -- Feeder Pig Purchase Agreement."

     SALE OF ANIMALS.  The Company intends to continue to sell its feeder pigs
to its members.  Accordingly, the Company has contracted with its members (and
intends to contract with any new members) for the sale of the feeder pigs
produced at the Company's facilities.  Feeder Pig Purchase Agreements have been
executed by the Company's members as a condition to subscribing for shares of
the Company's Common Stock.  Members in the Company are and will be required to
purchase, and the Company is and will be required to sell, lots of feeder pigs
produced by the Company in amounts proportionate to the respective member's pro
rata share of the Company's Common Stock, but in no event greater than two and
seven-tenths (2.7) lots per share of Common Stock on a prospective rolling
12-month basis.  Presently, each share of Common Stock held in the Company will
entitle the respective member to contract to purchase one delivery allotment per
102-allotment block made available to the members under the Feeder Pig Purchase
Agreements.  In the event that the Company issues additional shares of Common
Stock for the construction of additional feeder pig production facilities, the
number of participants in the allotment will be increased, although such
increase is not anticipated to materially change an investor's right to receive
his anticipated allotment of feeder pigs.  Casualty to the Company's feeder pig
production facilities, diminished breeding stock productivity or extreme
mortality or morbidity, among other adverse circumstances, has reduced and could
reduce the number of feeder pigs available for purchase by members and increase
the price of feeder pigs under the Feeder Pig Purchase Agreements.  See "Factors
That May Affect Future Results of Operations, Financial Condition or Business"
under Item 6.

     If the Company is successful in implementing its business plan and any new
feeder pig production facilities are developed on schedule, the initial lots of
feeder pigs resulting from the development and expansion of the Company's feeder
pig production operations are not expected to be available to new investor
members for up to 13 to 15 months after completion of the sale of a minimum
block of 17 shares of Common Stock to such members.  New investor members will
not be entitled to purchase feeder pigs from the Company until such time.
Members in the Company are required to contract for the purchase of Qualifying
Pigs (as that term is defined in the Feeder Pig Purchase Agreement) from the
Company's facilities.  Each such contract, or Feeder Pig Purchase Agreement,
constitutes an irrevocable ten-year commitment.  Each lot of feeder pigs
purchased by a member pursuant to a Feeder Pig Purchase Agreement is priced
based upon the following factors:  the financing cost per pig, the operating
cost per pig, and a $4.50 per pig production margin (all as defined in the
Feeder Pig Purchase Agreement).  In the event that a member fails at least twice
to perform his purchase obligation under the Feeder Pig Purchase Agreement, such
member will be in default, which default may result in the relinquishment of his
purchase rights under the Feeder Pig Purchase Agreement.  For each ten shares of
Common Stock owned by a member, the number of such failures that will result in
a default is increased by one.  A member's failure to perform his purchase
obligation, among other circumstances, also may result in the Company's
foreclosure on its security interest granted in the member's Common Stock.  In
addition, the member will be responsible for the damages and expenses incurred
by the Company as a result of any failure to purchase, pay for, and take
delivery of any lot of Qualifying Pigs under the Feeder Pig Purchase Agreement,
including (a) damages equal to the difference between the price payable by the
member for the Qualifying Pigs that member has failed to purchase, pay for, and
take delivery under the Agreement and the then current market price for feeder
pigs, (b) $3,000, which amount is intended to cover the Company's administrative
and other costs and expenses associated with such failure, and (c) all costs of
collection, enforcement, and prosecution of the Company's rights and remedies.
If the Company produces feeder pigs in excess of two and seven-tenths (2.7) lots
per share of Common Stock on a prospective rolling 12-month basis, the Company
may sell such excess production to non-members, or retain such excess production
for the Company's own purposes, in lieu of selling such excess production
pursuant to the Feeder Pig Purchase Agreements.  The Company has agreed in its
Swine Production Services Agreement with Farmland to provide Farmland the first
opportunity to purchase any such excess production and any feeder pigs that
members have failed to purchase during the term of said Agreement (and in no
event less than the five-year period ending July 13, 1999).  See "Description of
Business -- Feeder Pig Purchase Agreement," "Certain Relationships and Related
Transactions" under Item 12, and "Absence of Market" under Item 5.

     As of the date of this report, the Company was engaged in negotiations
concerning the possible provision by the Company=s existing lender and Farmland
of full debt financing for the development of a second Illinois facility.  See
"Description of Business--Financing."  Although no assurances can be given that
the Company will be successful in obtaining this financing, it is anticipated
that, if such financing is obtained at least in part from Farmland, Farmland
would contract to purchase all feeder pigs produced at the facility that was
constructed using the proceeds of such financing.  In such event, it is
anticipated that Farmland=s purchase of such feeder pigs would be under
substantially the same terms required of the Company=s members pursuant to the
Feeder Pig Purchase Agreements except that the price paid by Farmland for such
feeder pigs would not include the $4.50 per pig production margin.  No
assurances can be given that the Company will obtain the financing described
above or that Farmland will agree to purchase, on acceptable terms if at all,
the feeder pigs produced at the facility constructed using the proceeds of such
financing.  See "Description of Business--Feeder Pig Purchase Agreement."

     COMPETITION.  The feeder pig production business is competitive and
fragmented among family-owned and investor-owned farms and large-scale
agribusiness feeder pig production operations.  Feeder pigs are available at
sale barn auction, markets such as Farmland's Pig Finder7 electronic feeder pig
auction market, and under contract from producers.  Competition is based upon
price, product consistency and quality, ability to deliver the required
quantities and ability to meet delivery schedules.  Although there are a great
number of operations that compete with the Company, as discussed elsewhere in
this report the Company has contracted with its members (and intends to contract
with any new members) for the sale of feeder pigs produced at the Company's
facilities.  If the Company produces feeder pigs in excess of its supply
commitments to members, however, the Company may sell such excess production to
non-members.  The Company believes that its most important competitive strengths
are its ability to provide competitive pricing, the quality and consistency of
the feeder pigs produced by it and the ability of its management team.  See
"Description of Business -- Business Environment" and "Description of Business
-- Feeder Pig Purchase Agreement."

     EXPANSION.  Expansion is an important element of the Company's business
plan.  The Company's present intent is to construct or acquire three 2,450-sow
facilities in addition to the Company's existing facilities and the facilities
under development, following completion or acquisition of which the Company will
be operating a total of nine such facilities.  The ability of the Company to
construct or acquire each of such three facilities is subject to it obtaining at
least $4,080,000 of financing (at least $12,240,000 in the aggregate).  As of
the date of this report, the Company has commenced preliminary development
activities with respect to a second 2,450-sow facility in Wayne County, Illinois
in anticipation of obtaining such necessary financing.  No assurances can be
given that the Company will obtain the financing required for the development of
the second Illinois facility.  See "Description of Business--Financing."

     The Company believes that substantial economies of scale will be realized
in the event that the Company is able to expand beyond the three facilities that
the Company presently intends to construct or acquire.  These additional
economies are expected to include savings and enhancements in the production of
breeding stock, economies in the production of feed, and enhancement of
management and labor productivity.  The Company intends to pursue expansion of
its operations as financial, managerial and other resources become available.
No assurance can be given as to when or if such resources will become available
to Alliance so as to allow it to proceed with such expansion.

     Hog production operations require the availability of ample pure water at
reasonable cost.  Although the Company has obtained access to water necessary
for it to conduct its current operations in Colorado and Illinois, the Company
has been advised that it will be unable to obtain any new commercial well
permits in Colorado.  Accordingly, the Company has found it necessary in
Colorado to obtain the water necessary for its operations through the purchase
of more expensive, irrigated land or other real property already having the
necessary commercial well permits.  No assurance can be given that the Company
will be able to obtain the water permits necessary to enable it to expand its
operations in Colorado, Illinois or other locations selected by the Company.
See "Factors that May Affect Future Results of Operations, Financial Condition
or Business -- Adequate Water Supply."

     FINANCING.  The ability of the Company to implement its business strategy
and construct or acquire additional feeder pig production facilities is subject
to it obtaining at least $4,080,000 of financing with respect to each such
facility.  In this regard, the Company is engaged in a public offering of shares
of its Common Stock.  In addition to the proceeds to be received from the
possible issuance of additional shares of Common Stock, the Company would be
required to obtain additional funds through secured term debt borrowings.  The
Company anticipates that with respect to each minimum block of 17 shares of
Common Stock issued by the Company at an aggregate price of $1,360,000, the
Company would be required to borrow approximately $2,720,000 of term debt
borrowings in order to construct one new feeder pig production facility and
related support facilities, to purchase breeding stock, and to provide working
capital for operations.  The amount of this proposed financing has been
determined based upon the anticipated capital expansion and business operations
needs of the Company and the anticipated net proceeds from the issuance of
shares of Common Stock.

     On May 19, 1995, the Company entered into various loan documents with
CoBank, ACB ("CoBank") related to a $23,600,000 secured credit facility.  This
credit facility provides for up to $18,850,000 of  non-revolving term debt and
$4,750,000 of revolving term credit.  Proceeds from the term debt may be used
for construction of feeder pig production facilities and are advanced by CoBank
as construction costs are incurred by Alliance.  Proceeds from revolving term
credit may be used for working capital and other purposes.  The actual advance
of funds under this credit facility is subject to the satisfaction of certain
conditions precedent and may be withdrawn or terminated by CoBank under certain
circumstances.  In addition, the unused portion of the credit facility expires
February 28, 1997 with respect to the non-revolving term debt and June 20, 2006
with respect to the revolving term credit.  No assurances can be given that the
funding conditions precedent will be satisfied and that the Company will be able
to obtain sufficient financing when needed, or that alternative sources of
financing will be available on acceptable terms.

     The availability of non-revolving term debt and revolving term credit under
the CoBank credit facility is subject to specified equity investment levels in
the Company being satisfied.  As of August 31, 1996, no additional term loans
were immediately available to the Company, $422,000 of terms loans were
available upon CoBank=s final acceptance and approval of the feeder pig
production facilities then under development, and $779,000 of revolving term
credit was immediately available.  The availability of the unused $6,330,000
term loan and $1,830,000 revolving term credit under the CoBank credit facility
is restricted and may be made available to the Company only to the extent that
additional equity investment is made in the Company.  With respect to each
additional equity investment of $1,360,000 obtained by the Company (e.g., 17
shares of Common Stock sold for $80,000 each), the Company is entitled to obtain
advances under the credit facility of $2,720,000 ($2,110,000 of term loans and
$610,000 of revolving term credit), up to an aggregate of $8,160,000.

     Prior to any advance being made by CoBank under the credit facility,
certain conditions precedent must be addressed to CoBank's satisfaction,
including but not limited to (i) provision of environmental audits respecting
the Company's realty, (ii) obtaining performance bonds and lien payment bonds
and builder's risk casualty insurance respecting such construction, (iii)
obtaining a chain of title and title insurance respecting the Company's realty,
and (iv) provision of evidence that CoBank has a perfected first priority lien
on all security for the Company's obligations.  As of August 31, 1996, the
outstanding balance of loans made by CoBank under this credit facility was
$13,659,000.

     As an alternative to funding an expansion of the Company's operations with
a combination of debt and equity financing, as of the date of this report the
Company was engaged in negotiations with CoBank and Farmland for the provision
of full debt financing.  This financing alternative is being considered in
connection with the commencement of preliminary development activities on a
second 2,450-sow facility in Wayne County, Illinois.  See "Description of
Business--Expansion."  Although no assurances can be given that the Company will
be successful in obtaining this financing, it is anticipated that, if obtained,
such financing would consist of $2,110,000 of non-revolving term debt and
$610,000 of revolving term debt obtained from CoBank and $1,360,000 of
subordinated non-revolving term debt from Farmland (including $200,000
previously loaned by Farmland to the Company for the acquisition of certain real
property in Wayne County, Illinois).    See "Description of Property" under Item
2 and "Certain Relationships and Related Transactions--Farmland--Real Estate
Loans" under Item 12.

     The CoBank portion of this financing would be provided under the Company=s
existing credit facility.  It is anticipated that the Farmland portion of this
financing would provide for amortization over a ten-year period, at a variable
rate equal to CoBank's then national variable rate plus 1.25%.  The payment
schedule for the Farmland loan would require the Company to make interest-only
payments for the life of the loan, with a final balloon payment of all principal
to be made upon the earlier of (i) the Company's next issuance and sale of a
minimum block of 17 shares of Common Stock, and (ii) the expiration of ten
years.  Alliance's obligation to Farmland would be secured by a mortgage on the
facilities constructed with the proceeds of the loan, which mortgage would be
second in priority to that of CoBank.  In addition, Farmland would contract to
purchase all feeder pigs produced at the facility that was constructed using the
proceeds of the Farmland loan.  See "Description of Business--Sale of Animals."
As a result of the larger portion of indebtedness associated with this financing
alternative (and the higher debt service related thereto) as compared with the
debt and equity alternative discussed above, the net proceeds from the issuance
of shares of Common Stock that would be required must be correspondingly greater
in order to provide for the balloon payment of principal under the Farmland
loan.  There can be no assurance that the Company would be successful in selling
shares of Common Stock at prices that are sufficient to provide the net proceeds
required, or that the Company will sell any shares of Common Stock.  In
addition, no assurances can be given that the Company's negotiations with CoBank
and Farmland will be successful and that the Company will be able to obtain the
financing required for the development of the second Illinois facility, or that
such financing will be obtained on acceptable terms or terms that are comparable
to those described herein.

     In connection with the Company=s acquisition of certain real property in
Yuma County, Colorado, the Company borrowed $760,000 from Farmland.  This loan
is evidenced by a promissory note providing for amortization over a ten-year
period, at a variable rate of interest equal to CoBank's prime rate.  The
payment schedule for this loan requires the Company to make interest-only
payments for the life of the loan, with a final balloon payment of all principal
to be made upon the expiration of the ten-year term. See "Description of
Property" under Item 2 and "Certain Relationships and Related Transactions--
Farmland--Real Estate Loans" under Item 12.

     The CoBank credit facility provides for the monthly payment of principal
and interest.  Principal payments pursuant to the loan terms with respect to the
initial $8.3 million of non-revolving term loans are to be made in 114 monthly
installments of $72,500 each, beginning January 20, 1996, with the remaining
unpaid balance being due and payable on July 20, 2005.  Principal payments
pursuant to the loan terms with respect to each $2,110,000 of new non-revolving
term loans are to be made in monthly installments of $18,700 each, beginning on
the 20th day of the eighteenth month following the date of the initial advance
of such $2,110,000 loan.  Principal payments pursuant to the loan terms with
respect to the revolving term loan are to be made in 24 equal monthly
installments of the principal that is outstanding as of the June 20, 2006
expiration of the revolving loan commitment, beginning on the 20th day of the
month following the payment in full of the new non-revolving term loan (but in
no event later than March 20, 2008).  Interest accrues on the outstanding
principal balance of the loan at a rate equal to either (i) a variable rate
equal to CoBank's then national variable rate plus 1.25%, or (ii) CoBank's then
quoted rates for fixed rate loans, as may be elected from time to time by the
Company, and is payable monthly in arrears by the 20th day of the following
month.  During the period in which principal under the loan is outstanding,
portions of such principal may bear interest at such variable rate while other
portions may bear interest at such fixed rate.  As of August 31, 1996, interest
accrued on the outstanding principal balance of the loan at a rate of 9.5% per
annum (calculated by adding 125 basis points to CoBank's national variable rate
of 8.25% in effect as of such date).  The interest rate(s) applicable to the
loan are subject to reduction at specified times upon the Company's satisfaction
of certain conditions relating to the Company's equity level and debt service
coverage ratio.  As of August 31, 1996, no reductions in the Company=s interest
rate had been made.  The Company is permitted to prepay the loan at any time
without penalty, except that in the event that fixed rate balances are prepaid,
the Company is required to pay CoBank a surcharge in an amount equal to CoBank's
funding losses with respect thereto or, if the CoBank loan is refinanced by
another lender, a surcharge in an amount sufficient (on a present value basis)
to enable CoBank to maintain the yield it would have earned on the amount repaid
for the period such amount was scheduled to be outstanding at a fixed rate.

     In obtaining the initial non-revolving CoBank loan, the Company was
required to pay a $50,000 origination fee as well as make an equity investment
in CoBank of $1,000.  In addition, the Company paid a $36,000 origination fee in
connection with the refinancing of its existing CoBank loan, and will be
required to pay a $6,000 fee with respect to the origination of each $2,110,000
of new non-revolving term loans.  During the course of the loan, the Company may
be required to make additional equity investments at a rate not to exceed 1% of
the average five-year principal loan balance (which additional equity
investments may be satisfied out of CoBank's non-cash patronage distributions)
until the Company meets CoBank's target level of equity investment, which
currently is 11.5% of the Company's average five-year principal loan balance.
In addition, the Company was required to grant a first perfected lien and
security interest on substantially all of its properties and assets to CoBank
and to assign to CoBank all of the Company's rights in and to the existing
Feeder Pig Purchase Agreements.  The Company is required to comply with various
affirmative and negative covenants, including but not limited to (i) maintenance
of at least $2,250,000 of equity, plus $550,000 of equity for each facility
developed by the Company after its initial four facilities ($3,350,000 of equity
was required at August 31, 1996 and the Company had $4,606,289 of equity at such
date), (ii) maintenance of modified working capital (calculated as current
assets, plus available revolving term credit, minus current liabilities
(excluding the current portion of term debt payments)) of at least $210,000,
plus $98,000 of modified working capital for each facility developed by the
Company after its initial four facilities  ($406,000 of modified working capital
was required at August 31, 1996 and the Company had $1,391,298 of modified
working capital at such date), (iii) provision of monthly financial statements
and audited annual financial statements to CoBank, (iv) restrictions on the
incurrence of additional indebtedness, (v) restrictions on certain liens,
mergers, sales of assets, investments, guaranties, loans, advances and business
activities unrelated to existing operations, and (vi) restrictions on the
declaration and payment of the cash portion of patronage distributions and other
distributions or allocations of the Company's earnings, surplus or assets.  The
Company was in compliance with each of these covenants as of August 31, 1996.

     WASTE DISPOSAL AND ENVIRONMENTAL MATTERS.  Several environmental
requirements potentially are applicable to feeder pig production operations such
as those conducted by the Company.  Generally, these requirements take the form
of federal statutory and regulatory requirements that are, in some cases,
reflected in similar state requirements.  In other instances, state or local
requirements may exist separately and without federal precedent.

     The principal environmental regulations with which the Company must comply
are related to the handling and disposal of waste water generated at the
Company's feeder pig production facilities.  The federal Clean Water Act
generally prohibits the discharge of pollutants into the waters of the United
States.  The Environmental Protection Agency ("EPA") has further issued
regulations that prohibit the discharge of waste water from animal feedlot
operations into the waters of the United States, except under certain
circumstances when excessive rainfall runoff added to existing process waste
water exceeds the design capacity of the waste water handling and treatment
facilities.  These regulations therefore generally require that waste water
handling and treatment facilities for "animal feedlots" (which term is defined
broadly enough to cover the Company's feeder pig production operations) be of a
non-discharge nature.

     To comply with these federal requirements, animal feedlot operators, such
as the Company, must either obtain a permit from the EPA for its operations, or,
in the case of a state which has been granted authority by EPA to carry out a
Clean Water Act program, application must be made to the state.  The State of
Colorado and the State of Illinois each has been granted such authority by the
EPA.  The Colorado and Illinois regulations generally adopt the format of the
EPA provisions for animal feedlots, and generally require concentrated animal
feeding operations to be operated as non-discharge facilities.  These
regulations require that the Company design, construct, and operate waste water
control structures capable of retaining and processing all waste water and storm
runoff which enter the facility, with the exception of water generated from
rainfall in excess of certain prescribed parameters.  Moreover, these
regulations authorize the state agency to require the removal of accumulated
manure and process waste water as necessary to prevent the overflow of the
containment and processing structure.  The Company uses lagoon containment and
processing systems at its production facilities to comply with these
regulations.

     Land application of manure and process waste water also is regulated by
Colorado and Illinois regulations.  Generally, these regulations authorize the
state agency to require that manure and process waste water not be distributed
on lands in a manner that affects the quality of waters, impairs existing
beneficial uses, or exceeds estimated soil infiltration rates, and shall not be
applied when the land is frozen, saturated or during rainfall.  Sprinkler
irrigation equipment must include a back flow prevention device.  Land
application rates are established on a case-by-case basis after taking into
account the nature and type of manure or process waste water and the
characteristics of the area to which it is to be applied.

     Each feeder pig production facility is designed to enable the removal of
animal waste by means of emptying shallow pits located under the slatted floors
of each facility.  Animal waste falls through the slatted floor into the pit
which is filled with water.  Periodically, each pit is drained and refilled.
Waste water drained from a pit is moved into a lagoon system for treatment.  All
lagoons must be of a size adequate to accommodate the anticipated volume of
waste water to be generated together with storm water runoff.  Further, each
lagoon must be lined with a material that prevents or inhibits the seepage of
waste water into the ground water below.  See "Description of Property" under
Item 2.

     Cost of design and construction of waste water treatment systems vary by
facility based upon the characteristics of each individual site.  The Company
has estimated that the cost of construction of lagoons and the attendant pumps
and piping required to handle the waste water generated at each feeder pig
production facility will range from approximately $100,000 to $250,000.  Ongoing
expenditures to handle waste water consist principally of expenditures for
utilities and maintenance.  Such ongoing expenditures do not constitute a
significant operating cost to the Company.

     EMPLOYEES.  Operating management of each of the Company's existing and
future facilities will be the responsibility of each respective 2,450-sow
facility's General Manager. The General Manager will have overall responsibility
for the operation of the facility.  Additional department managers likely will
oversee the breeding/gestation, farrowing, and nursery departments.  It is
anticipated that each facility under development or proposed will employ eleven
persons in breeding through farrowing operations, including management and
laborers.

     Pursuant to the Swine Production Services Agreement between the Company and
Farmland, Farmland has agreed to assist in providing certain administrative
services to the Company, including the coordination of the Company's training of
personnel to be employed by the Company and the selection of employees.

     As of August 31, 1996, the Company employed approximately 102 persons, of
whom 98 were full-time employees and four were part-time employees.  Of the
Company's 98 full-time employees, 14 employees are assigned to perform various
facilities operation services for Pig Producers I, L.P. ("Pig Producers"), a
limited partnership in which Farmland holds a 12.5% interest.  Pig Producers is
engaged in the production of feeder pigs from a 2,450-sow feeder pig production
facility located in Yuma County, Colorado.  The Company is reimbursed by Pig
Producers for all wages, benefits and other costs attributable to the 14
Alliance employees performing services for Pig Producers.  See "Certain
Relationships and Related Transactions--Farmland" under Item 12.  The Company is
not a party to any collective bargaining agreement and considers its
relationship with employees to be satisfactory.

     GOVERNMENT REGULATION.  The Company is subject to various federal, state
and local government regulations, including those restricting certain types of
investor-owned livestock production and those concerning the environment,
occupational safety and health and zoning.  In addition, its employment
practices are governed by minimum wage, overtime and other working condition
regulations.  The Company has not experienced significant difficulty in
complying with applicable regulations and compliance generally has not had an
adverse effect on the Company's business.  See "Description of Business -- Waste
Disposal and Environmental Matters."

     FEEDER PIG PURCHASE AGREEMENT.

     General.  The rights and obligations of the parties with respect to the
sale of feeder pigs by the Company to its members will be governed by the Feeder
Pig Purchase Agreements.  Although the following summary describes the material
provisions of the Feeder Pig Purchase Agreement, it does not purport to be a
complete statement of all provisions of the Feeder Pig Purchase Agreement and in
no way modifies or amends the Feeder Pig Purchase Agreement.

     Purchase.  The Company intends to sell feeder pigs that meet particular
minimum weight, health, nutrition and genetic quality standards to members of
the Company who have entered into a Feeder Pig Purchase Agreement with the
Company.  Feeder pigs that meet such standards, as set forth in the Feeder Pig
Purchase Agreement, are referred to as "Qualifying Pigs."  Pursuant to the terms
of the Feeder Pig Purchase Agreement, the member of the Company is required to
purchase, and the Company is required to sell, Qualifying Pigs in lots of no
less than 900, and no more than 1,000, Qualifying Pigs per lot, as determined by
the Company.  Such lots of feeder pigs are to be made available to members of
the Company on a rotating schedule determined and implemented by the Company,
with the number of lots made available to a member and the frequency of
availability being based upon the member's proportionate equity interest in the
Company and the actual production of Qualifying Pigs from the Company's
facilities.  If the Company is successful in implementing its business plan and
any new feeder pig production facilities are developed on schedule, the initial
lots of feeder pigs resulting from the development and expansion of the
Company's feeder pig production operations are not expected to be available to
new investor members for up to 13 to 15 months after completion of the sale of a
minimum block of 17 shares of Common Stock to such members.  New investor
members will not be entitled to purchase feeder pigs from the Company until such
time.  In the event that the production of feeder pigs exceeds two and
seven-tenths (2.7) lots per share of Common Stock on a prospective rolling
12-month basis, the Company may sell such excess production to non-members, or
retain such excess production for the Company's own purposes, in lieu of selling
such excess production pursuant to the Feeder Pig Purchase Agreements.  The
Company has agreed in its Swine Production Services Agreement with Farmland to
provide Farmland the first opportunity to purchase excess feeder pigs produced
by the Company during the term of said Agreement (and in no event less than the
five-year period ending July 13, 1999).  See "Certain Relationships and Related
Transactions -- Farmland" under Item 12.

     Price.  The Company intends to sell Qualifying Pigs, subject to adjustment
for weight as described below, pursuant to a pricing formula consisting of the
sum of the following factors:  the financing cost per pig, the operating cost
per pig, and a $4.50 per pig production margin. The financing cost per pig
applicable to a member is to be determined on a rolling 12-month prospective
basis and will be equal to the quotient obtained by dividing (i) the sum of the
anticipated required payments of principal and interest (including any scheduled
sinking fund payments) for the ensuing 12-month period with respect to the term
debt borrowings incurred by the Company in connection with the consummation of
the sale of Common Stock to such member, by (ii) the total number of Qualifying
Pigs anticipated to be produced and shipped by the Company during such 12-month
period from the one or more feeder pig production facilities developed through
the use of such term debt borrowings and the net proceeds from the sale of
Common Stock to such member (such estimate being based on the total estimated
number of Qualifying Pigs to be produced and shipped by the Company during such
12-month period from all feeder pig production facilities of the Company).  The
operating cost per pig is to be determined on a rolling 12-month historical
basis and will be equal to the quotient obtained by dividing (i) the sum of (A)
all expenses (excluding interest expense, depreciation and amortization) of the
Company, plus (B) the net cash flow cost of all capital expenditures of the
Company (including any capital sinking fund payments) for production facility
and breeding stock improvements and replacements, in each case, for the 12
months preceding the then present month of shipment, by (ii) the number of
Qualifying Pigs produced and shipped by the Company during such 12-month period.
At the time the Company notifies a member that a lot is available for purchase
by the member pursuant to the member's Feeder Pig Purchase Agreement, the
Company will furnish to the member an estimate of the total purchase price of
all Qualifying Pigs included in the lot, and the member is required to pay such
estimated total purchase price to the Company not less than one day prior to the
scheduled shipment date.  The actual total purchase price of all Qualifying Pigs
included in a lot sold to a member will be based upon weight at the time of
loading and settlement of any adjustments shall be made within five days
following delivery.

     Weight Adjustment.  The purchase price for Qualifying Pigs is subject to
adjustment based upon the extent of any variation in the average weight of
Qualifying Pigs from 45 pounds.  To the extent that the average weight of a
shipment of Qualifying Pigs exceeds 45 pounds per pig, the purchaser will pay an
additional $.25 per pound per pig on the first five pounds by which the average
weight exceeds 45 pounds per pig and an additional $.15 per pound per pig for
the average weight between 50 pounds and 60 pounds.  To the extent that the
average weight of a shipment of Qualifying Pigs is less than 45 pounds per pig,
the purchase price will be decreased by $.25 per pound per pig.

     Delivery of Pigs.  The Company will be responsible for obtaining, at the
Company's expense, all health permits necessary to qualify the pigs for
interstate shipment.  It is anticipated that all lots of Qualifying Pigs will be
weighed at the Company's expense at a state-inspected scale near the Company's
production facility.  Delivery is to be FOB shipping point, with the members
bearing the risk of loss during transit, and the trucks used to haul Qualifying
Pigs from the Company's production facility must be thoroughly cleaned and
disinfected prior to loading.  A member may inspect the lot of Qualifying Pigs
to be purchased by such member prior to loading.  After the delivery of pigs at
their destination, a member will have the right to seek an appropriate price
adjustment for any pig which is found not to be a Qualifying Pig.  Such
adjustment will be made following the Company's inspection of the subject pigs,
and will be determined through mutual agreement of the Company and the member.

     Term and Termination.  A member's Feeder Pig Purchase Agreement will be for
an initial term commencing on the date entered into and continuing for a period
of 120 months after the date the first delivery of Qualifying Pigs is made to
the member thereunder, subject to earlier termination upon the occurrence of
certain events.  Feeder Pig Purchase Agreements will be extended automatically
for succeeding one year terms unless the member gives to the Company, not less
than one year prior to the expiration of the initial or any extended term,
notice that the member desires to terminate the Feeder Pig Purchase Agreement as
of the expiration of such initial or extended term.  The Company may terminate a
member's Feeder Pig Purchase Agreement if the member fails to purchase, pay for,
and take delivery of any two lots of Qualifying Pigs when and as made available
to the member; provided, however, that for each ten shares of Common Stock owned
by a member, the number of such failures necessary before the Company may
terminate such member's Agreement is increased by one.  The member may terminate
the Feeder Pig Purchase Agreement if the Company materially breaches any
obligation or covenant in the Agreement and such breach is not cured within 30
days following notice of such breach given by the member to the Company.
Furthermore, if the first delivery of Qualifying Pigs thereunder is not made
within 24 months of the date of the Feeder Pig Purchase Agreement, the member
may terminate the Agreement within three months after the expiration of such
24-month period.  If either party is prevented from performing under the Feeder
Pig Purchase Agreement because of reasons beyond its control which make it
commercially impossible to perform, however, then that party is relieved from
such performance so long as it remains commercially impossible to perform.  A
member's Feeder Pig Purchase Agreement automatically terminates if the member
assigns or transfers all shares of Common Stock from which the member's right to
purchase lots of Qualifying Pigs under the Agreement derives.  Except as
described above, a member does not have the right to terminate the Feeder Pig
Purchase Agreement prior to the expiration of the initial or any extended term
thereof.  As noted above, the member's right to terminate the Feeder Pig
Purchase Agreement at the expiration of the initial or any extended term thereof
may be exercised only if the member gives notice to the Company at least one
year prior to the expiration of such initial or extended term that the member
desires to exercise such termination right.  The foregoing termination rights
constitute the member's exclusive rights of termination under the Feeder Pig
Purchase Agreement.  No member has the right to demand the return of or to
receive any of the member's capital from the Company as a result of the
termination of the Feeder Pig Purchase Agreement or otherwise and regardless of
whether demanded prior to the expiration of the initial or any extended term of
the Feeder Pig Purchase Agreement or at any time after the expiration of any
such term.  The Company is under no obligation to redeem or repurchase its
Common Stock prior to the expiration of the initial or any extended term of the
Feeder Pig Purchase Agreement or at any time after the expiration of any such
term.  See "Absence of Market" under Item 5.

     Effect of Purchaser Default.  If a member fails to purchase, pay for, and
take delivery of any lot of Qualifying Pigs when and as made available to the
member pursuant to the Feeder Pig Purchase Agreement, the member is responsible
for the damages and expenses incurred by the Company as a result of such
failure.  In particular, the member is liable for (a) the difference between the
price payable by the member for the Qualifying Pigs that member has failed to
purchase, pay for, and take delivery under the Agreement and the then current
market price for feeder pigs, (b) $3,000, which amount is intended to cover the
Company's administrative and other costs and expenses associated with such
failure to purchase, pay for, and take delivery of the Qualifying Pigs, and (c)
all costs of collection, enforcement, and prosecution of the Company's rights
and remedies under the Agreement or otherwise arising.  If a member fails to pay
promptly the damages and expenses incurred by the Company as a result of the
member's failure to purchase, pay for and take delivery of a lot of Qualifying
Pigs, such member will not be permitted to purchase any other lots unless and
until such damages and expenses are paid, and such member also will be
responsible for all damages and expenses accruing to the Company with respect to
lots that such member is not permitted to purchase as a result thereof.  In
addition to the member's responsibility for such damages and expenses, the
Company may pursue other remedies, including the termination of the member's
Feeder Pig Purchase Agreement.  If the member is prevented from performing under
the Feeder Pig Purchase Agreement because of reasons beyond the member's control
which make it commercially impossible to perform, however, then the member is
relieved from such performance so long as it remains commercially impossible to
perform.  See "Description of Business -- Feeder Pig Purchase Agreement -- Term
and Termination" and "-- Grant of Security Interest."

     Grant of Security Interest.  Pursuant to the Feeder Pig Purchase Agreement,
a member grants to the Company, as security for the performance of all of the
member's obligations under the Feeder Pig Purchase Agreement, a security
interest in all of the member's equity interest in the Company.  In this regard,
the certificates representing shares of Common Stock will be retained by
Alliance and members will be required to endorse appropriate stock powers with
respect to such certificates.  The Company's security interest in the member's
shares of Common Stock is to be senior to all others, except for any permissible
pledge or other security interest granted in such shares by the member to any
financial institution for purposes of securing a loan used in financing the
member's acquisition of such shares and as otherwise agreed by the Company in
its discretion.  A member's failure to perform his purchase obligation under the
Feeder Pig Purchase Agreement, among other occurrences, may result in the
Company's foreclosure on the security interest in the member's Common Stock.
See "Absence of Market" under Item 5.

     Warranties.  The Company makes no warranties, express or implied, with
respect to feeder pigs produced by it, except as expressly provided in the
Feeder Pig Purchase Agreement.  The Company specifically disclaims any
warranties of merchantability or fitness for a particular purpose and makes no
warranty as to any specific level of performance with respect to any pigs sold
thereunder.

     Arbitration.  Any controversy arising out or relating to a Feeder Pig
Purchase Agreement or any breach thereof (other than certain controversies that
include, but are not limited to, controversies arising out of a member's failure
to purchase, pay for, and take delivery of any lot of Qualifying Pigs and the
Company's exercise of any rights or remedies related thereto) is required to be
submitted to binding arbitration under the Feeder Pig Purchase Agreement.
Arbitration hearings are to take place in Denver, Colorado, or at such other
location as the Company and such member may agree, with judgment upon the award
rendered by the arbitrator being entered in any court having jurisdiction.


ITEM 2. DESCRIPTION OF PROPERTY.


     As of the date of this report, the Company conducts operations from its
five existing 2,450-sow production facilities located in Yuma County, Colorado
(approximately 150 miles east of Denver), and from its one existing 2,450-sow
production facility in Wayne County, Illinois.  The original Yuma County,
Colorado facility was constructed in a configuration different than that
employed with respect to the Company's other facilities and is anticipated to be
different than that employed for future facilities.  The original facility
consists of six separate buildings, including two breeding buildings, two
gestation buildings, and two farrowing buildings, all of which are situated
together on an approximately 160 acre site with a separately accessed nursery
building, while each of the Company's other facilities consist of a
three-building sow breeding, gestation and farrowing complex situated together,
with a separately accessed nursery building.   Management believes that the
condition of its facilities presently is adequate for the Company's business,
and that its facilities are adequately covered by insurance.  Each of the
existing facilities, including land and buildings, was constructed for between
$2,243,000 and $2,495,000, and has been or will be pledged as security for the
Company's loan from CoBank under the terms of a deed of trust/mortgage.

     Between September and December 1995, the Company purchased approximately
1,000 acres of real property in Yuma County, Colorado, upon which the Company
has developed one 2,450-sow production facility and holds the remaining acreage
for the development of additional production facilities (the "Additional
Colorado Property").  The acquisition cost of this Additional Colorado Property
was approximately $760,000.  The Company obtained funding for the purchase of
the Additional Colorado Property from the proceeds of a loan obtained from
Farmland.  In conjunction with this loan, the Company delivered to Farmland a
promissory note evidencing the debt providing for the amortization of the loan
over a ten-year period, at a variable rate equal to CoBank's prime rate.  As of
August 31, 1996, CoBank's prime rate was 8.25%.  The payment schedule of the
promissory note requires that the Company make interest-only payments for the
life of the loan, with a final balloon payment of the principal at the
expiration of the ten-year term.  To secure the obligations of the promissory
note, the Company has agreed to execute a deed of trust in favor of Farmland
covering all of the Additional Colorado Property, which deed of trust is second
in priority to that of CoBank with respect to the 2,450-sow production facility
constructed thereon.

     As of the date of this report, the Company has acquired approximately 442
acres of real property in Wayne County, Illinois, including a 90 acre tract
acquired pursuant to the exercise of the option referred to below.  The Company
has developed one 2,450-sow production facility on these 442 acres.  In
addition, as of the date of this report the Company has commenced preliminary
development activities with respect to a second 2,450-sow facility located on
this property.  See "Description of Business--Expansion."

     In November 1996, the Company entered into a contract pursuant to which the
Company has been granted the option to purchase approximately 500 acres of real
property in Wayne County, Illinois (the AOption Property@).  Under the terms of
this option contract, if the Company fails to fully exercise the option as to
the entire Option Property prior to November 1998, the Company shall be
responsible for a $150,000 liquidated damages payment to the owner of the Option
Property.  The Company's responsibility for this liquidated damages payment is
secured by a stand-by letter of credit issued by CoBank.  Until the expiration
of this letter of credit, the revolving term credit available to the Company
will be reduced by $150,000.  In November 1996, the Company exercised its rights
under this option contract to acquire an approximately 90 acre tract of the
Option Property, including 45 acres  (the A45 Acre Tract@) on which the Company
intends to develop a second Illinois sow production facility.  The Company
obtained funding for the purchase of the 45 Acre Tract from the proceeds of a
loan provided by Farmland.  In conjunction with this loan, the Company delivered
to Farmland a promissory note evidencing the debt provide for amortization over
a ten-year period, at a variable rate equal to CoBank's then national variable
rate plus 1.25%.  The payment schedule for the Farmland loan would require the
Company to make interest-only payments for the life of the loan, with a final
balloon payment of all principal to be made upon the earlier of (i) the
Company's next issuance and sale of a minimum block of 17 shares of Common
Stock, and (ii) the expiration of ten years.  It is anticipated that Alliance's
obligation to Farmland under this note will be secured by a mortgage on the 45
Acre Tract.

     The Company anticipates that it will contract with Central Confinement,
Inc., Columbus, Nebraska, for the construction of the second facility situated
in Wayne County, Illinois.  Design and construction of these facilities would be
handled by the contractor on a "turn-key" basis.  The Company would be
responsible for obtaining all applicable permits and would arrange for site
excavation, fill sand, driveways, electrical service, wells and fresh water,
manure pipes, manure storage, domestic sewer system, and exterior recycle pump
and exterior pipes from the buildings.  It is anticipated that Farmland will be
coordinating these services for the Company.

     The Company maintains its administrative offices at 302 Idlewild Street in
Yuma, Colorado.  This office space has been made available to the Company by
Farmland at no cost to the Company.


ITEM 3.  LEGAL PROCEEDINGS.


     There are no material pending legal proceedings to which the Company is a
party or to which any of its property is subject.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.


     No matter was submitted to a vote of the security holders of the Company
during the fourth quarter of the fiscal year ended August 31, 1996.


                                   PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.


ABSENCE OF MARKET

     There is no public trading market for the Company's Common Stock, $.01 par
value per share.  The Common Stock is subject to provisions of the Colorado
Cooperative Association Law and the Company's Articles of Incorporation and
Bylaws which restrict the transferability of the Common Stock.  In particular,
the Colorado Cooperative Association Law and the Company's Articles of
Incorporation provide that the certificates of membership in the Company (which
also represent shares of Common Stock of the Company) shall not be assignable or
transferable except upon consent of the Board of Directors, and that the Company
shall have the right in its Bylaws to limit the transfer or assignment of
membership and the terms and conditions upon which transfers or assignments may
be allowed.  The Company's Bylaws provide that the equity interests issued by
the Company may not be assigned or transferred, except upon the consent of the
Company's Board of Directors, and that the Company's Board of Directors may not
give such consent unless such assignee or transferee executes and delivers to
the Company a Feeder Pig Purchase Agreement.  The transfer agent for the Common
Stock is the Secretary of the Company.

     In addition to the foregoing transfer restrictions, the Company's Bylaws
give the Company the right to purchase a member's Common Stock under certain
circumstances, which may adversely affect transferability.  Such right is in
addition to any right the Company may have to foreclose on the security interest
in member's Common Stock pursuant to the Feeder Pig Purchase Agreement.  In
particular, the Company has the option under its Bylaws to purchase a member's
shares of Common Stock upon the occurrence of certain specified events (a) by
tendering to the member (i) the lesser of (A) the price paid to the Company for
such investor's shares of Common Stock, and (B) the book value of the Common
Stock and capital credits associated therewith, less (ii) any indebtedness due
the Company from the member, or (b) by tendering to the member a nonvoting
certificate of participation representing the member's interest at the time of
such tender in a face amount equal to the amount specified in clause (a) above.
The occurrences giving rise to such option include the following events: (a) a
member's termination of a Feeder Pig Purchase Agreement without having executed
and delivered a replacement Feeder Pig Purchase Agreement or a member's failure
to be a party to a Feeder Pig Purchase Agreement, and (b) the Company's Board of
Directors by resolution finds that a member has (i) intentionally or repeatedly
violated any provision of the Company's Articles of Incorporation or Bylaws,
(ii) breached a Feeder Pig Purchase Agreement or materially breached any other
contract with Company, (iii) remained indebted to the Company for 90 days after
such indebtedness first becomes payable, or (iv) willfully obstructed any lawful
purpose or activity of the Company.  In the event the Company exercises either
option, the voting stock of the member shall be cancelled, and the member shall
thereafter have no voting rights in the Company.  The Company is under no
obligation, however, to redeem or repurchase an investor's Common Stock at any
time.  See "Description of Business -- Feeder Pig Purchase Agreement" under 
Item 1.

HOLDERS

     The authorized capital stock of the Company consists of 10,000 shares of
Common Stock, $.01 par value per share.  As of August 31, 1996, there were 102
shares of Common Stock outstanding, which were held of record by 17
stockholders.  Only producers of agricultural products, associations of such
producers, and federations of such associations who have executed and delivered
to the Company a Feeder Pig Purchase Agreement may own Common Stock, and only
stockholders of the Company may be members of the Company.  Holders of Common
Stock are entitled to one vote for each share held on all matters submitted to a
vote of stockholders, except that during any period in which the Company has
borrowed money from a lender subject to regulations of the Farm Credit
Administration regarding loan policies and operations (such as the Company's
current lender), no cooperative association stockholder is permitted to vote
shares of Common Stock representing 25% or more of the shares then outstanding.

PATRONAGE DISTRIBUTIONS AND ABSENCE OF DIVIDENDS

     No dividends have been, or will be, paid by Alliance on its Common Stock.
The Company intends to distribute, however, at least annually, all of its net
margins, if any, as patronage distributions to its stockholders on the basis of
the quantity or value of business done by the Company with or for each
stockholder with respect to feeder pigs sold pursuant to the Feeder Pig Purchase
Agreements or the Swine Production Services Agreement.   The Company's "net
margins" for this purpose generally are equal to the Company's gross receipts
attributable to patronage sourced business reduced by all related expenses which
are deductible for federal income tax purposes (other than any deduction for
payment of patronage distributions).  A stockholder's share of the Company's net
margins will be payable to him or her after the close of each fiscal year.  The
Company's Board of Directors has the right to pay the patronage distribution in
qualified written notices of allocation, non-qualified written notices of
allocation, cash or any combination thereof.  The written notices of allocation
will be issued in the form of Alliance capital credits.  The extent of the cash
portion of the patronage distributions will be determined annually and will
depend upon the Company's financial condition, results of operation, capital
commitments and other factors deemed relevant by the Board of Directors.  The
Company has entered into various loan agreements and other documentation with
its existing lender which restrict the Company's ability to pay patronage
distributions in cash.  See "Description of Business -- Financing" under Item 1.
The Company's Board of Directors has authorized, with the consent and approval
of CoBank, the payment of a $670,167 rebate to its members with respect to
feeder pigs sold to such members by Alliance during the fiscal year ended August
31, 1996.  No assurances can be given that such rebate will be paid.  The
Company does not intend to make any future rebate payments to its members.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.


EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS MADE IN
THIS REPORT ON FORM 10-KSB ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES.  ALLIANCE=S ACTUAL RESULTS, FINANCIAL CONDITION OR BUSINESS COULD
DIFFER MATERIALLY FROM ITS HISTORICAL RESULTS, FINANCIAL CONDITION OR BUSINESS,
OR THE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR BUSINESS CONTEMPLATED BY
SUCH FORWARD-LOOKING STATEMENTS.  FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW UNDER THE
CAPTION "FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL
CONDITION OR BUSINESS," AS WELL AS THOSE DISCUSSED ELSEWHERE IN ALLIANCE'S
REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

     GENERAL.  The Company commenced operations in July, 1994, following its
acquisition of the entire equity ownership rights and interest in Yuma LLC, a
Colorado limited liability company in which Farmland and Yuma Cooperative owned
71.5% and 28.5%, respectively, of the outstanding equity interests.  Subsequent
to the Company's acquisition of Yuma LLC, Yuma LLC was dissolved and liquidated
and Alliance received all assets and liabilities of Yuma LLC and continued the
feeder pig production operations of Yuma LLC as described herein.  As a result
of these transactions, a portion of the financial information presented herein
relates to the financial condition and results of operations of Yuma LLC.  The
results of operations for the year ended August 31, 1994 are principally those
of Yuma LLC, but also include the results of operations of the Company from July
9, 1994 to August 31, 1994.  The results of operations for the years ended
August 31, 1996 and 1995, respectively, are entirely the results of operations
of the Company.  Unlike Yuma LLC,  Alliance was burdened with debt financing
costs during the development and start-up of its feeder pig production
facilities.  In addition, Alliance generally produces feeder pigs of lighter
weight than those of Yuma LLC, and sells its feeder pigs at prices lower than
the price at which Yuma LLC sold its feeder pigs.

     FISCAL YEARS ENDED AUGUST 31, 1996 AND 1995.  Shipments of feeder pigs were
higher for the fiscal year ended August 31, 1996 than in the prior year=s
period.  Alliance shipped 148,926 feeder pigs during fiscal 1996 compared to
46,858 feeder pigs shipped during fiscal 1995, an increase of approximately
218%.  Net sales for the fiscal year ended August 31, 1996 increased to
$7,037,927 from $1,554,113 for the prior year, an increase of $5,438,814 or
approximately 350%.  This increase in volume and sales dollars is primarily due
to four units operating for the fiscal year ended August 31, 1996 versus one
unit for the fiscal year ended August 31, 1995 and the change in Alliance's
contract price, effective July 13, 1995, to include $4.50 per pig in addition to
the financing cost and operating cost on which the price was previously based.

     Alliance=s sales for the fiscal year ended August 31, 1996 have been
reduced by the accrual of a rebate of  $670,167 that is intended to be paid to
its members with respect to feeder pigs sold to such members by Alliance during
such fiscal year.  See "Patronage Distributions and Absence of Dividends" under
Item 5.  Alliance incurred a positive gross margin of $615,088 and a negative
gross margin of $282,275 for fiscal 1996 and 1995, respectively.  This
improvement in gross margin is primarily due to the nature of the contractual
pricing arrangements applicable to the Company's sale of feeder pigs to its
members.  The selling price for Alliance's feeder pigs is based on, among other
things, the 12-month rolling average of operating costs per pig.  For the fiscal
year ended August 31, 1996, the Company's operating costs at the time pigs were
sold (the then current operating costs) exceeded the historical rolling average
of operating costs by $0.09 per head sold.  For the fiscal year ended August 31,
1995, the Company's then current operating costs exceeded the historical rolling
average of operating costs by $6.37 per head sold.  The substantial difference
between fiscal 1995's then current operating costs and historical rolling
average operating costs is principally due to Alliance's culling of a greater
portion of its herd than is customary in order to accommodate their replacement
with multiplier unit animals, in addition to the resulting decline in
production.

     Sales to Farmland (including sales to Farmland of Yuma Cooperative's share
of feeder pigs produced by the Company) for fiscal 1996 and 1995 were $5,035,160
and $1,467,069, respectively.   The average net sales price per head was $48.12
and $33.16 and the average industry market price per head was $41.15 and $32.17
during 1996 and 1995, respectively.

     Alliance recorded start-up costs of $426,926 and $754,756 relating to the
operation of new production facilities during the fiscal years ended August 31,
1996 and 1995, respectively, and conversion of the existing unit to a multiplier
unit during the fiscal year ended August 31, 1995.  All costs for the fiscal
year ended August 31, 1996 and $647,751 of the costs for the fiscal year ended
August 31, 1995 were comprised of utilities, feed, labor and other general
expenses prior to the operation of the new 2,450-sow feeder pig production
facilities, and $107,005 of the costs for the fiscal year period ended August
31, 1995 were attributable to the conversion of the existing 2,450-sow feeder
pig unit from a commercial sow unit to a multiplier sow unit.

     Loss on sale of breeding stock was $226,738 for the fiscal year ended
August 31, 1996 as compared to $112,797 for the prior year period.  This
increase is attributable to the existence of newly developed facilities in
fiscal 1995, from which culling of animals was not necessary until near the end
of that fiscal year, as compared to more mature facilities in fiscal 1996, from
which culling of animals occurred throughout that fiscal year.

     Administrative expenses were $369,787 for the fiscal year ended 1996
compared to $101,927 for the prior year period.  This increase reflects the
increased operations and includes higher administrative, payroll and
professional fees.

     Interest expense of $1,001,329 for fiscal 1996 compared to $289,082 for
fiscal 1995 was incurred in financing the development of the four existing and
two new 2,450-sow feeder pig facilities.

     Alliance incurred a net loss of $1,343,087 for the fiscal year ended August
31, 1996 compared to a net loss of $1,513,328 for the prior year period.  The
fiscal 1996 loss was attributable to $426,926 of start-up expenses related to
the development of two feeder pig production facilities and a loss of $226,738
on the sale of breeding stock.  The remaing amount of the net loss is primarily
attributable to current costs exceeding the rolling average cost that per pig
prices are based on, caused in part by high death loss due to herd health
issues, as well as rising corn prices.  The fiscal 1995 loss was attributable to
$754,756 of start-up expenses related to facilities development and a loss of
$112,797 on the sale of breeding stock.  In addition, the Company's operating
costs at the time pigs were sold during both fiscal 1996 and 1995 exceeded the
historical rolling average of operating costs from which the selling price for
pigs was based. During all of fiscal 1996, the selling price for Alliance's
feeder pigs was based on the 12-month rolling average of operating costs per
pig, the debt service financing cost per pig, and a $4.50 per pig production
margin.  The Company accrued a $670,167 rebate, however, that is intended to
provide each member with a $4.50 payment per pig sold to such member during
fiscal 1996; thereby effectively eliminating the production margin.  The $4.50
per pig production margin was not added to the price of feeder pigs sold during
fiscal 1995 until after July 13, 1995.  In addition operating risks and
uncertainties associated with any business, the Company's ability to generate
net income is limited by any start-up expenses that are incurred with respect to
facilities development, by the Company's selling price formula for feeder pigs
that contains a $4.50 production margin, and by the possible return of all or a
portion of such rebate to the Company's members.

     FISCAL YEARS ENDED AUGUST 31, 1995 AND 1994.  Shipments of feeder pigs from
the Company's feeder pig production facilities were sustained at approximately
the same level for the fiscal year ending August 31, 1995 as were made in the
prior fiscal year.  The Company shipped 46,858 feeder pigs in the fiscal year
ended August 31, 1995 as compared to 46,014 feeder pigs shipped in the prior
fiscal year.

     Although the level of production for fiscal 1995 was comparable to that for
fiscal 1994, net sales for fiscal 1995 declined to $1,554,113 from $2,309,319
for the prior year period, a decline of $755,206 or approximately 32.7%.  This
decline resulted from a reduction in the average selling price of feeder pigs
from $51.04 per pig in fiscal 1994 to $33.16 in fiscal 1995.  In addition, the
selling price per pig for approximately ten months of fiscal 1995 was determined
pursuant to the formula established under the Company's Interim Feeder Pig
Purchase Agreements with Farmland and Yuma Cooperative, which selling price is
substantially less than would have been obtained under the feeder pig marketing
agreement to which Yuma LLC was a party in fiscal 1994.  Finally, the Company
currently markets a feeder pig of lighter weight than that previously marketed
by Yuma LLC in fiscal 1994, which further accounts for the reduction in the
sales price per pig.  The decline in net sales more than offset the $75,880
reduction in cost of goods sold from $1,912,268 in fiscal 1994 to $1,836,388 in
fiscal 1995.

     In fiscal 1995, the Company incurred expenses of $754,756 related to the
start-up of three feeder pig production facilities and the conversion of the
existing facility to a multiplier unit.  The start-up costs attributable to the
three new facilities, including utilities, feed, labor and other expenses,
accounted for $647,751 and the remaining $107,005 was due to the conversion of
an existing feeder pig facility to a multiplier unit and the related replacement
of commercial sows with more expensive multiplier sows.  This conversion began
in August 1994 and was substantially complete in January 1995.  Productivity
declined to an average of 17.4 feeder pigs per sow in inventory for fiscal 1995
from an average of 18.8 feeder pigs per sow in the prior fiscal year as the
Company culled a greater portion of its herd than was customary in order to
accommodate their replacement with multiplier unit animals.  This herd culling
also accounts for the increased loss on sale of breeding stock from $56,474 for
the year ended August 31, 1994 to $112,797 for fiscal 1995.  With the completion
of the facility conversion, management is hopeful that productivity and loss on
sale of breeding stock levels will be comparable to fiscal 1994 levels.  No
start-up and conversion expenses were incurred by the Company in fiscal 1994.

     Administrative expenses were $101,927 for the year ended August 31, 1995 as
compared to $36,629 for the prior fiscal year.  This increase was attributable
to $26,932 of amortization expenses for organizational costs and loan
origination fees, $33,102 of legal fees and $41,893 of miscellaneous expenses,
including administrative employee salaries and office equipment lease payments.

     Interest expense was $289,082 for the year ended August 31, 1995 as
compared to $1,375 for the prior year period.  Interest for the year ended
August 31, 1995 was due to interest incurred on financing the construction of
three feeder pig production facilities.  After repaying the remaining balance of
its long-term debt in October, 1993, the Company had no long-term indebtedness
for the remainder of fiscal 1994.  As of August 31, 1995 Alliance had borrowed
$9,165,000 from CoBank.

     LIQUIDITY AND CAPITAL RESOURCES.  At August 31, 1996, the Company reported
a working capital deficit of $257,702 and total assets of $20,845,613.  The
Company issued 17 shares of Common Stock in August 1995 and 17 additional shares
in October 1995 for aggregate net proceeds of approximately $2,605,600.  The
Company has used these funds, in combination with borrowings of $5,939,000
through August 31, 1996, for the development, population, and start-up of one
2,450-sow feeder pig production facility in Yuma County, Colorado and one 2,450-
sow feeder pig production facility in Wayne County, Illinois.

     As of the date of this report, the Company has 102 shares of Common Stock
issued and outstanding and is offering an additional 51 shares of Common Stock
to qualified prospective investors.  As of August 31, 1996, Alliance had
$779,000 immediately available to it under its credit facility with CoBank.
Another $422,000 of term loans is to be made available by CoBank approximately
90 days following completion of construction of the Company's facilities under
development.  Of the $779,000 available at August 31, 1996 and the $422,000 to
be made available under the credit facility, Alliance anticipates that
approximately $655,000 would be required to complete construction of the newest
unit and $546,000 would be available for working capital purposes due to the
previous funding of some of such construction costs with working capital.  In
the opinion of management, these arrangements for debt capital are adequate for
Alliance=s present operating and capital plans.  In the event that an additional
51 shares of Common Stock are issued and sold prior to the February 28, 1997
expiration of the CoBank loan commitment, another $8,160,000 would be eligible
for borrowing.  The net proceeds from any such sale of Common Stock, together
with such additional borrowings, would be used for future capital expansion of
up to three additional feeder pig production facilities.  There can be no
assurance that any additional shares of Common Stock will be sold and that the
additional borrowing required for such capital expansion would be available.

     During the fiscal year ended August 31, 1996, Alliance incurred capital
expenditures of $6,770,862 for the construction of a new 2,450-sow feeder pig
production facility in Yuma County, Colorado and a new 2,450-sow feeder pig
production facility in Wayne County, Illinois, as well as capital expenditures
of $636,424 for the acquisition of real property on which additional facilities
could be developed.  The remaining capital expenditures were for replacement of
breeding stock and the completion of construction related to the Company's first
four facilities.

     Alliance estimates that an additional $385,000 of facilities development
costs will be incurred before the two facilities under development are operating
at full capacity, which cost are to be funded by additional borrowings from the
Company's existing credit facility.

     On May 19, 1995, the Company entered into various loan documents with
CoBank related to a $23,600,000 secured credit facility.  This credit facility
provides for up to $18,850,000 of  non-revolving term debt and $4,750,000 of
revolving term credit.  Proceeds from the term debt may be used for construction
of feeder pig production facilities and are advanced by CoBank as construction
costs are incurred by Alliance.  Proceeds from revolving term credit may be used
for working capital and other purposes.  The actual advance of funds under this
credit facility is subject to the satisfaction of certain conditions precedent
and may be withdrawn or terminated by CoBank under certain circumstances.  In
addition, the unused portion of the credit facility expires February 28, 1997
with respect to the non-revolving term debt and June 20, 2006 with respect to
the revolving term credit.  No assurances can be given that the funding
conditions precedent will be satisfied and that the Company will be able to
obtain sufficient financing when needed, or that alternative sources of
financing will be available on acceptable terms.

     The availability of non-revolving term debt and revolving term credit under
the CoBank credit facility is subject to specified equity investment levels in
the Company being satisfied.  As of August 31, 1996, no additional term loans
were immediately available to the Company, $422,000 of terms loans were
available upon CoBank=s final acceptance and approval of the feeder pig
production facilities then under development, and $779,000 of revolving term
credit was immediately available.  The availability of the unused $6,330,000
term loan and $1,830,000 revolving term credit under the CoBank credit facility
is restricted and may be made available to the Company only to the extent that
additional equity investment is made in the Company.  With respect to each
additional equity investment of $1,360,000 obtained by the Company (e.g., 17
shares of Common Stock sold for $80,000 each), the Company is entitled to obtain
advances under the credit facility of $2,720,000 ($2,110,000 of term loans and
$610,000 of revolving term credit), up to an aggregate of $8,160,000.  See
"Description of Business--Financing" under Item 1.

     Installments of principal and interest under the Company's credit facility
are payable monthly in arrears by the 20th day of the month.  Principal payments
with respect to the initial $8.3 million of non-revolving term loans are to be
made in 114  monthly installments of $72,500 each, beginning January 20, 1996,
with the remaining unpaid balance being due and payable on July 20, 2005.
Principal payments pursuant to the loan terms with respect to each $2,100,000 of
new non-revolving term loans are to be made in monthly installments of $18,700
each, beginning on the 20th day of the eighteenth month following the date of
the initial advance of such $2,110,000 loan.  Principal payments pursuant to the
loan terms with respect to the revolving term loan are to be made in 24 equal
monthly installments of the principal that is outstanding as of the June 20,
2006 expiration of the revolving loan commitment, beginning on the 20th day of
the month following the payment in full of the new non-revolving term loan (but
in no event later than March 20, 2008).  Interest accrues on the outstanding
principal balance of the loan at a rate equal to either (i) a variable rate
equal to CoBank's then national variable rate plus 1.25%, or (ii) CoBank's then
quoted rates for fixed rate loans, as may be elected from time to time by the
Company.  As of August 31, 1996, interest accrued on the outstanding principal
balance of the loan at a rate of 9.5% per annum (calculated by adding 125 basis
points to CoBank's national variable rate of 8.25% in effect as of such date).
See "Description of Business -- Financing" under Item 1.

     During the course of the loan, the Company may be required to make equity
investments at a rate not to exceed 1% of the average five-year principal loan
balance (which equity investments may be satisfied out of CoBank's non-cash
patronage distributions) until the Company meets CoBank's target level of equity
investment, which currently is 11.5% of the Company's average five-year
principal loan balance.  In addition, the Company is required to comply with
various affirmative and negative covenants, including but not limited to (i)
maintenance of at least $2,250,000 of equity, plus $550,000 of equity for each
facility developed by the Company after its initial four facilities (the Company
had $4,606,289 of equity as of August 31, 1996), (ii) maintenance of modified
working capital (calculated as current assets, plus available revolving term
credit, minus current liabilities (excluding the current portion of term debt
payments)) of at least $210,000, plus $98,000 of modified working capital for
each facility developed by the Company after its initial four facilities (the
Company had $625,628 of modified working capital as of August 31, 1996), (iii)
provision of monthly financial statements and audited annual financial
statements to CoBank, (iv) restrictions on the occurrence of additional
indebtedness, (v) restrictions on certain liens, mergers, sales of assets,
investments, guaranties, loans, advances and business activities unrelated to
existing operations, and (vi) restrictions on the declaration and payment of the
cash portion of patronage distributions and other distributions or allocations
of the Company's earnings, surplus or assets.  The Company was in compliance
with each of these covenants as of August 31, 1966.  See "Description of
Business -- Financing" under Item 1.

     The Company intends to continue to operate its existing feeder pig
production facilities and sell feeder pigs produced therefrom.  Funding of the
ongoing operation of its facilities will be provided from the sale of feeder
pigs and available working capital.  The Company believes that such funding
sources are adequate for current operations.

     Cash used by Alliance in its operating activities totaled $280,449 during
the fiscal year ended August 31, 1996 compared with $1,045,286 in the prior year
period  This decrease in cash used reflects the improvement in operations before
provision for depreciation and amortization and accrual for rebates offset in
part by increased inventories.  Other major uses of cash include $8,808,889 for
capital additions or improvements, $1,366,333 for acquisition of additional
inventory and $580,000 for payments applied to the Company=s outstanding long
term debt.

     Major sources of cash include $1,321,683 received from the issuance and
sale of 17 shares of the Company=s Common Stock, $3,798,000 of long term debt,
and an increase of $1,276,000 in the Company=s revolving term credit.

     INCOME TAXES.  The Company is a Colorado cooperative association.  Results
of its operations for the years ended August 31, 1996 and 1995 were a loss of
$1,343,087 and $1,513,328, respectively.  Deferred income taxes have not been
provided, because all sales are to members and all future sales are anticipated
to be to members.  Accordingly, no taxable income resulted for any of these
periods and no provision is made for income taxes by the Company.

     INFLATION.  Inflation is believed to have a relatively minor impact on the
operations of the Company.  While certain costs, such as salaries, are affected
by inflation, the Company believes that the factors which most affect its
results of operations are the cost of feed and other inputs and the productivity
of the breeding stock herd which are each influenced by a variety of factors.
Further, the Company will sell its feeder pig production under terms which cause
the sales price of feeder pigs to be adjusted for changes in the cost of
production per unit, including increases in costs caused by inflation.  The
precise impact of inflation on the Company's costs is not readily ascertainable.

RECENT ACCOUNTING PRONOUNCEMENT

     Statement of Financial Accounting Standards No. 121 - Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of
("Statement 121") is effective for fiscal years beginning after December 15,
1995 (Alliance=s 1997 fiscal year).  Statement 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangible assets and goodwill related to those assets to be held and used and
for long-lived assets and certain identifiable intangibles to be disposed of.
Management expects the adoption of Statement 121 will not have a significant
impact on Alliance=s financial statements.

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR
BUSINESS

     In order to take advantage of the safe harbor provisions for
forward-looking statements contained in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, added to those Acts by the Private Securities Litigation Reform Act of
1995, Alliance is identifying important risks and uncertainties that could cause
Alliance=s actual results of operations, financial condition or business to
differ materially from its historical results of operations, financial condition
or business, or the results of operations, financial condition or business
contemplated by forward-looking statements made herein or elsewhere orally or in
writing.  Factors that could cause or contribute to such differences include,
but are not limited to, those factors described below.

     EARLY STAGE OF DEVELOPMENT.  Alliance was formed in May, 1994 (with its
predecessor, Yuma LLC, being formed in October, 1991) and is at an early stage
of development.  Accordingly, it is subject to all of the risks inherent in the
establishment of a new business and the operation of a business generally,
including the need for substantial capital to support its facilities development
efforts, the need to attract and retain qualified personnel and experienced
management, the risks related to facility location and construction, changes in
market conditions and costs, competition, inflation, production efficiency,
quality control, herd health, environmental and other governmental laws and
regulations, and the other risks described in this Report.  There can be no
assurance that Alliance successfully will implement its business plan to develop
additional feeder pig production facilities and realize any significant
economies of scale or that the feeder pigs to be raised at such facilities will
be made available to Alliance's stockholders under the Feeder Pig Purchase
Agreements in quantities which are sufficient to meet the requirements of such
stockholders and at prices that are less than otherwise could be obtained from
other sources.

     BREEDING STOCK.  The availability in sufficient numbers of genetically
consistent breeding stock that satisfies the characteristics required by the
Company and that can be obtained on acceptable terms and prices is critical to
the Company's operations.  No assurances can be given that the Company's
requirements for breeding stock will be satisfied on acceptable terms and
prices, if at all.

     HERD HEALTH.  The health of the breeding herd and feeder pigs produced by
Alliance can greatly impact, and has greatly impacted, the profitability of
Alliance.  In the event that Alliance's breeding herd or feeder pig population
contracts a disease causing diminished breeding stock productivity, or extreme
mortality and morbidity, Alliance will face substantial cost or loss and its
operating results will be adversely affected.  In addition, herd health problems
could result in an increase in the price for feeder pigs under the Feeder Pig
Purchase Agreements as well as a reduction in the feeder pigs available for
purchase by stockholders under said Agreements.  Alliance and its members have
suffered the consequences referred to in this paragraph as a result of herd
health problems.  Although Alliance's facilities have been designed in an
attempt to allow for disease separation between the facilities, large numbers of
animals will be raised together and may be vulnerable to disease.  No assurance
can be given that Alliance will be able to avoid herd health problems.

     VOLATILE INPUT COSTS.  Because the cost of feed and other supplies
constitute a substantial portion of the cost of producing a feeder pig,
Alliance's profitability is extremely sensitive to changes in the cost of such
inputs.  These costs are subject to substantial fluctuations based upon regional
and seasonal availability and demand, including those attributable to crop
conditions, weather and other factors.  A substantial increase in the cost of
these inputs, or a substantial decline in the availability of these inputs,
could materially adversely affect the performance of Alliance and result in the
price for feeder pigs under the Feeder Pig Purchase Agreements being higher than
otherwise could be obtained from other sources.  Moreover, Alliance's operating
results are dependent upon the sale price paid to Alliance for feeder pigs,
which in turn is determined in part based on the twelve month historical rolling
average of operating costs incurred by Alliance in producing feeder pigs.
Actual changes in the sale price of feeder pigs therefore will lag changes in
the related operating costs and may adversely affect Alliance's operating
results, particularly in the event of sudden movements, or continual increases,
in such operating costs.

     ADEQUATE WATER SUPPLY.  Alliance's operations are dependent upon the
availability of an ample supply of pure water at reasonable cost.  Although
Alliance has obtained the necessary commercial water well permits to obtain the
water necessary to conduct its current operations in Colorado, Alliance has been
advised that it will be unable to obtain any new commercial well permits in
Colorado.  Accordingly, Alliance has found it necessary in Colorado to obtain
the water necessary for its operations through the purchase of more expensive,
irrigated land or other real property already having the necessary commercial
well permits.  No assurance can be given that Alliance will be able to obtain
the water permits necessary to enable it to expand its operations in Colorado,
Illinois or other locations selected by Alliance.  Alliance's inability to
obtain the necessary water well permits for the expansion of its operations
could have a material adverse effect on Alliance's business.

     OBLIGATION TO PURCHASE FEEDER PIGS.  Each member of Alliance has entered
into a Feeder Pig Purchase Agreement, pursuant to which such member is obligated
to purchase his or her proportionate share of Alliance's feeder pig production
for an initial term of ten years and, unless earlier terminated by the member,
for succeeding one year renewal terms.  Feeder pigs are made available to
members of Alliance on a rotating schedule determined and implemented by
Alliance, with the number of lots made available to a member and the frequency
of availability being based upon the member's proportionate equity interest in
Alliance and the actual production of Qualifying Pigs from Alliance's
facilities.  No assurance can be given that the availability of feeder pigs to
members will coincide with the member's needs or capacity to take delivery.

     The purchase price for feeder pigs is established pursuant to a formula
consisting of the sum of the following factors:  the financing cost per pig, the
operating cost per pig, and a $4.50 per pig production margin (all as defined in
the Feeder Pig Purchase Agreement).  The effect of such pricing is to shift the
risks of increasing production costs and lower market prices for feeder pigs
from Alliance and to the member.  No assurance can be given that the price for
feeder pigs under the Feeder Pig Purchase Agreements will be less than otherwise
could be obtained from other sources.  Among other factors, a substantial
increase in operating costs, including the costs of feed and other supplies and
the costs associated with diminished breeding stock health or productivity, or
extreme mortality and morbidity, could result in a higher price to be paid by
members for feeder pigs than otherwise could be obtained from other sources.
Moreover, the prevailing market price for feeder pigs could decline below the
price to be paid for feeder pigs under the Feeder Pig Purchase Agreements.

     UNPURCHASED AND EXCESS FEEDER PIGS.  Each member of Alliance has entered
into a Feeder Pig Purchase Agreement, pursuant to which such member has  agreed
to purchase his or her proportionate share of Alliance's feeder pig production.
The failure of Alliance's stockholders to purchase their respective share of
Alliance's feeder pig production could materially adversely affect the
performance of Alliance.  In the event that one or more stockholders fail to
purchase their respective share of Alliance's feeder pig production, it will be
necessary for Alliance to find alternate purchasers for its unpurchased feeder
pigs.  In addition, it also may be necessary to find alternate purchasers to the
extent Alliance's production of feeder pigs exceeds two and seven-tenths (2.7)
lots per share of Common Stock on a prospective rolling 12-month basis.
Stockholders will not be obligated under the Feeder Pig Purchase Agreements to
purchase their proportionate share of such excess production.  Although Alliance
has agreed to provide Farmland the first opportunity to purchase feeder pigs
that stockholders have failed to purchase and any excess feeder pig production
during the five year period ending July 13, 1999, no assurances can be given
that Farmland will exercise its option to purchase any such feeder pigs.  In
addition, no assurances can be given that alternate purchasers will be
available, or that any such alternate purchasers will agree to purchase feeder
pigs upon terms as favorable to Alliance as those contained in the Feeder Pig
Purchase Agreements.  To the extent that unpurchased feeder pigs are sold to
alternate purchasers at prices less than would have been obtained under the
Feeder Pig Purchase Agreements, the price for feeder pigs to stockholders may
increase.

     LOSSES ASSOCIATED WITH START-UP.  Alliance was formed recently and has a
limited history of operations.  The development of feeder pig production
facilities entails substantial up front expenditures for the purchase of real
estate, the construction of the facilities, and the acquisition of breeding
stock and for working capital during the initial start-up period for each new
facility.  As a result, Alliance anticipates that the development of feeder pig
production facilities will result in Alliance's continued incurrence of losses.
There can be no assurance that Alliance will become profitable after it ceases
facilities development activities.

     SUBSTANTIAL INDEBTEDNESS.  Alliance is highly leveraged.  The degree to
which Alliance is and will be leveraged could have an adverse impact on
Alliance, including (i) increased vulnerability to adverse general economic and
market conditions, (ii) impaired ability to obtain additional financing for
future working capital, capital expenditures, general corporate or other
purposes, and (iii) dedication of a significant portion of cash provided by
operating activities to the payment of debt obligations and thereby reducing
funds available for operations or distribution.  Alliance's ability to make
required debt service payments in the future will be dependent upon Alliance's
operating results, which are subject to financial, economic and other factors
affecting Alliance, many of which are beyond its control.  Moreover, such
operating results are dependent upon the sale price paid to Alliance for feeder
pigs, which in turn is determined in part based on the twelve month historical
rolling average of operating costs incurred by Alliance in producing feeder
pigs.  Actual changes in the sale price of feeder pigs therefore will lag
changes in the related operating costs and may affect Alliance's ability to
timely make required debt service payments.  No assurance can be given that
Alliance will be able to make required debt service payments.  No person has
agreed to guarantee the obligation of Alliance to make timely debt service
payments.

     ASSETS SECURING DEBT; CREDIT AGREEMENT RESTRICTIONS.  Alliance entered into
various loan agreements and other documentation with Alliance's existing lender,
CoBank.  Pursuant to such loan documentation, Alliance has been, and anticipates
that it will be, required to grant liens on substantially all of its properties
and assets to CoBank and to comply with various affirmative and negative
covenants, including but not limited to (i) maintenance of minimum levels of
working capital, (ii) restrictions on the incurrence of additional indebtedness,
(iii) restrictions on certain liens, mergers, sales of assets, investments,
guaranties, loans, advances and business activities unrelated to existing
operations, and (iv) restrictions on the declaration and payment of dividends or
patronage distributions.  There can be no assurance that Alliance will be able
to achieve and maintain compliance with the prescribed covenants of such loan
documentation.  Alliance has successfully sought and received consents, waivers
and amendments to its loan documentation on various occasions.  If further
consents, waivers or amendments are requested by Alliance, including any such
consents, waivers or amendments required for the payment of rebates on the price
of feeder pigs sold, there can be no assurance that Alliance's lender will again
grant such requests.  The failure to obtain any such consents, waivers or
amendments would reduce Alliance's flexibility to respond to adverse industry
conditions and could have a material adverse effect on Alliance's results of
operations, financial condition and business.  If an event of default occurs
under Alliance's loan documentation, CoBank will have the right to foreclose
upon such collateral.  In addition, the terms of Alliance's financing with
CoBank might adversely affect the ability of Alliance to obtain additional
financing for any future expansion efforts.  No person has agreed to guarantee
the obligation of Alliance to make timely debt service payments.

     FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING.  Alliance is and
will be subject to the risks normally associated with debt financing, including
the risk that Alliance's cash flow will be insufficient to meet required
payments of principal and interest and the risk that indebtedness will not be
able to be refinanced or that the terms of such refinancing will not be as
favorable as the terms of the original indebtedness and thereby increasing the
cost to stockholders of feeder pigs made available under the Feeder Pig Purchase
Agreements.  Alliance anticipates that it will be required to raise additional
capital in order to further expand its operations.  Such capital may be raised
through additional private or public financings, as well as collaborative
relationships, borrowings and other available sources.  If Alliance needs to
raise additional funds, there can be no assurance that additional or sufficient
financing will be available, or, if available, that it will be available on
acceptable terms.  If additional funds are raised by issuing equity securities
of Alliance, dilution to then existing stockholders may result.  If adequate
funds are not available, Alliance may be required to significantly curtail a
portion of its planned operations.

     COMPETITION.  Many of Alliance's existing or potential competitors may have
substantially greater financial, technical and personnel resources than
Alliance.  There can be no assurance that Alliance's competitors will not be
more successful than Alliance in developing and improving pork production
technologies and raising consistent high quality feeder pigs that are more
economical to raise than any which may be developed or raised by Alliance.
Moreover, as additional competitors commence operations, the supply of feeder
pigs may exceed demand and result in a downward pressure on the prevailing
market prices for feeder pigs.  Under the Feeder Pig Purchase Agreements, each
investor is obligated to purchase his proportionate share of Alliance's feeder
pig production based in large part on Alliance's cost of production.
Accordingly, if Alliance is not successful in developing and improving pork
production technologies relative to its competitors or if the prevailing market
prices for feeder pigs decline below those applicable under the Feeder Pig
Purchase Agreements, each member may be obligated to purchase his proportionate
share of Alliance's feeder pig production at a price higher than could be
available from other sources.  Alliance's ability to achieve or maintain cost
competitive feeder pig production operations on an ongoing basis may depend on
its ability to raise additional capital, which may not then be available on
acceptable terms, if at all.

     ANTI-CORPORATE FARMING SENTIMENT.  The development of large corporate
farming operations and concentration of hog production in larger-scale
facilities, such as those of Alliance, has increased dramatically over the last
decade.  This development has engendered opposition from residents of Colorado,
Illinois and other states in which Alliance conducts, or may conduct, its
business operations.  Such opposition may reflect various concerns, including
concerns about pollution and effluent emissions, excessive water use, offensive
odor, humane treatment of animals and the perceived threat to small farmers and
the family farm.  To the extent that public opposition is expressed with respect
to large corporate farming operations such as those of Alliance, national, state
or local laws restricting their operations may be enacted in response, legal
proceedings may be instituted to obtain monetary awards, injunctive orders or
other legal or equitable remedies, potential employees may be dissuaded from
accepting a position with such corporate farming operators, property owners may
be reluctant to sell parcels to such corporate farming operators, or other
consequences may result that could have a material adverse effect on Alliance
and its business.  No assurances can be given that public opposition will not
result in the occurrence of any one or more of such adverse consequences.

     EXPANSION.  The development and successful operation of each new facility
of Alliance depends on various factors, including the availability of suitable
sites, regulatory compliance, the ability to meet construction schedules, the
capabilities of Alliance's contractors, the ability to maintain facility
construction costs within original estimates, the ability of Alliance to manage
its anticipated expansion generally and to hire and train qualified personnel,
and general economic and business conditions.  Many of the foregoing factors are
not within the control of Alliance or its contractors, and therefore no
assurance can be given that Alliance's expansion objectives and goals will be
successfully implemented.

     CONTROL BY CURRENT STOCKHOLDERS; POTENTIAL CONFLICTS OF INTEREST.  As of
the date of this Report, Farmland, Farmers Cooperative Elevator Company, Yuma
Cooperative, and Farmers Cooperative Association collectively own 81 shares of
Alliance's Common Stock, which constitutes approximately 79.4% of Alliance's
outstanding shares.  Although no one cooperative association stockholder is
permitted to vote shares of Common Stock representing 25% or more of the shares
outstanding during any period in which Alliance has borrowed money from a lender
subject to regulations of the Farm Credit Administration regarding loan policies
and operations (such as Alliance's current lender), the above-named stockholders
could exercise a significant degree of influence or control over Alliance with
respect to the election of directors and other matters if they, or several of
them, agree to vote together on such matters.

     Alliance has contracted with Farmland and Yuma Cooperative for the
provision of certain requirements of Alliance, including the supply of feed and
other inputs, breeding stock, and administrative services.  Alliance's
agreements with Farmland and Yuma Cooperative may be modified in the future and
Alliance may enter into additional agreements or transactions with Farmland and
Yuma Cooperative.  Farmland, through its various business divisions,
subsidiaries and affiliates, is engaged in the production of livestock
elsewhere, in the sale of the above described supplies and services to other
parties, and in the slaughter and processing of hogs.  Farmland may have
conflicting interests in the provision of such services to Alliance in light of
its other business activities.  Similarly, Yuma Cooperative also may have
conflicting interests in the provision of goods and services to Alliance.

     ATTRACTION AND RETENTION OF EMPLOYEES.  Alliance is dependent on members of
its management and facilities operations personnel, the loss of whose services
might adversely affect the achievement and success of its planned expansion
activities.  In addition, attracting and retaining qualified facilities
operations personnel is important to Alliance's success.  The inability to
acquire and retain the services of such management and facilities operations
personnel could have a material adverse effect on Alliance's operations and
significantly impact its prospects for success.  Although Alliance has
contracted with Farmland and others to provide certain managerial,
administrative and other services, Alliance can give no assurance that it will
be able to attract and retain the personnel it needs on acceptable terms.

     DISTRIBUTIONS AND DIVIDENDS.  No dividends will be paid by Alliance on its
Common Stock.  Alliance, however, intends to make annual patronage distributions
of its net margins, if any, to its members on the basis of the quantity or value
of business done by Alliance with or for the member-patrons.  Such patronage
distributions may be paid in cash, written notices of allocation, whether
qualified or non-qualified, or a combination thereof, as determined by
Alliance's Board of Directors in its sole discretion.  Alliance has entered into
various loan agreements and other documentation with its existing lender which
restrict Alliance's ability to pay patronage distributions in cash.

     GOVERNMENT REGULATION.  Alliance is subject to various federal, state and
local government regulations, including those restricting certain types of
investor-owned livestock production operations and those concerning the
environment, occupational safety and health, and zoning.  While Alliance
attempts to monitor all aspects of its regulatory compliance responsibilities,
there can be no assurance that it will satisfy all applicable governmental
regulations or obtain all required approvals.  Failure to comply with applicable
regulations can, among other things, result in fines, suspensions of regulatory
approvals, operating restrictions, and criminal prosecution.  Changes in or
additions to applicable regulations also could adversely affect Alliance and its
business.

     ADDITIONAL FACTORS.  Additional risk and uncertainties that may affect
future results of operations, financial condition or business of Alliance
include, but are not limited to: the effect of economic and industry conditions
on prices for Alliance's feeder pigs and its cost structure; the ability to keep
pace with technological change timely and cost-effectively and to provide better
service and remain competitive; adverse publicity, news coverage by the media,
or negative reports by industry analysts regarding Alliance or its feeder pigs
which may have the effect of reducing the reputation and goodwill of Alliance;
the ability to attract and retain capital for growth and operations on
competitive terms; and changes in accounting policies and practices.


ITEM 7.  FINANCIAL STATEMENTS.


     The financial statements required by this Item are located at the back of
this report on the pages indicated in Item 13.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE.


     None.


                                   PART III


ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.


DIRECTORS AND EXECUTIVE OFFICERS

     The names of the current directors and executive officers of the Company
(and all persons nominated or chosen to become such), their ages and present
positions and offices with the Company are as follows:

     Name         Age         Position and Offices Held


     Wayne N. Snyder          52        Chairman of the Board, President and
                                           Director

     Scott R. Webster         35        Vice President and Chief Operating
                                           Officer
                                         
     Doug Brown               38         Treasurer, Secretary and Director
                          
     Merl Daniel              51         Director

     Gerald D. Johnson        53         Director

     Loren Keppy              35         Director

     Set forth below is a description of the business experience of each
director and executive officer of the Company.

     Wayne N. Snyder has served as Chairman of the Board, President and Director
of the Company since its formation in May 1994, and has served as General
Manager of Yuma LLC, the Company's predecessor, from October 1991 to July 1994.
Mr. Snyder has served as Director of Livestock Production for Farmland since
1989.  In that capacity, he is responsible for all activities of Farmland's
livestock production department.  His professional career includes over 20 years
of experience with Farmland in a variety of positions, including Regional
Manager and Vice President -- Sales.

     Scott R. Webster has served as Vice President and Chief Operating Officer
of the Company since July 1995, and has served as a member of the Company's
senior management since November 1994.  Mr. Webster is Manager of Pork
Production for Farmland, where he is responsible for all of Farmland's pork
production activities.  Prior to joining Farmland in November 1994, Mr. Webster
served as Director of Nutrition, Research and Development at Brown's of Carolina
since June 1992, where he was involved in developing the company from 8,000 sows
to 50,000 sows.  He has been involved in pork production activities since 1975
and also was employed by DeKalb Feeds upon the completion of a Master of Science
degree from the University of Missouri in 1985 until June 1992.

     Doug Brown has served as Treasurer and as a Director of the Company since
its formation in May 1994, and as Secretary of the Company since October 1994.
He served as a manager of Yuma LLC from October 1991 to July 1994.  Mr. Brown
has served as the Vice President and General Manager of Yuma Cooperative since
1990.  Prior to that time, Mr. Brown served as the general manager of the
Douglas Farmers Cooperative in Douglas, Oklahoma for four years.

     Merl Daniel has served as a Director of the Company since March 1995.  Mr.
Daniel has been employed by Farmland since 1968, and has served in his present
capacity of Vice President and Controller for Farmland since July 1992.  From
October 1990 to July 1992, he served as Farmland's Director MIS, Operations and
Technical Support, in which capacity he managed Farmland's computer operations.
Prior to October 1990, Mr. Daniel served Farmland in a variety of other
capacities.

     Gerald D. Johnson has served as a Director of the Company since September
1994.  Mr. Johnson has been employed by Farmers Cooperative Elevator Company,
Plymouth, Nebraska as its General Manager since October 1992.  Prior to that
date, he served six years as Controller of Farmers Cooperative Business
Association, Shelby, Nebraska.  For the approximately 32 years prior to assuming
such position, he served in a variety of positions with several other
cooperative associations.

     Loren Keppy has served as a Director of the Company since June 1996.  Mr.
Keppy has been self-employed as a farmer since 1984.  In this regard, he
currently operates a 5,000 head per year hog finishing operation near Durant,
Iowa, in addition to farming 470 acres of crops.  Mr. Keppy received a Bachelor
of Science degree in Industrial Technology from the University of Northern Iowa,
and is a member of the River Valley Coop.

     Officers are elected annually by the Board of Directors and serve until
their respective successors are duly elected and qualified.  The Company's Board
of Directors currently consists of five directors:  Messrs. Snyder, Brown,
Daniel, Johnson and Keppy.  The members of the Board of Directors are elected
for one year terms expiring at the annual meeting of stockholders or until their
respective successors are duly elected and qualified, unless sooner removed or
disqualified.  The Company's Articles of Incorporation and Bylaws provide that
at least a majority of the directors constituting the Board of Directors shall
be, and less than a majority of the directors need not be, members or duly
authorized representatives of members of the Company.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     With respect to any company having a class of equity securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "Exchange
Act"), Section 16(a) of the Exchange Act requires the directors and executive
officers, persons who own more than 10% of any class of equity securities of the
Company registered pursuant to Section 12 of the Exchange Act and certain trusts
to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership in such securities and other equity
securities of the Company.  During the fiscal year ended August 31, 1996, the
Company did not have any class of equity securities registered pursuant to
Section 12 of the Exchange Act.  Accordingly, no Section 16(a) filing
requirements were applicable to its directors, executive officers, greater than
10% shareholders and reportable trusts during such year with respect to the
Company's equity securities.


ITEM 10.  EXECUTIVE COMPENSATION.


EXECUTIVE COMPENSATION

     No compensation has been awarded, earned by or paid to Wayne N. Snyder, the
chief executive officer of the Company, by the Company for services rendered to
the Company as such during the period from the Company's organization on May 3,
1994 through August 31, 1996.  Mr. Snyder is employed by Farmland, which has
agreed to provide certain administrative, advisory and consulting services to
the Company under the terms of a Swine Production Services Agreement.  No
executive officer of the Company at August 31, 1996 was awarded, earned or was
paid compensation in excess of $100,000 for services rendered to the Company as
such during the fiscal year ended August 31, 1996.  See "Directors and Executive
Officers" under Item 9 and "Certain Relationships and Related Transactions"
under Item 12.

DIRECTOR COMPENSATION

     Although the Company's Bylaws provide that directors may be compensated for
their services, no compensation has been awarded to, earned by or paid to
members of the Company's Board of Directors for service to the Company as such.
Each director may be reimbursed for such director's reasonable out-of-pocket
expenses incurred in the performance of service to the Company as a director if
authorized by the Board of Directors.
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


     The following table sets forth certain information as of August 31, 1996
regarding the beneficial ownership of Common Stock in Alliance by Farmland,
Farmers Cooperative Elevator Company, Yuma Cooperative and Farmers Cooperative
Association; the only persons who were the beneficial owners of more than 5% of
the outstanding Common Stock as of such date.   No directors or executive
officers of the Company were the beneficial owners of Alliance Common Stock as
of the date of this report.  All information with respect to beneficial
ownership has been furnished by the respective 5% or more stockholder.

                          AMOUNT AND NATURE OF              PERCENTAGE OF
     NAME                BENEFICIAL OWNERSHIP(1)       SHARES OUTSTANDING(1)


Farmland Industries, Inc. (2)              50                    49.0%
     3315 North Oak Trafficway
     Kansas City, MO 64116

Yuma Farmers Milling and                   12                    11.8%
  Mercantile Cooperative Company (3)
    101 South Detroit
    Yuma, CO 80759

Farmers Cooperative Elevator               13                    12.7%
  Company (4)
     501 East Main Street
     Plymouth, NE  68424

Farmers Cooperative Association (5)          6                    5.9%
     212 North Agora Street
     Marathon, Iowa 50565

(1)Beneficial ownership is determined in accordance with the rules of the
   Securities and Exchange Commission which generally attribute beneficial
   ownership of securities to persons who possess sole or shared voting power
   and/or investment power with respect to those securities.  Unless otherwise
   indicated, the persons or entities identified in this table have sole voting
   and investment power with respect to all shares shown as beneficially owned
   by them.  Percentage ownership calculations are based on 102 shares of
   Common Stock outstanding.

(2)The voting and disposition of the shares of Common Stock held by Farmland
   are subject to the discretion of the board of Directors of Farmland.
   Pursuant to the Company's Articles of Incorporation, Farmland is prohibited
   from voting shares of Common Stock representing 25% or more of the shares
   outstanding during any period in which the Company has borrowed money from a
   lender subject to regulations of the Farm Credit Administration regarding
   loan policies and operations (such as the Company's current lender).  As of
   August 31, 1996, the Company had borrowed approximately $13,659,000 from
   such a lender.  See "Description of Business -- Financing" under Item 1 and
   "Holders" under Item 5.

(3)The voting and disposition of the shares of Common Stock held by Yuma
   Cooperative are subject to the discretion of the Board of Directors of Yuma
   Cooperative.

(4)The voting and disposition of the shares of Common Stock held by Farmers
   Cooperative Elevator Company are subject to the discretion of the Board of
   Directors of Farmers Cooperative Elevator Company.

(5)The voting and disposition of the shares of Common Stock held by Farmers
   Cooperative Association are subject to the discretion of the Board of
   Directors of Farmers Cooperative Association.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


GENERAL

     As of August 31, 1996, Farmland and Yuma Cooperative owned approximately
49.0% and 11.8%, respectively, of the Common Stock of the Company.  In
connection with the formation of the Company as a Colorado cooperative
association on May 3, 1994, one share of the Company's Common Stock was issued
to Farmland for the purchase price of $100.  On July 13, 1994, the Company
acquired the entire equity ownership rights and interests in Yuma LLC, a
Colorado limited liability corporation in which Farmland and Yuma Cooperative
owned approximately 71.5% and 28.5%, respectively, of the outstanding equity
interests.  In exchange for their respective equity interests in Yuma LLC,
Farmland and Yuma Cooperative were issued 30 shares and 12 shares, respectively,
of the Company's Common Stock.  Yuma LLC thereupon was dissolved and liquidated
and its assets and liabilities were assigned to and assumed by Alliance.  Said
assets and liabilities have been reflected on the Company's balance sheet at
Yuma LLC's book value, which consisted of $3,027,091 and $80,291 in total assets
and liabilities, respectively, at July 8, 1994.  The Company has entered into
various contractual arrangements with both Farmland and Yuma Cooperative for the
provision of specific goods and services.  All future transactions between the
Company and its officers, directors, employees and affiliates, including
Farmland and Yuma Cooperative, will be on terms no less favorable to the Company
than can be obtained from unaffiliated parties.  All such transactions will be
subject to the approval of a majority of the independent outside members of the
Board of Directors who do not have an interest in the transactions.  See Item
11.

FARMLAND
     Farmland is a Kansas cooperative association engaged in regional farm
supply and marketing operations, including the processing and marketing of pork
and beef.  Farmland's livestock production department is directly engaged in the
production of feeder pigs and finished hogs through contractual arrangements
with independent producers, the ownership of pig production operations in joint
venture with both agricultural cooperatives and independent producers, as well
as other activities including the operation of feeder pig brokerage services.
Wayne N. Snyder, Scott R. Webster and Merl Daniel each are employed by Farmland
and presently serve as directors or executive officers of the Company.

     Farmland, through its various business divisions and interests, is engaged
in providing to competitors of the Company certain goods and services, including
the supply of feed and other inputs, breeding stock and administrative services,
among others, which are comparable to those being provided by Farmland to the
Company.  Moreover, Farmland also is directly engaged in the production of hogs
through the direct ownership of animals and facilities, through contractual
arrangements with other producers, and through joint venture arrangements
established with other parties.  Because of Farmland's various activities, there
may arise conflicts of interest between Farmland and the Company.  The Company
anticipates that Farmland may continue to engage and invest in activities and
businesses other than those of Alliance.  Thus, Farmland may have conflicts of
interest in allocating its resources and management time, services and functions
among the Company and such other activities.  Similarly, with respect to the
employees of Farmland serving as officers or directors of the Company,
Farmland's other business interests may result in competition for their time,
services and functions.

     Swine Production Consulting and Services Agreement.  The Company has
entered into various contractual arrangements with Farmland for the provision of
specific goods and services.  Under the terms of a Swine Production Services
Agreement with the Company, Farmland, acting as independent contractor, has
agreed to provide certain administrative, advisory and consulting services to
the Company, including the following:  performing various ministerial services,
including data entry of transactions for accounting purposes and computer
generation of financial and operational reports and checks; compilation of the
production records with respect to each feeder pig production facility;
logistical backup and coordination, including facilitating the acquisition,
servicing, transportation and sale of genetic stock, breeding stock and feeder
pigs; facilitating the purchase of inputs for the Company; assistance in
sourcing feed ingredients, animal health products and veterinarian services;
assistance in arranging financing; assistance in selection of suitable sites for
the Company's facilities; assistance in obtaining appropriate permits for the
construction and operation of facilities for the Company; assistance in the
recruitment, selection and training of general managers for the Company; and
advice and consultation with respect to management practices, feed formulations
and other aspects of the Company.

     Farmland has agreed to assist the Company in acquiring the necessary
management and labor to adequately staff and operate the Company's feeder pig
production facilities. The Company will cause the new feeder pig production
facilities to be constructed, provide initial and replacement breeding stock
purchased from Farmland or other sources which, under normal circumstances, will
be sufficient to keep the facilities in full production and provide adequate
record keeping to allow Farmland to provide the accounting and reporting
functions required of it under the Swine Production Services Agreement.
Finally, the Company will grant Farmland reasonable access to the facilities, in
accordance with good bio-security practices, to allow Farmland to provide its
required services.  Farmland will be paid one dollar ($1.00) for each feeder pig
sold by the Company as partial compensation for Farmland's duties under the
agreement.  Such amount is subject to adjustment annually commensurate with, and
based upon, changes in the Consumer Price Index.  For the year ended August 31,
1996, the Company paid Farmland a total of $151,905 for its provision of
administrative, advisory and consulting services pursuant to the Swine
Production Services Agreement.  Farmland also may provide a significant portion
of the feed ingredients, nutritional supplements and animal health supplies
required by the Company at Farmland's customary rates.  For the year ended
August 31, 1996, the Company purchased $303,963 of feed ingredients, nutritional
supplements and animal health supplies from Farmland.

     Farmland will purchase from the Company gilts produced by the Company for
purposes of finishing for use as breeding stock by the Company, subject to
available finishing capacity of Farmland.  Upon completion of such finishing,
Farmland will resell to the Company all such gilts that survive finishing by
Farmland.  The purchase price to be paid by Farmland to the Company for gilts
will be based on the purchase price specified in the Feeder Pig Purchase
Agreement between Farmland and the Company or, if no such agreement is then in
effect, the purchase price specified in the most recent effective Feeder Pig
Purchase Agreement between Farmland and the Company.  The purchase price to be
paid by the Company to Farmland for finished gilts will be based upon the
prevailing market price of hogs at the time of purchase, plus any royalty fees
payable by Farmland and a handling fee of $10.00 per gilt.  For the year ended
August 31, 1996, the Company purchased finished gilts from Farmland at an
aggregate price of $872,979.

     It is anticipated that Farmland may provide hybrid gilts from additional
multiplier facilities to meet a portion of the Company's initial stocking and
ongoing requirements for breeding stock with respect to each  feeder pig
production facility in existence, under development or proposed.  The actual
number of replacement gilts purchased from Farmland will be affected by the
Company's requirements and the availability of animals from Farmland's
facilities.  The purchase price of replacement hybrid breeding stock is to be
based upon the prevailing market price of breeding stock at the time of
purchase.

     In the Swine Production Services Agreement, the Company has granted
Farmland an option during the term of the Agreement (and in no event less than
the five-year period ending July 13, 1999) to purchase (a) excess feeder pigs
produced by the Company at the price per pig equal to the average price per pig
paid by stockholders under Feeder Pig Purchase Agreements for the then
immediately preceding month, and (b) feeder pigs that a stockholder has failed
to purchase under such stockholder's Feeder Pig Purchase Agreement at the price
per pig determined pursuant to such Feeder Pig Purchase Agreement.  The Company
also has granted Farmland an option to purchase any shares of Common Stock
reacquired by the Company.

     Feeder Pig Purchase Agreement.  As a member of the Company, Farmland has
contracted with the Company to purchase a share of the feeder pigs to be
produced by the Company under the same terms required of the Company's other
members, except that during the period commencing on July 13, 1994 and ending on
August 11, 1995, the date the Company first produced and shipped feeder pigs
pursuant to the Feeder Pig Purchase Agreements with the Company's existing
members, the price paid by Farmland for feeder pigs was based only on the
Company's operating cost per pig; provided, however, that such price was
increased by $4.50 per feeder pig after July 13, 1995.  Commencing on August 11,
1995, the date the Company first produced and shipped feeder pigs pursuant to
the Feeder Pig Purchase Agreements with the Company's existing members (other
than Farmland and Yuma Cooperative), the price paid by Farmland for feeder pigs
is and will be under terms comparable to those applicable to the Company's
members pursuant to the Feeder Pig Purchase Agreements.  For the year ended
August 31, 1996, Farmland purchased feeder pigs from the Company (including Yuma
Cooperative's share of feeder pigs produced by the Company) at an aggregate
price of $5,035,160.  Finally, the Company has agreed to provide Farmland the
first opportunity to purchase any feeder pigs produced by the Company in excess
of the Company's supply commitments to other members or that other members have
failed to purchase during the term of the Swine Production Services Agreement
(and in no event less than the five-year period ending July 13, 1999).  See
"Description of Business -- Feeder Pig Purchase Agreement" under Item 1.

     Real Estate Loans.  Between September and December 1995, the Company
purchased approximately 1,000 acres of real property in Yuma County, Colorado,
upon which the Company has developed one 2,450-sow production facility and holds
the remaining acreage for the development of additional production facilities
(the "Additional Colorado Property").  The acquisition cost of this Additional
Colorado Property was approximately $760,000.  The Company obtained funding for
the purchase of the Additional Colorado Property from the proceeds of a loan
obtained from Farmland.  In conjunction with this loan, the Company delivered to
Farmland a promissory note evidencing the debt providing for the amortization of
the loan over a ten-year period, at a variable rate equal to CoBank's prime
rate.  As of August 31, 1996, CoBank's prime rate was 8.25%.  The payment
schedule of the promissory note requires that the Company make interest-only
payments for the life of the loan, with a final balloon payment of the principal
at the expiration of the ten-year term.  To secure the obligations of the
promissory note, the Company has agreed to execute a deed of trust in favor of
Farmland covering all of the Additional Colorado Property, which deed of trust
is second in priority to that of CoBank with respect to the 2,450-sow production
facility constructed thereon.  See "Description of Property" under Item 2.

     In November 1996, the Company exercised its rights under an option contract
to acquire an approximately 90 acre tract of real property in Wayne County,
Illinois, including 45 acres  (the A45 Acre Tract@) on which the Company intends
to develop a second Illinois sow production facility.  The Company obtained
funding for the purchase of the 45 Acre Tract from the proceeds of a loan
provided by Farmland.  In conjunction with this loan, the Company delivered to
Farmland a promissory note evidencing the debt providing for amortization over a
ten-year period, at a variable rate equal to CoBank's then national variable
rate plus 1.25%.  The payment schedule for the Farmland loan would require the
Company to make interest-only payments for the life of the loan, with a final
balloon payment of all principal to be made upon the earlier of (i) the
Company's next issuance and sale of a minimum block of 17 shares of Common
Stock, and (ii) the expiration of ten years.  It is anticipated that Alliance's
obligation to Farmland under this note will be secured by a mortgage on the 45
Acre Tract.  See "Description of Property" under Item 2.

     Pig Producers I, L.P.  Farmland holds a 12.5% interest in Pig Producers I,
L.P. ("Pig Producers"), a limited partnership engaged in the production of
feeder pigs from a 2,450-sow feeder pig production facility located in Yuma
County, Colorado.  The Company has assigned 14 employees of its employees to
perform various facilities operation services for Pig Producers.  Pig Producers
reimburses the Company for all wages, benefits and other costs attributable to
these 14 Alliance employees.  From time to time, the Company and Pig Producers
also engage in various commercial transactions related to the sale of genetic
stock, breeding stock, feed ingredients and animal health supplies.

YUMA COOPERATIVE

     Yuma Cooperative is a Colorado cooperative association engaged in farm
supply and grain marketing activities.  Doug Brown is Vice President and General
Manager of Yuma Cooperative and serves as a director and executive officer of
the Company.

     Yuma Cooperative is engaged in providing to competitors of the Company and
other users certain goods and services, including the supply of feed and animal
health products, which are comparable to those provided by Yuma Cooperative to
the Company.  Because of its other business activities, conflicts of interest
may arise between Yuma Cooperative and the Company.  With respect to the
employees of Yuma Cooperative serving as officers or directors of the Company,
Yuma Cooperative's other business interests may result in competition for their
time, services and functions.

     Feed Purchase Agreement.  The Company has entered into a Feed Purchase
Agreement with Yuma Cooperative respecting the supply of manufactured feed and
animal health products.  In this capacity, Yuma Cooperative has agreed to
purchase feed-grains and feed additives for the production of feed which,
together with animal health products, will be sold to the Company.  In exchange
for providing these goods and services, Yuma Cooperative is entitled to
compensation based upon a fixed charge for the grinding, mixing, and delivery of
feed ($14 per ton as of November 1, 1996), in addition to the actual delivered
cost of the feed ingredients.   Feed rations which are pelleted are subject to a
surcharge ($7 per ton as of November 1, 1996).  Both the fixed charge and the
surcharge are subject to annual increases in November of each year corresponding
to any increases in the Consumer Price Index -- Retail Items.  Corn provided by
Yuma Cooperative for use in feed generally is sold to the Company at delivered
cost plus, in the absence of available Company grain storage facilities, a $.10
per bushel handling fee.  The Company has the right under the Feed Purchase
Agreement, in its sole discretion, to purchase and provide its own corn for feed
manufacturing.  For the year ended August 31, 1996, the Company purchased
$3,423,773 of feed from Yuma Cooperative.  See "Description of Business --
Purchase of Feed and Other Inputs" under Item 1.

     Feeder Pig Purchase Agreement.  As a member of the Company, Yuma
Cooperative has contracted with the Company to purchase a share of the feeder
pigs to be produced by the Company under the same terms required of the
Company's other members, except that during the period commencing on July 13,
1994 and ending on August 11, 1995, the date the Company first produced and
shipped feeder pigs pursuant to the Feeder Pig Purchase Agreements with the
Company's existing members, the price paid by Yuma Cooperative for feeder pigs
was based only on the Company's operating cost per pig; provided, however, that
such price was increased by $4.50 per feeder pig after July 13, 1995.
Commencing on August 11, 1995, the date the Company first produced and shipped
feeder pigs pursuant to the Feeder Pig Purchase Agreements with the Company's
existing members (other than Farmland and Yuma Cooperative), the price paid by
Yuma Cooperative for feeder pigs is and will be under terms comparable to those
applicable to the Company's members pursuant to the Feeder Pig Purchase
Agreements.  For the year ended August 31, 1996, Yuma Cooperative's share of
feeder pigs produced by the Company was purchased from the Company by Farmland.
See "Certain Relationships and Related Transactions -- Farmland" and
"Description of Business -- Feeder Pig Purchase Agreement" under Item 1.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.


     (A)  EXHIBITS:

     1.   The following financial statements of the Company and reports of the
Company's independent auditors appear on the pages indicated in this report.

                                                               Page


Independent Auditors' Report                                     38

Balance Sheets as of August 31, 1996 and 1995                    39

Statements of Operations for the years ended
August 31, 1996 and 1995                                         40

Statements of Shareholders' Equity for the years
ended August 31, 1996 and 1995                                   41

Statements of Cash Flows for the years ended
August 31, 1996 and 1995                                         42

Notes to Financial Statements                                    43

     2.   The following exhibits are filed as part of this report:


Exhibit
   No.                                  Description


3.1 Articles of Incorporation (filed on November 7, 1994 as Exhibit 3.1 to the
    Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

3.1.1   Articles of Amendment (filed on November 7, 1994 as Exhibit 3.1.1 to
    the Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

3.1.2   Articles of Amendment (filed on January 10, 1996 as Exhibit 3.1.2 to
    the Company's Registration Statement on Form SB-2 (Registration No.
    33-86068) and incorporated herein by reference).

3.2 Amended and Restated Bylaws (filed on November 7, 1994 as Exhibit 3.2 to
    the Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

3.2.1   Amendments to Amended and Restated Bylaws (filed on November 7, 1994 as
    Exhibit 3.2.1 to the Company's Registration on Form SB-2 (Registration No.
    33-86068) and incorporated herein by reference).

3.2.2   Amendment to Amended and Restated Bylaws (filed on January 23, 1995 as
    Exhibit 3.2.2 to the Company's Registration on Form SB-2 (Registration No.
    33-86068) and incorporated herein by reference).

4.1 Articles of Incorporation (filed on November 7, 1994 as Exhibit 3.1 to the
    Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

4.1.1   Articles of Amendment (filed on November 7, 1994 as Exhibit 3.1.1 to
    the Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

4.1.2   Articles of Amendment (filed on January 10, 1996 as Exhibit 3.1.2 to
    the Company's Registration Statement on Form SB-2 (Registration No.
    33-86068) and incorporated herein by reference).

4.2 Amended and Restated Bylaws (filed on November 7, 1994 as Exhibit 3.2 to
    the Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

4.2.1   Amendments to Amended and Restated Bylaws (filed on November 7, 1994 as
    Exhibit 3.2.1 to the Company's Registration on Form SB-2 (Registration No.
    33-86068) and incorporated herein by reference).

4.2.2   Amendment to Amended and Restated Bylaws (filed on January 23, 1995 as
    Exhibit 3.2.2 to the Company's Registration on Form SB-2 (Registration No.
    33-86068) and incorporated herein by reference).

4.3 Specimen Form of Certificate Representing Membership in the Company and the
    Common Stock (filed on November 7, 1994 as Exhibit 4.3 to the Company's
    Registration on Form SB-2 (Registration No. 33-86068) and incorporated
    herein by reference).

4.4 Loan Agreement, dated as of September 21, 1994, between National Bank for
    Cooperatives and the Registrant (filed on November 7, 1994 as Exhibit 10.6
    to the Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

4.4.1   Term Loan Amendment, dated as of May 19, 1995, between CoBank, ACB
    (formerly National Bank for Cooperatives) and the Registrant (filed with
    the Company's Annual Report on Form 10-KSB for the fiscal year ended August
    31, 1995 as Exhibit 10.6.1 and incorporated herein by reference).

4.5 The Registrant's Promissory Note, dated September 21, 1994, to National
    Bank for Cooperatives (filed on November 7, 1994 as Exhibit 10.7 to the
    Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

4.6 Security Agreement, dated September 21, 1994, made by the Registrant to
    National Bank for Cooperatives (filed on November 7, 1994 as Exhibit 10.8
    to the Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

4.7 Correction Deed of Trust, dated November 4, 1994, between the Public
    Trustee of the County of Yuma, State of Colorado and the Registrant (filed
    on January 23, 1995 as Exhibit 10.9 to the Company's Registration on Form
    SB-2 (Registration No. 33-86068) and incorporated herein by reference).

4.8 Master Loan Agreement, dated as of May 19, 1995, between CoBank, ACB and
    the Registrant (filed with the Company's Annual Report on Form 10-KSB for
    the fiscal year ended August 31, 1995 as Exhibit 10.11 and incorporated
    herein by reference).

4.9 Multiple Advance Term Loan Supplement, dated as of May 19, 1995, between
    CoBank, ACB and the Registrant (filed with the Company's Annual Report on
    Form 10-KSB for the fiscal year ended August 31, 1995 as Exhibit 10.12 and
    incorporated herein by reference).

4.10Revolving Term Loan Supplement, dated as of May 19, 1995, between CoBank,
    ACB and the Registrant (filed with the Company's Annual Report on Form
    10-KSB for the fiscal year ended August 31, 1995 as Exhibit 10.13 and
    incorporated herein by reference).
10.1Form of Feeder Pig Purchase Agreement (filed on January 23, 1995 as Exhibit
    10.1 to the Company's Registration on Form SB-2 (Registration No. 33-86068)
    and incorporated herein by reference).

10.2Swine Production Services Agreement, dated July 13, 1994, between Farmland
    Industries, Inc. and the Registrant (filed on November 7, 1994 as Exhibit
    10.2 to the Company's Registration on Form SB-2 (Registration No. 33-86068)
    and incorporated herein by reference).

10.2.1  First Amendment to Swine Production Services Agreement, dated as of
    July 26, 1996, between Farmland Industries, Inc. and the Company.

10.3Feed Purchase Agreement, dated July 13, 1994, between the Yuma Farmers
    Milling-Mercantile Cooperative Company of Yuma, Colorado and the Registrant
    (filed on November 7, 1994 as Exhibit 10.3 to the Company's Registration on
    Form SB-2 (Registration No. 33-86068) and incorporated herein by
    reference).

10.4Interim Feeder Pig Purchase Agreement, dated July 13, 1994, between
    Farmland Industries, Inc. and the Registrant (filed on November 7, 1994 as
    Exhibit 10.4 to the Company's Registration on Form SB-2 (Registration No.
    33-86068) and incorporated herein by reference).

10.4.1  First Amendment to Interim Feeder Pig Purchase Agreement, dated July
    13, 1994, between Farmland Industries, Inc. and the Registrant (filed on
    November 7, 1994 as Exhibit 10.4.1 to the Company's Registration on Form
    SB-2 (Registration No. 33-86068) and incorporated herein by reference).

10.5Interim Feeder Pig Purchase Agreement, dated July 13, 1994, between the
    Yuma Farmers Milling-Mercantile Cooperative Company of Yuma, Colorado and
    the Registrant (filed on November 7, 1994 as Exhibit 10.5 to the Company's
    Registration on Form SB-2 (Registration No. 33-86068) and incorporated
    herein by reference).

10.5.1  First Amendment to Interim Feeder Pig Purchase Agreement, dated July
    13, 1994, between the Yuma Farmers Milling-Mercantile Cooperative Company
    of Yuma, Colorado and the Registrant (filed on November 7, 1994 as Exhibit
    10.5.1 to the Company's Registration on Form SB-2 (Registration No.
    33-86068) and incorporated herein by reference).

10.6Loan Agreement, dated as of September 21, 1994, between National Bank for
    Cooperatives and the Registrant (filed on November 7, 1994 as Exhibit 10.6
    to the Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

10.6.1  Term Loan Amendment, dated as of May 19, 1995, between CoBank, ACB
    (formerly National Bank for Cooperatives) and the Registrant (filed with
    the Registrant's Annual Report on Form 10-KSB for the fiscal year ended
    August 31, 1995 as Exhibit 10.6.1 and incorporated herein by reference).

10.7The Registrant's Promissory Note, dated September 21, 1994, to National
    Bank for Cooperatives (filed on November 7, 1994 as Exhibit 10.7 to the
    Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

10.8Security Agreement, dated September 21, 1994, made by the Registrant to
    National Bank for Cooperatives (filed on November 7, 1994 as Exhibit 10.8
    to the Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

10.9Correction Deed of Trust, dated November 4, 1994, between the Public
    Trustee of the County of Yuma, State of Colorado and the Registrant (filed
    on January 23, 1995 as Exhibit 10.9 to the Company's Registration on Form
    SB-2 (Registration No. 33-86068) and incorporated herein by reference).

10.10   Effluent Agreement, dated September 15, 1994, between RMR Ranch, Inc.,
    and the Registrant (filed on November 7, 1994 as Exhibit 10.13 to the
    Company's Registration on Form SB-2 (Registration No. 33-86068) and
    incorporated herein by reference).

10.11   Master Loan Agreement, dated as of May 19, 1995, between CoBank, ACB
    and the Registrant (filed with the Registrant's Annual Report on Form
    10-KSB for the fiscal year ended August 31, 1995 as Exhibit 10.11 and
    incorporated herein by reference).

10.12   Multiple Advance Term Loan Supplement, dated as of May 19, 1995,
    between CoBank, ACB and the Registrant  (filed with the Registrant's Annual
    Report on Form 10-KSB for the fiscal year ended August 31, 1995 as Exhibit
    10.12 and incorporated herein by reference).

10.13   Revolving Term Loan Supplement, dated as of May 19, 1995, between
    CoBank, ACB and the Registrant (filed with the Registrant's Annual Report
    on Form 10-KSB for the fiscal year ended August 31, 1995 as Exhibit 10.13
    and incorporated herein by reference).

10.14   Master Construction Agreement, dated September 18, 1995, between the
    Registrant and Central Confinement Service, Ltd. (filed with the
    Registrant's Annual Report on Form 10-KSB for the fiscal year ended August
    31, 1995 as Exhibit 10.15 and incorporated herein by reference).

10.15   The Registrant's Promissory Note, dated August 30, 1995, to Farmland
  Industries, Inc. (filed with the    Registrant's Annual Report on Form 10-KSB
  for the fiscal year ended August 31, 1995 as Exhibit 10.16 and
    incorporated herein by reference).

27  Financial Data Schedule

No management contracts or compensatory plans or arrangements required to be
identified by Item 13(a) are included among the exhibits filed as part of this
report.

     (B)  REPORTS ON FORM 8-K.

     No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.



                         Independent Auditors' Report



The Board of Directors
Alliance Farms Cooperative Association:

We have audited the accompanying balance sheets of Alliance Farms Cooperative
Association as of August 31, 1996 and 1995 and the related statements of
operations, shareholders= equity and cash flows for the years then ended.  These
financial statements are the responsibility of the Association=s management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Alliance Farms Cooperative
Association as of August 31, 1996 and 1995 and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.



Kansas City, Missouri                             KPMG Peat Marwick, LLP
October 23, 1996




               ALLIANCE FARMS COOPERATIVE ASSOCIATION
                           BALANCE SHEETS
                      August 31, 1996 and 1995
<TABLE>
<CAPTION>
                                                              August 31, 1996              August 31, 1995

<S>                                                           <C>                                 <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                  $               0                   $1,477,213
   Receivables                                                           72,448                       31,887
   Inventory  (Note 4)                                                2,435,477                    1,069,144
   Other current assets                                                  48,273                       19,274

       Total current assets                                           2,556,198                    2,597,518

   Property, plant and equipment, at cost (Note 5)                   16,491,601                   10,345,236
   Less accumulated depreciation                                      1,333,291                      705,989

                                                                     15,158,310                    9,639,247


   Breeding stock                                                     3,928,215                    2,877,957
   Less accumulated depreciation                                      1,013,872                      708,363

                                                                      2,914,343                    2,169,594
   Other assets, net of $51,568 and $29,462
     accumulated amortization                                           216,762                      165,581

                                                                    $20,845,613                  $14,571,940



LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Bank overdraft                                                       575,749                            0
   Current maturities of long-term debt (Note 6)                        870,000                      580,000
   Accounts payable (Note 3)                                            526,193                      672,957
   Accrued rebates (Note 2)                                             670,167                       41,139
   Accrued expenses                                                     171,791                       65,151

     Total current liabilities                                        2,813,900                    1,359,247

Long-term debt (Note 6)                                              13,425,424                    8,585,000

Shareholders' equity
   Common stock of $.01 par value;  authorized
     10,000 shares, issued and outstanding 102 shares
     (85 shares at August 31, 1995)                                           1                            1
   Additional paid-in capital                                         7,487,653                    6,165,970
   Accumulated deficit                                              (2,881,365)                  (1,538,278)

      Total shareholders' equity                                      4,606,289                    4,627,693
     Commitments (Note 7)

                                                                    $20,845,613                  $14,571,940


<FN>
See accompanying notes to financial statements
</TABLE>



             ALLIANCE FARMS COOPERATIVE ASSOCIATION
                    STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
           For the years ended August 31, 1996 and 1995
                                                                      1996                       1995


<S>                                                                <C>                        <C>
Net sales  (Note 2)                                                $7,037,927                 $1,554,113
Cost of goods sold                                                  6,422,838                  1,836,388


     Gross margin/(loss)                                              615,089                  (282,275)

Expenses related to start-up
  of new production facilities                                        426,926                    754,756
Administrative expenses                                               369,787                    101,927
Loss on sale of breeding stock                                        226,738                    112,797


Operating loss                                                     ($408,362)               ($1,251,755)

Other income (expense):
   Interest expense                                               (1,001,329)                  (289,082)
   Other                                                               66,604                     27,509

                                                                    (934,725)                  (261,573)




Net loss                                                         ($1,343,087)               ($1,513,328)



<FN>
                  See accompanying notes to financial statements
</TABLE>




                ALLIANCE FARMS COOPERATIVE ASSOCIATION
                  STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>


        For the years ended August 31, 1996 and August 31, 1995

<CAPTION>
                                                          Additional                                     Total
                                        Common              paid-in              Accumulated         Shareholders'
                                         stock              capital                deficit              equity

<S>                                       <C>                 <C>                    <C>                  <C>
Balance at August 31, 1994                $1                  4,885,559               (24,950)            $4,860,610

Sale of 17 shares of common
stock - $.01 par per share,
net of $82,356 offering costs             ---                 1,280,411              ---                   1,280,411


Net loss                                  ---                 ---                  (1,513,328)            (1,513,328)


Balance at August 31, 1995                $1                  6,165,970            (1,538,278)            $4,627,693

Sale of 17 shares of common
stock - $.01 par per share,
net of $38,317 offering costs             ---                 1,321,683              ---                   1,321,683



Net loss                                  ---                 ---                  (1,343,087)            (1,343,087)
Balance at August 31, 1996                $1                  7,487,653            (2,881,365)            $4,606,289




<FN>
See accompanying notes to financial statements
</TABLE>




                ALLIANCE FARMS COOPERATIVE ASSOCIATION
                       STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
             For the years ended August 31, 1996 and 1995
                                                                          1996                        1995

<S>                                                                    <C>                        <C>
Cash flow from operating activities:
   Net loss                                                            $(1,343,087)                $(1,513,328)
   Adjustment to reconcile net loss to net cash
     used in operating activities:
        Provision for depreciation and amortization                       1,721,482                     862,206
        Loss on sale of breeding stock                                      226,738                     112,797
   Changes in assets and liabilities:
        Receivables                                                        (40,561)                       1,185
        Inventory                                                       (1,366,333)                   (791,628)
        Other current assets                                               (28,999)                       5,624
        Other assets                                                       (38,593)                    (39,165)
        Accounts payable                                                  (146,764)                     245,943
        Accrued rebates                                                     629,028                      41,139
        Accrued expenses                                                    106,640                      29,941

            Net cash used in operating activities                         (280,449)                 (1,045,286)

Cash flows from investing activities:
   Capital expenditures                                                 (8,808,888)                (10,044,382)
   Proceeds from sale of breeding stock                                     626,268                      88,051

          Net cash used in investing activities                         (8,182,620)                 (9,956,331)


Cash flows from financing activities
   Proceeds from issuance of long term debt                               3,798,000                   9,165,000
   Net increase in revolving term credit                                  1,276,000                         ---
   Payment on long term debt                                              (580,000)                         ---
   Increase in note payable to Farmland                                     636,424                         ---
   Issuance of common stock, net of offering costs                        1,321,683                   1,280,411
  Loan origination fees                                                    (42,000)                    (74,180)
  Bank overdraft                                                            575,749                         ---

            Net cash provided by financing activities:                    6,985,856                  10,371,231


            Decrease in cash and cash
                 equivalents                                            (1,477,213)                   (630,386)

Cash and cash equivalents at beginning of period                         $1,477,213                  $2,107,599

Cash and cash equivalents at end of period                                       $0                  $1,477,213



Supplemental schedule of cash paid for interest                            $989,334                    $228,977


<FN>
See accompanying notes to financial statements
</TABLE>









Alliance Farms Cooperative Association

Notes to Financial Statements



1.   Description of the Business and Summary of Significant Accounting Policies


     Alliance Farms Cooperative Association (Alliance) is a cooperative
     association engaged in the production of feeder pigs for sale to its
     members. As of August 31, 1996 Alliance owned and was operating five
     2,450-sow feeder pig production facilities in Yuma County, Colorado and a
     comparable facility was being developed in Wayne County, Illinois.

     ( a )     Inventory


     Inventories are stated at the lower of cost or market.  Cost has been
     determined by the average cost method for feeder pigs.

     Inventoriable costs are costs incurred in producing feeder pigs at the
     feeder pig production facility from the time of gestation through sale of
     the feeder pig.  Such costs include feed, care and a proportionate share of
     the depreciation of the breeding stock and facilities.  Market value used
     for purposes of computing lower of cost or market approximates the ultimate
     sale price of feeder pigs which is determined contractually between
     Alliance Farms and its members/patrons.

     ( b )     Property, Plant and Equipment


     Property, plant and equipment are stated at cost.  Depreciation is
     calculated on the straight-line method over the estimated useful lives of
     the assets, generally from three to twenty years.  Major repairs that
     extend the life of an asset are capitalized.  Normal repair and maintenance
     costs are expensed.

     Statement of Financial Accounting Standards No. 121 - Accounting for the
     Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of
     ("Statement 121") is effective for fiscal years beginning after December
     15, 1995 (Alliance=s 1997 fiscal year).  Statement 121 establishes
     accounting standards for the impairment of long-lived assets, certain
     identifiable intangible assets and goodwill related to those assets to be
     held and used and for long-lived assets and certain identifiable
     intangibles to be disposed of.  Management expects the adoption of
     Statement 121 will not have a significant impact on Alliance=s financial
     statements.

     ( c )     Breeding Stock


     Breeding stock is stated at cost.  Depreciation on breeding stock is
     calculated on the straight-line method over the estimated breeding life of
     the animals, three years.

     ( d )     Cash and Cash Equivalents
     Cash and cash equivalents in the accompanying statement of cash flows
     include cash on hand and short-term investments with original maturities of
     less than ninety days.

     ( e )     Other Assets


     Other assets consist of organizational costs which are amortized over five
     years and loan origination fees which are amortized over the term of the
     loan, 12 years.


     ( f )     Sales


     Alliance Farms recognizes sales at the time pigs are shipped.

     ( g )     Income Taxes


     Alliance Farms is subject to income taxes on all income not distributed to
     patrons as patronage refunds.  Deferred income taxes have not been
     provided, because all sales were to members for the periods ended August
     31, 1996, 1995 and 1994 and all future sales are anticipated to be to
     members.

     ( h )     Use of Estimates


     Management of Alliance has made a number of estimates and assumptions
     relating to the reporting of assets and liabilities and the disclosure of
     contingent assets and liabilities to prepare these financial statements in
     conformity with generally accepted accounting principles.  Actual results
     could differ from those estimates.

2.   Sales


     Alliance has sold 100% of its feeder pigs to its members for the fiscal
     year ended August 31, 1996 and 1995 at a contractual price which is based
     on Alliance=s operating costs (which are based on a twelve month rolling
     average), debt service and, after July 13, 1995, an additional $4.50 per
     pig and at a contractual price which was based on Alliance=s operating
     costs (which were based on a twelve month rolling average) for the first
     nine months of the fiscal year ended August 31, 1995.

     Alliance=s sales for the fiscal years ended August 31, 1996 and 1995 have
     been reduced by the accrual of a rebate of  $670,167 and $41,139,
     respectively. The 1996 accrual is intended to be paid to its members after
     the end of the fiscal year.

     Because the contractual price for the sale of a feeder pig is determined
     based upon, among other things, a twelve month historical rolling average
     for operating costs and to the extent that current operating costs per pig
     exceed the historical average operating costs, Alliance may incur a
     negative gross margin on the sale of its feeder pigs during periods of
     rising costs.

     Alliance=s average net sales price and the average industry market price
     were as follows:

                                        Fiscal Year Ended
                                            August 31
                                         1996          1995


          Average Net Sales Price       48.12          33.16
          Average Industry Market*      41.15          32.17

     *As published by Spark=s Companies, Inc. (from the USDA=s Market News
Service)

3.   Transactions with Farmland and Yuma Cooperative


     As of August 31, 1996 and 1995, Farmland Industries, Inc. (Farmland) owned
     approximately 49% and 47.1%, respectively, of the Common Stock of Alliance,
     and Yuma Farmers= Milling and Mercantile Cooperative (Yuma Cooperative)
     owned approximately 11.8% and 14.1%, respectively, of the Common Stock of
     Alliance.

     Alliance purchased feed from Yuma Cooperative and animal health supplies
     and breeding stock from Farmland based on market prices.Yuma Cooperative
     and Farmland are members of Alliance.  Alliance also sold feeder pigs to
     Farmland and Yuma Cooperative.  Such purchases and sales were as follows:

                                           Fiscal Year Ended
                                              August 31
                                          1996        1995

     Feed Purchases                     $3,423,773     $1,068,014
     Animal Health Purchases               303,963         71,438
     Breeding Stock                        872,979        189,253
     Feeder Pig Sales                    5,035,160      1,467,069


     Farmland provides the Company with an administrative office in Yuma,
     Colorado at no cost to the Company.  Farmland also performs administrative,
     advisory and consulting services on behalf of Alliance pursuant to a
     contractual agreement.  The agreement provides that Farmland will be
     compensated for such services in an amount equal to one dollar per pig
     shipped adjusted annually for inflation for a term of ten years commencing
     July 13, 1994.  Amounts paid by Alliance to Farmland under such agreement
     were as follows:

                                  Fiscal Year Ended
                                       August 31
                                   1996           1995

             Management Fee      $151,905       $47,045


     Alliance owed $38,650 and $137,722 at August 31, 1996 and $66,597 and
     $32,882 at August 31, 1995 to Farmland and Yuma Cooperative respectively,
     for goods and services.  Alliance is also obligated to Farmland in the
     amount of $636,424 at August 31, 1996 pursuant to a $760,000 promissory
     note.  See note 6.

4.   Inventory


     Major components of inventories as of August 31, 1996 and  August 31, 1995
     are as follows:

                         August 31            August 31
                           1996                 1995

     Feeder Pigs         $2,265,056          $  993,554
     Other                  170,421              75,590
                         $2,435,477          $1,069,144





5.   Property, Plant and Equipment


     Property, plant and equipment at August 31, 1996 and 1995 consisted of  the
following:
                                  1996            1995

     Land                   $ 1,717,079       $ 261,340
     Buildings               13,129,134       7,599,070
     Site Improvements        1,019,936         422,458
     Machinery and equipment    254,316         123,034
     Mobile equipment            27,346          ---
     Furniture and office
         equipment               21,694          11,139
     Construction in progress   322,096       1,928,195

                            $16,491,601     $10,345,236





6.   Long-Term Debt


     Long term debt at August 31, 1996 and 1995 consisted of the following:

                                    1996                1995

     CoBank Term Loan            $11,518,000      $8,300,000
     CoBank Revolving Term Credit  2,141,000         865,000
     Note Payable to Farmland        636,424         ----

                                  14,295,424        9,165,000



     Less Current Maturities         870,000           580,000

                                 $13,425,424        $8,585,000




     On May 19, 1995, Alliance entered into a $23,600,000 secured credit
     facility with CoBank.  This agreement provides for $18,850,000 of term
     loans and $4,750,000 of revolving term credit.  Proceeds from the term
     loans are used for construction of feeder pig production facilities and are
     advanced by CoBank as Alliance incurs construction costs.  Proceeds from
     revolving term credit may be used for working capital and other purposes.
     The unused commitments expire February 28, 1997 for the term loans and June
     20, 2006 for the revolving term credit.  Interest accrues on the
     outstanding principle balance of the loan at a rate equal to CoBank=s
     national variable rate, plus 1.25% (9.5% at August 31, 1996).  Alliance
     capitalized $38,181 and $60,105 of interest on construction for the fiscal
     years ended August 31, 1996 and 1995 respectively.

     At August 31, 1996, no additional term loans were immediately available,
     $422,000 of term loans will be made available by CoBank upon final
     acceptance of the feeder pig production facilities and $779,000 of
     revolving term credit was immediately available.

     Additional amounts available of term loans of $6,330,000 and revolving term
     credit of $1,830,000 are restricted and available only as additional shares
     of common stock are sold ($2,110,000 of term loans and $610,000 of
     revolving term credit for every $1,360,000 of common stock sold).

     Alliance is required to comply with various covenants, including, but not
     limited to (i) maintaining at least $3,350,000 of shareholder=s equity,
     (ii) maintaining modified working capital (calculated as current assets,
     plus the available revolving term credit, minus current liabilities
     excluding the current portion of term debt payments) of at least $406,000,
     (iii) restrictions on the incurrence of additional indebtedness, and (iv)
     restrictions on the declaration and payment of the cash portion of
     patronage distributions and other distributions or allocations of earnings,
     surplus or assets.  As of August 31, 1996 Alliance was in compliance with
     all covenants.  Alliance may be required to make equity investments in
     CoBank in an amount not to exceed 1% of the average five-year principal
     loan balance until Alliance meets CoBank=s target level of equity
     investment, which is currently 11.5% of the average five-year principal
     loan balance.  As of August 31, 1996, substantially all assets of Alliance
     were pledged to CoBank.

     At August 31, 1996, $636,424 had been borrowed from Farmland pursuant to a
     $760,000 loan agreement.  The loan agreement with Farmland provides for
     interest at CoBank=s prime rate and requires repayment in 2005.

     Long-term debt as of August 31, 1996 matures during the fiscal years ending
     August 31 in the following amounts:


                         1997 $       870,000
                         1998       1,262,700
                         1999       1,318,800
                         2000       1,318,800
                         2001       1,318,800
                    Thereafter      8,206,324

                              $    14,295,424




     7.     Commitments


          As of August 31, 1996, Alliance Farms was operating five 2,450 sow
     feeder pig production units and had an additional unit under construction.
     At August 31, 1996, commitments for construction of such facilities totaled
     approximately $655,000.  These commitments will be funded through bank
     borrowings.

     8.   Fair Value of Financial Instruments


          Alliance has financial instruments which are comprised of cash and
     cash equivalents, receivables, and long-term debt.  The fair value of
     receivables and long-term debt are estimated using current interest rates
     for similar instruments.  The carrying amounts of cash and cash equivalents
     approximate fair value because of the short maturity of these instruments.
     SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
     SECTION 15(D) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS

          No annual report to security holders covering the fiscal year ended
     August 31, 1996 or proxy statement, form of proxy or other proxy soliciting
     material has been sent by the Registrant to security holders.  The
     Registrant anticipates that an annual report will be furnished to security
     holders subsequent to the filing of this Annual Report on Form 10-KSB.  The
     Registrant undertakes to furnish copies of such annual report to the
     Commission when it is sent to security holders.

                                  SIGNATURES

               In accordance with Section 13 or 15(d) of the Exchange Act, the
     registrant caused this report to be signed on its behalf by the
     undersigned, thereunto duly authorized.

                    ALLIANCE FARMS COOPERATIVE ASSOCIATION



                                   By:   /s/  Wayne N. Snyder

                                        Wayne N. Snyder, President

Dated:  November  27, 1996

       In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature and Title                                         Date



/s/ Wayne N. Snyder                                    November 27, 1996

Wayne N. Snyder
Chairman of the Board, President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)


 /s/ Doug Brown                                        November 27, 1996
Doug Brown
Treasurer, Secretary and Director


 /s/ Merl Daniel                                       November 27, 1996

Merl Daniel
Director


 /s/ Gerald D. Johnson                                 November 27, 1996

Gerald D. Johnson
Director


 /s/ Loren Keppy                                       November 27, 1996

Loren Keppy
Director