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

     For the Fiscal Year Ended August 31, 1998
                                OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     For the transition period from __________________ to
     _________________.

                Commission file number: 0000927536

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

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


            503 East 8th Avenue, 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: 
$17,731,585.

     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 23, 1998, IS $4,360,000.  AS OF
NOVEMBER 23, 1998, THE ISSUER HAD 119 SHARES OF CLASS A COMMON
STOCK, PAR VALUE $0.01 PER SHARE, AND 36 SHARES OF CLASS B COMMON
STOCK, PAR VALUE $0.01 PER SHARE, OUTSTANDING.

               DOCUMENTS INCORPORATED BY REFERENCE

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


<PAGE>



                              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 who own shares of its
Class A Common Stock, and in the production of weaned pigs for
sale to its members who own shares of its Class B Common Stock or
Class C Common Stock.  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 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 503
East 8th Avenue, 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.

RECENT DEVELOPMENT

     COLORADO REGULATION OF COMMERCIAL SWINE OPERATIONS.  In the
November 1998 general election, Colorado voters adopted
amendments to the Colorado Revised Statutes concerning the
regulation of housed commercial swine feeding operations, which
amendments may have material and adverse consequences to the
Company and its business.  These amendments mandate certain water
and air quality control measures that must be implemented by
commercial swine feeding operations housing at least 800,000
pounds of swine or which are deemed commercial under local law. 
Commercial swine feeding operations are defined broadly to
include operations in which swine are fed in buildings for at
least 45 days in any 12-month period, and include two or more
operations under common ownership that are located on land
overlying the same groundwater aquifer (or are otherwise adjacent
to one another).  Although regulations implementing the
amendments have not yet been promulgated, the amendments
potentially are applicable to the Company's Colorado operations. 
See "Description of Business--Waste Disposal and Environmental
Matters--Colorado Regulation of Commercial Swine Operations."

DESCRIPTION OF BUSINESS

     GENERAL.  The Company is a cooperative association engaged
in the production of feeder pigs for sale to its members who own
shares of its Class A Common Stock, and in the production of
weaned pigs for sale to its members who own shares of its Class B
Common Stock or Class C Common Stock.  As of August 31, 1998, the
Company owned and operated five 2,450-sow feeder pig production
facilities located in Yuma County, Colorado (approximately 150
miles east of Denver), two 2,450-sow feeder pig production
facilities located in Wayne County, Illinois (approximately 100
miles east of St. Louis, Missouri), one 2,450-sow weaned pig
production facility in Yuma County,  Colorado and one weaned pig
production facility in Wayne County, Illinois.  As of the date of
this report, the Company has commenced preliminary development
activities with respect to a 5,000-sow pig production facility in
Yuma County, Colorado.  See "Description of Business--Expansion"
and "Description of Property" under Item 2.

     The Company's business strategy is to produce feeder and
weaned 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 using the net proceeds from
the sale of additional shares of its Class A Common Stock,
together with debt financing, to develop or acquire and
thereafter operate additional feeder pig production facilities,
and to expand its weaned pig production operations by using the
net proceeds from the sale of shares of its Class B Common Stock
or Class C Common Stock, together with debt <PAGE> financing, to develop
or acquire and thereafter operate weaned pig production
facilities.  In this regard, the Company intends to use the net
proceeds from the sale of each block of 17 shares of Class A
Common Stock, together with debt financing, to develop or acquire
one feeder pig production facility having the capacity of a
2,450-sow unit, to use the net proceeds from the sale of each
block of 18 shares of Class B Common Stock, together with debt
financing, to develop or acquire one weaned pig production
facility having the capacity of a 2,450-sow unit, and to use the
net proceeds from the sale of each block of 24 shares of Class C
Common Stock, together with debt financing, to develop or acquire
one weaned pig production facility having the capacity of a
2,450-sow unit.  As of the date of this report, the Company has
reached an agreement with the Company's existing lender and
Farmland concerning the provision of 100% debt financing for the
development of a 5,000-sow pig production facility until the
Company's next issuance and sale of a block of 17 shares of Class
A Common Stock, 18 shares of Class B Common Stock or 24 shares of
Class C Common Stock, at which time one-half of the principal and
interest of the $2,160,000 of debt financing provided by Farmland
must be repaid. The remaining principal and interest of the
Farmland debt financing is payable upon the Company's issuance
and sale of a second block of shares.   See "Certain
Relationships and Related Transactions--Farmland--Real Estate
Loans" under Item 12 and "Description of Business--Financing." 
No assurances can be given that the Company will develop
additional feeder pig production facilities or weaned pig
production facilities, that the Company will obtain the financing
required for any such development, whether through the sale of
additional shares of capital stock or the incurrence of
additional indebtedness, or that the Company will sell any
additional shares of capital 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 pigs to be produced by the Company under the same terms
required of the Company's other members.  Finally, the Company
has agreed to provide Farmland the first opportunity to purchase
any feeder and weaned 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).  The Company intends to
cause any  such excess production of weaned pigs, however, to be
retained by the Company for development into feeder pigs.  See
"Certain Relationships and Related Transactions" under Item 12
and "Description of Business -- 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 and weaned 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.



<PAGE> 



     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 (which includes operations relating to
the production of weaned pigs) 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.   In producing feeder pigs, the Company engages in the
first two of these stages of production, while  the Company's
production of weaned pigs will involve only the first of these
stages of production.

     Production of feeder and weaned 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 and weaned pig production facilities which is either in
existence, under development or proposed (which facilities may be
developed in tandem with, or as a part of, one or more
facilities) is anticipated to be stocked with approximately 2,450
sows.  The Company intends to maintain an adequate population of
female-line 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 and weaned pigs have been and will
continue to be produced from genetically consistent breeding
stock.  The Company currently utilizes breeding stock from Pig
Improvement Company ("P.I.C.") after discontinuing the use of
breeding stock obtained from DeKalb Swine Breeders and
repopulating its Colorado facilities.  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.



<PAGE> 




     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.  

     Alliance implemented an artificial insemination ("AI")
program in its Colorado and Illinois operations and plans to use
AI in any future facilities.  Although no assurances can be
given, Alliance believes that the use of AI will allow more rapid
improvements in carcass quality and assist in maintaining higher
health status of the herds.

     Alliance engaged in the depopulation of its operational
feeder pig production facilities located in Yuma County, Colorado
in order to repopulate these units with P.I.C. females.  Sourcing
for this repopulation was from Alliance's Illinois facility.  The
P.I.C. females were finished into breeding sows on the facilities
of independent Colorado producers.  In this regard, Alliance
contracted with Farmland for the use of facilities as to which
Farmland had acquired rights from the owners of such facilities. 
See "Certain Relationships and Related Transactions" under Item
12.  Although no assurances can be given, management believes
that the repopulation eventually will improve both productivity
and health of the sow units and may result in improved production
results in both nursery and finishing pig performance. 
Repopulation began in August 1997 with P.I.C. feeder pigs first
being made available in March 1998.  The repopulation project was
completed in October 1998.

     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 continue 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 establishes the specifications of all supplies
purchased, as well as the specifications for the purchase and
delivery of all feed 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
($12.00 per ton as of the date of this report), in addition to
the actual delivered cost of the feed ingredients.   Feed rations
which are pelleted are subject to a surcharge ($6.00 per ton as
of the date of this report).  The fixed charge was reduced from
$13.00 to $12.00 per ton on September 1, 1998, and both the fixed
charge and the surcharge will remain fixed through the expiration
of the Feed Purchase Agreement on August 31, 1999.  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" and "Certain
Relationships and Related Transactions" under Item 12.

     The Company believes that feed costs presently account for
approximately 35% to 40% of the cost of producing a feeder pig
and for approximately 20% and 25% of the cost of producing a
weaned 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 and weaned pigs,
the actual changes in the sales price of feeder and weaned pigs
will lag changes in feed cost because the Company determines the
cost of feeder and weaned pigs on a five month (twelve months
prior to September 1, 1998 with respect to feeder pigs)
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 -- Pig Purchase Agreement."

     SALE OF ANIMALS.  The Company intends to sell its feeder and
weaned 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 and <PAGE> weaned pigs produced at
the Company's facilities.  Pig Purchase Agreements have been and
are to be executed by members and prospective 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 Class
A Common Stock, but in no event greater than two and seven-tenths
(2.7) lots per share of Class A Common Stock on a prospective
rolling 12-month basis.  Presently, each share of Class A Common
Stock held in the Company will entitle the respective member to
contract to purchase one delivery allotment per 119-allotment
block made available under the Pig Purchase Agreements to the
members owning Class A Common Stock.  Similarly, members in the
Company will be required to purchase, and the Company will be
required to sell, lots of weaned pigs produced by the Company
that are to be sold to members in amounts proportionate to the
respective member's pro rata share of the Company's Class B
Common Stock or Class C Common Stock, as the case may be, but in
no event greater than two and seven-tenths (2.7) lots per share
of Class B Common Stock on a prospective rolling 12-month basis
and in no event greater than two and one-tenth (2.1) lots per
share of Class C Common Stock on a prospective rolling 12-month
basis.  Presently, each share of Class B Common Stock held in the
Company will entitle the respective member to contract to
purchase one delivery allotment per 36-allotment block made
available under the Pig Purchase Agreements to the members owning
Class B Common Stock.  The Company intends to allocate its
production of weaned pigs from all facilities between those that
are to be sent to nurseries and developed by the Company into
feeder pigs, on the one hand, and those that are to be sold as
weaned pigs, on the other hand, in the same proportion that the
number of the Company's operating feeder pig production
facilities bears to the number of the Company's operating weaned
pig production facilities.  The lots of feeder and weaned pigs
purchased by the respective member from time to time will not
necessarily be produced from the same feeder or weaned pig
production facility.  In the event that the Company issues
additional shares of Common Stock for the construction of
additional feeder or weaned pig production facilities, the number
of participants in the allotment of feeder or weaned pigs, as the
case may be, will be increased, although such increase is not
anticipated to materially change an investor's right to receive
his anticipated allotment of pigs.  Casualty to the Company's
facilities, diminished breeding stock productivity or extreme
mortality or morbidity, among other adverse circumstances, could
reduce the number of feeder or weaned pigs available for purchase
by members and increase the price of pigs under the 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 and weaned 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 Class A Common Stock
to such members and the initial lots of weaned pigs resulting
from the development of the Company's weaned pig production
operations are not expected to be available to new investor
members for up to 11 to 13 months after completion of the sale to
such members of a minimum block of 18 shares of Class B Common
Stock or a minimum block of 24 shares of Class C Common Stock, as
the case may be.  New investor members will not be entitled to
purchase 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 Pig Purchase Agreement) from
the facilities.  Each such contract, or Pig Purchase Agreement,
constitutes an irrevocable ten-year commitment.  Each lot of pigs
purchased by a member pursuant to any such Agreement will be
priced based upon the following factors (all as defined in such
Agreement):  the financing cost per pig, the operating cost per
pig, and a $0 to $4.50 per pig production margin (changed from
$4.50 effective September 1, 1998 with respect to feeder pigs) as
determined by the Board of Directors in its discretion.  In the
event that a member fails at least twice to perform his purchase
obligation under such Agreement, such member will be in default,
which default may result in the relinquishment of his purchase
rights under such 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 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 or
weaned pigs, as the case may be, (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 Class A Common Stock
on a prospective <PAGE> rolling 12-month basis or produces weaned pigs
in excess of two and seven-tenths (2.7) lots per share of Class B
Common Stock or two and one-tenth (2.1) lots per share of Class C
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 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
or weaned 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).  The Company intends to cause any 
such excess production of weaned pigs, however, to be retained by
the Company for development into feeder pigs.  See "Description
of Business -- 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 has reached an
agreement with the Company's existing lender and Farmland
concerning the provision by such lender and Farmland of 100% debt
financing for the development of a 5,000-sow pig production
facility in Yuma County, Colorado.  See "Description of Business--
Financing."  In connection with obtaining this financing,
Farmland has contracted to purchase, until the first to occur of
the expiration of ten years and the date on which Farmland is
repaid on its loan, the marginal increase in Alliance's
production of weaned pigs (approximately 97 lots of weaned pigs
on a prospective rolling 12-month basis) resulting from the
development of the facility constructed using the proceeds of
such financing.  Farmland's purchase of such weaned pigs would be
under substantially the same terms required of the Company's
members pursuant to the Pig Purchase Agreements, except that the
purchase price for pigs does not include the production margin. 
See "Description of Business--Pig Purchase Agreement."

     COMPETITION.  The feeder and weaned pig production business
is competitive and fragmented among family-owned and
investor-owned farms and large-scale agribusiness pig production
operations.  Feeder and weaned pigs are available at sale barn
auction, markets such as Farmland's Pig Finder  electronic 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 and weaned
pigs produced at the Company's facilities.  If the Company
produces 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 and the quality and consistency of the pigs produced by
it.  See "Description of Business--Business Environment" and
"Description of Business--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 additional 2,450-sow feeder pig production
facilities (which facilities may exist as stand-alone units or as
part of 5,000-sow production complexes) and additional 2,450-sow
weaned pig production facilities (which facilities may exist as
stand-alone units or as part of 5,000-sow production complexes). 
The ability of the Company to construct or acquire each such
feeder pig production facility is subject to it obtaining at
least $3,940,000 of net financing proceeds, and the ability of
the Company to construct or acquire each such weaned pig
production facility is subject to it obtaining at least
$3,100,000 of net financing proceeds.

     The Company believes that substantial economies of scale
will be realized in the event that the Company is able to expand
beyond its existing feeder pig and weaned pig production
facilities.  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 <PAGE> 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 (a) construct or acquire additional feeder
pig production facilities having the capacity of 2,450-sow units
is subject to it obtaining at least $3,940,000 of net financing
proceeds with respect to each such facility, and (b) construct or
acquire new weaned pig production facilities having the capacity
of a 2,450-sow unit is subject to it obtaining at least
$3,100,000 of net financing proceeds 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 debt borrowings.  The Company
anticipates that (a) with respect to each minimum block of 17
shares of Class A 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 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, (b) with respect to each minimum
block of 18 shares of Class B Common Stock issued by the Company
at an aggregate price of $1,080,000, the Company would be
required to borrow approximately $2,160,000 of debt borrowings in
order to construct one new weaned pig production facility and
related support facilities, to purchase breeding stock, and to
provide working capital for operations, and (c) with respect to
each minimum block of 24 shares of Class C Common Stock issued by
the Company at an aggregate price of $1,080,000, the Company
would be required to borrow approximately $2,160,000 of debt
borrowings in order to construct one new weaned 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 March 18, 1998, the Company entered into various loan
agreements with CoBank, ACB ("CoBank") related to a secured
credit facility which provides for up to $26,846,700 of
non-revolving term debt,  $7,660,000 of revolving term credit and
$18,400,00 of construction financing.  Proceeds from the term
debt were used for refinancing the then existing non-revolving
term debt, and will be used to finance the construction or
acquisition of additional pig production facilities.  Proceeds
from the revolving term credit were used for refinancing the
existing revolving term credit and will be used to provide
working capital.  Proceeds from the construction loan may be used
for the construction or acquisition of pig production facilities
and are advanced by CoBank as construction costs are incurred by
Alliance.  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.  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. In addition, the unused portion of the credit facility
expires August 31, 2001 with respect to the revolving term
credit, with the amount outstanding on such date being due and
payable by September 30, 2011, and the unused portion of the
credit facility expires December 31, 2001 with respect to the
non-revolving term debt and September 30, 2001 with respect to
the construction financing.

     The availability of non-revolving term debt, revolving term
credit and construction debt under the CoBank credit facility is
subject to specified equity investment levels in the Company
being satisfied.  As of August 31, 1998, $7,001,597 was
immediately available to Alliance under its credit facility.  
The availability of $15,002,900 of unused term loans, $4,280,000
of revolving term credit and $9,760,000 of construction loans
under the CoBank credit facility is restricted and may be made
available to the Company to the extent that: (a) with regard to a
feeder pig production facility having the capacity of a 2,450-sow
unit (i) an additional equity investment of $1,360,000 (e.g., 17
shares of Class A Common Stock sold for at least $80,000 each) is
made in the Company; or (ii) the Company secures a $1,360,000 
subordinated non-revolving term loan from Farmland (representing
an amount equal to an equity investment) (a "Feeder Equity
Loan"), or (b) with regard to a weaned pig production facility
having the capacity of a 2,450 sow unit (i) an additional equity
investment of $1,080,000 (e.g., 18 shares of Class B Common Stock
sold for at least $60,000 each or 24 shares Class C Common Stock
sold for at least $45,000 each) is made in the Company; or (ii)
the Company secures a $1,080,000  subordinated non-revolving term
loan from Farmland (representing an amount equal to an equity
investment) (a "Weaned Equity Loan").  With respect to each
additional equity investment or Feeder Equity Loan of $1,360,000
obtained by the Company for the construction of a feeder pig
unit, the Company is entitled to obtain advances under the credit
facility of $2,720,000 <PAGE> ($2,110,000 of term loans and $610,000 of
revolving term credit), up to an aggregate of $5,440,000.  With
respect to each additional equity investment or Weaned Equity
Loan of $1,080,000 obtained by the Company for the construction
of a weaned pig unit, the Company is entitled to obtain advances
under the credit facility of $2,160,000  ($1,675,000 of term
loans and $485,000 of revolving term credit) up to an aggregate
of $8,640,000.

     Prior to any advance being made by CoBank under the existing
credit facility, certain conditions precedent must be addressed
to CoBank's satisfaction, including but not limited to (i)
provision of a survey of the Company's realty upon which the
construction will take place, including any effluent and water
easements servicing the realty, (ii) provision of environmental
audits respecting the Company's realty, (iii) obtaining
performance bonds and lien payment bonds and builder's risk
casualty insurance respecting such construction, (iv) obtaining a
chain of title and title insurance respecting the Company's
realty, (v) provision of evidence that CoBank has a perfected
first priority lien on all security for the Company's
obligations, (vi) submission of a construction budget and
schedule, along with the plans and specifications for the
proposed facility, and (vi) an appraisal of the proposed facility
to be constructed based upon the plans and specifications.  As of
August 31, 1998, the outstanding balance of loans made by CoBank
under this credit facility was $16,842,203.

     It is anticipated that the Feeder Equity Loans and Weaned
Equity Loans would be provided on terms substantially identical
to those applicable to the facilities expansion loans previously
made by Farmland to Alliance.  See "Certain Relationships and
Related Transactions--Farmland--Real Estate Loans" under Item 12. 
In this regard, such loans 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 a
Feeder Equity Loan would require the Company to make
interest-only payments for the life of the loan, with a final
balloon payment of the outstanding loan balance to be made upon
the earlier of (i) the Company's issuance and sale of a minimum
block of 17 shares of Class A Common Stock , or (ii) the
expiration of ten years.  The payment schedule for a Weaned
Equity Loan would require the Company to make interest-only
payments for the life of the loan, with a final balloon payment
of the outstanding loan balance to be made upon the earlier of
(i) the Company's issuance and sale of a minimum block of 18
shares of Class B Common Stock or 24 shares of Class C Common
Stock, or (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, it is anticipated that Farmland would contract to
purchase all feeder and weaned pigs, as the case may be, produced
at the facility that was constructed using the proceeds of the
Farmland loan until the first to occur of the expiration of ten
years and the date on which Farmland is repaid.  See "Business--
Sale of Animals."  The CoBank credit facility limits the number
of outstanding equity loans, including Feeder Equity Loans and
Weaned Equity Loans, at any one time, to eight.  No assurances
can be given that Farmland will now, or in the future, make an
Equity Loan, either Feeder or Weaned, 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 in September 30, 2005. 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
existing non-revolving term debt are to be made in equal monthly
installments of $128,600 each, commencing April 20, 1998 and
continuing thereafter until and including August 20, 1998, and
thereafter in equal monthly installments of $151,000, with the
remaining unpaid balance being due and payable on that date which
is ninety-nine months after the final advance under the non-
revolving term loan.  Principal payments pursuant to each
$2,110,000 of new non-revolving term loans are to be made in
monthly installments of $21,800 each, beginning on the 20th day
of the eighteenth month following the date of the initial advance
of such $2,110,000 loan.  For each $2,720,000 of new construction
loans, payment of the entire outstanding principal balance is to
be made on that date that is sixteen (16) months after the date
of the initial advance for construction of the proposed facility. 
The revolving loan commitment will be reduced in 40 equal
payments commencing on August 31, 2001, such that after the
fortieth reduction, the revolving loan commitment will be zero. 
To the extent that the outstanding principal balance under the
revolving loan exceeds the revolving loan commitment, the Company
will be required to immediately make a principal payment in a
amount sufficient to reduce the outstanding principal balance
under <PAGE> the revolving loan to an amount not exceeding the revolving
loan commitment.  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 a base rate
margin of 1.25% for non-revolving term loans and for revolving
loans or 2.25% for construction loans, 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,
1998, interest accrued on the outstanding principal balance on
the respective loan portions under variable rates at 9.75% per
annum for non-revolving term loans, 9.75% per annum for revolving
term loans and 10.75% per annum for construction loans and
between 8.26% and 9.39% for those portions under fixed rates. 
The interest rates 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, 1998, 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.

     In obtaining the secured credit facility, and for each year
in which the credit facility is effective, the Company is
required to pay a commitment fee equal to 0.5% on the outstanding
revolving loan commitment and 0.25% on the unadvanced amount of
the construction loan commitment.  In addition, the Company will
be required to pay an activation fee equal to 1% on the amount
withdrawn under the construction loan, along with 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 and future 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 a 0.25 ratio of total
equity to total assets for the period ending August 31, 1998, and
thereafter a 0.35 ratio of total equity to total assets, (ii)
maintenance of a debt service coverage ratio (calculated by
dividing average annual cash flow by the current debt) of not
less than one, (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, 1998.

     WASTE DISPOSAL AND ENVIRONMENTAL MATTERS.  

     General.  Several environmental requirements potentially are
applicable to feeder and weaned pig production operations such as
those conducted or proposed to be 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 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 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 <PAGE> 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 or weaned pig production facility is or will be
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.

     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 or
weaned pig production facility will range from approximately
$100,000 to $135,000.  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.

     Colorado Regulation of Commercial Swine Operations.  In the
November 1998 general election, Colorado voters adopted
amendments to the Colorado Revised Statutes concerning the
regulation of housed commercial swine feeding operations, which
amendments may have material and adverse consequences to the
Company and its business.  These amendments mandate certain water
and air quality control measures that must be implemented by
commercial swine feeding operations housing at least 800,000
pounds of swine or which are deemed commercial under local law. 
Commercial swine feeding operations are defined broadly to
include operations in which swine are fed in buildings for at
least 45 days in any 12-month period, and include two or more
operations under common ownership that are located on land
overlying the same groundwater aquifer (or are otherwise adjacent
to one another).  Although regulations implementing the
amendments have not yet been promulgated, the amendments
potentially are applicable to the Company's Colorado operations.

     In general, the amendments to the Colorado Revised Statutes
(i) condition the operation, construction or expansion of a
housed commercial swine feeding operation on receipt of an
individual discharge permit from the Colorado department of
public health and environment, (ii) direct the Colorado water
quality control commission to adopt rules regarding the
construction, operation and management of, and waste disposal by,
such operations, (iii) provide that such rules shall require that
land application of waste from such operations must not exceed
the nutritional requirements of the plants on that land and must
minimize runoff and seepage of such waste, (iv) provide that such
rules shall require that such operations not be permitted to
degrade the physical attributes or value of Colorado trust lands,
make immediate reports of spills or contamination to state and
county health departments, and monitor land-applied waste from
such operations and provide periodic reports to the state health
department, (v) authorize fees on such operations (of up to $0.20
per animal) to offset direct and indirect costs of the program,
(vi) authorize local governments to impose more restrictive
requirements, (vii) require that such operations employ
technology to minimize odor emissions, (viii) require operations
to cover waste impoundments that do not use air or oxygen in
their waste treatment method, and to recover, incinerate or
manage odorous gases from such operations, (ix) establish minimum
one mile distances between new land waste application sites or


<PAGE> 



impoundments and occupied dwellings, schools and municipal
boundaries, and (x) provide for enforcement of these provisions
by the state or any person who may be adversely affected.  The
amendments provide that the implementing regulations are to be
promulgated by March 31, 1999, and that housed commercial swine
feeding operations must be in compliance with these regulations
by July 1, 1999.

     Although the Company has begun to evaluate the impact that
the amendments may have on it, the Company presently is unable to
estimate the costs that reasonably could be expected to be
incurred by it in complying with the amendments and any related
regulations that may be promulgated.  The Company believes,
however, that if the amendments are applicable to it they may
have a material impact on the Company and its business.

     EMPLOYEES.  Operating management of each of the Company's
existing and future facilities will be the responsibility of each
respective production 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. See
"Certain Relationships and Related Transactions--Farmland--Swine
Production Consulting and Services Agreement" under Item 12.

     As of August 31, 1998, the Company employed 144 persons, of
whom 143 were full-time employees and one was a part-time
employee.  Of the Company's 143  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 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.  The November 1998 adoption of amendments to
the Colorado Revised Statutes concerning the regulation of housed
commercial swine feeding operations, however, may have material
and adverse consequences to the Company and its business.  See
"Description of Business -- Waste Disposal and Environmental
Matters."

     PIG PURCHASE AGREEMENT.  

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

     Purchase.  The Company intends to sell feeder pigs and
weaned pigs that meet particular minimum weight, health,
nutrition and genetic quality standards to members of the Company
who have entered into a  Pig Purchase Agreement with the Company. 
Feeder pigs and weaned pigs that meet such standards, as set
forth in the Pig Purchase Agreement, are referred to as
"Qualifying Pigs."  Pursuant to the terms of the Pig Purchase
Agreement, (a) a member of the Company owning Class A Common
Stock is required to purchase, and the Company is required to
sell, feeder pigs constituting Qualifying Pigs in lots of no less
than 900, and no more than 1,000, pigs per lot, as determined by
the Company, and (b) a member of the <PAGE> Company owning Class B
Common Stock or Class C Common Stock is required to purchase, and
the Company is required to sell, weaned pigs constituting
Qualifying Pigs in lots of no less than 925, and no more than
1,025, pigs per lot, as determined by the Company.  Lots of
feeder pigs constituting Qualifying Pigs are to be made available
to members of the Company owning Class A Common Stock 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
ownership interest in the Company's outstanding Class A Common
Stock and the actual production of feeder pigs constituting
Qualifying Pigs from the Company's facilities.  Lots of weaned
pigs constituting Qualifying Pigs are to be made available to
members of the Company owning Class B Common Stock or Class C
Common Stock 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 ownership interest in the Company's outstanding
Class B Common Stock or Class C Common Stock, as the case may be,
and the Company's actual production of Qualifying Pigs that are
to be sold to members of the Company as weaned pigs.  The Company
intends to allocate its production of weaned pigs from all
facilities between those that are to be sent to nurseries and
developed by the Company into feeder pigs, on the one hand, and
those that are to be sold as weaned pigs, on the other hand, in
the same proportion that the number of the Company's operating
feeder pig production facilities bears to the number of the
Company's operating weaned pig production facilities.  If the
Company is successful in implementing its business plan and the
proposed new production facilities go into operation on schedule,
the initial lots of feeder pigs for new investor members owning
Class A Common Stock are not expected to be available for up to
13 to 15 months after completion of the sale of a minimum block
of 17 shares of Class A Common Stock to such members, and the
initial lots of weaned pigs for new investor members owning Class
B Common Stock or Class C Common Stock are not expected to be
available for up to 11 to 13 months after completion of the sale
of a minimum block of 18 shares of Class B Common Stock or a
minimum block of 24 shares of Class C Common Stock, as the case
may be, to such members.   New investor members will not be
entitled to purchase 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 Class A 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 Pig Purchase Agreements. 
In the event that the production of weaned pigs exceeds two and
seven-tenths (2.7) lots per share of Class B Common Stock or two
and one-tenth (2.1) lots per share of Class C Common Stock, as
the case may be, 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 Pig Purchase
Agreements.  The Company intends to cause any  such excess
production of weaned pigs to be retained by the Company and
developed into feeder pigs.  Investor members will not be
entitled to purchase any excess production of pigs.  The Company
has agreed in its Swine Production Services Agreement with
Farmland to provide Farmland the first opportunity to purchase
excess 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 $0
to $4.50 per pig production margin (changed from $4.50 effective
September 1, 1998 with respect to feeder pigs) as determined by
the Board of Directors in its discretion.  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 debt financing incurred by the Company in
connection with the consummation of the sale of Common Stock to
such member (or his predecessor in interest), which debt
financing (except with respect to certain existing Pig Purchase
Agreements) shall be deemed to be at least $1,970,000 per feeder
pig production facility and $1,600,000 per weaned pig production
facility, by (ii) the total number of feeder pigs or weaned pigs,
as the case may be, constituting Qualifying Pigs anticipated to
be produced and shipped by the Company during such 12-month
period from the one or more pig production facilities developed
through the use of such debt financing and the net proceeds from
the sale of Common Stock to such member (or his predecessor in
interest) (such estimate being based on the total estimated
number of feeder pigs or weaned pigs, as the case may be,
constituting Qualifying Pigs to be produced and shipped by the
Company during such 12-month period from all pig production
facilities of the Company).  The operating cost per pig is to be
determined on a rolling five-month (changed from 12-month
effective September 1, 1998 with respect to feeder pigs)
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

<PAGE> 



(including any capital sinking fund payments) for production
facility and breeding stock improvements and replacements, in
each case, for the five months (changed from 12-month effective
September 1, 1998 with respect to feeder pigs) preceding the then
present month of shipment, by (ii) the number of Qualifying Pigs
produced and shipped by the Company during such five-month
(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 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 (a) the extent of any
variation in the average weight of feeder pigs constituting
Qualifying Pigs from 45 pounds, and (b) the extent of any
variation in the average weight of weaned pigs constituting
Qualifying Pigs from 8 to 12 pounds.  To the extent that the
average weight of a shipment of feeder pigs constituting
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 (or $.20 under some existing Agreements) per
pound per pig for the average weight between 50 pounds and 60
pounds.  To the extent that the average weight of feeder pigs
constituting Qualifying Pigs is less than 45 pounds per pig, the
purchase price will be decreased by $.25 per pound per pig.  To
the extent that the average weight of a shipment of weaned pigs
constituting Qualifying Pigs exceeds 12 pounds per pig, the
purchaser will pay an additional $1.00 per pound per pig.  To the
extent that the average weight of a shipment of weaned pigs
constituting Qualifying Pigs is less than 8 pounds per pig, the
purchase price will be decreased by $1.00 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 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 (or his
predecessor in interest) thereunder, subject to earlier
termination upon the occurrence of certain events.  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 Pig Purchase
Agreement as of the expiration of such initial or extended term. 
The Company may terminate a member's 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 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 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 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 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 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 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 <PAGE> member
desires to exercise such termination right.  The foregoing
termination rights constitute the member's exclusive rights of
termination under the 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
Pig Purchase Agreement or otherwise and regardless of whether
demanded prior to the expiration of the initial or any extended
term of the 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 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 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 such 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
Pig Purchase Agreement.  If the member is prevented from
performing under the 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--Pig Purchase
Agreement--Term and Termination" and "--Grant of Security
Interest."

     Grant of Security Interest.  Pursuant to the Pig Purchase
Agreement, a member grants to the Company, as security for the
performance of all of the member's obligations under the 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 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 and weaned pigs produced by
it, except as expressly provided in the 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
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 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 conducted
operations from its five existing 2,450-sow feeder pig production
facilities located in Yuma County, Colorado (approximately 150
miles east of Denver), its two 2,450-sow feeder <PAGE> pig production
facilities in Wayne County, Illinois, its one 2,450-sow weaned
pig production facility in Yuma County, Colorado and its one
weaned pig facility in Wayne County, Illinois.  In addition, the
Company has commenced preliminary development activities with
respect to a 5,000-sow pig production facility in Yuma County,
Colorado.  The original Yuma County, Colorado feeder pig
production 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
pig production 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 feeder pig
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, 1998,
CoBank's prime rate was 8.5%.  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
production facility constructed thereon.  See "Certain
Relationships and Related Transactions--Farmland--Real Estate
Loans"under Item 12.

     As of the date of this report, the Company has acquired
approximately 475 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 two feeder pig production facilities and one weaned pig
production facility on this property. 

     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 "Option Property").  Under the terms of
this option contract, if the Company failed to fully exercise the
option as to the entire Option Property prior to November 1,
1998, the Company would 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 was
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 was reduced by $150,000.  In
November 1998, the option to purchase the Option Property expired
and the Company became obligated to make the $150,000 liquidated
damages payment.

     The Company maintains offices at 503 East 8th Avenue in
Yuma, Colorado.  Farmland and the Company share equally the cost
for this office space.

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, 1998.



<PAGE> 



                             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.  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
any such assignee or transferee of Common Stock executes and
delivers to the Company a Pig Purchase Agreement.

     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 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 Pig Purchase Agreement
without having executed and delivered a replacement for such
Agreement or the member's failure to be a party to such
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 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 canceled,
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--Pig Purchase Agreement " under Item 1.

HOLDERS

     The authorized capital stock of the Company consists of
5,000 shares of (Class A) common stock, $.01 par value per share,
2,500 shares of Class B common stock, $.01 par value per share,
and 2,500 shares of Class C common stock, $.01 par value per
share.  As of August 31, 1998, there were 119 shares of Class A
Common Stock issued and outstanding, which were held of record by
23 stockholders; 36 shares of Class B Common Stock issued and
outstanding, which were held of record by eight stockholders; 
and no shares of Class C Common Stock issued and outstanding. 
Only producers of agricultural products, associations of such
producers, and federations of such associations who have executed
and delivered to the Company a Pig Purchase Agreement may own
Common Stock.  Only stockholders of the Company may be members of
the Company.  Except as otherwise specifically described under
this "Holders" caption, the powers, preferences and rights of the
Class A Common Stock, Class B Common Stock and Class C Common
Stock are in all respects identical. To the extent permitted by
applicable law, the Board of Directors of the Association is
authorized to provide by resolution for the issuance of shares of
stock of any class or of any series of any class at any time and
to determine, prior to the issuance of any shares of stock of
that class or series, the designations, preferences, limitations
and relative rights, if any, thereof.

     Except as described in the immediately following sentence,
holders of Class A Common Stock and Class B Common Stock are
entitled to one vote for each share held on all matters submitted
to a vote of stockholders and holders <PAGE> of Class C Common Stock are
entitled to three-fourths of one vote for each share held on all
matters submitted to a vote of stockholders.  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),
(i) no cooperative association stockholder is permitted to vote
shares of Common Stock representing 25% or more of the shares
then outstanding with respect to any matter as to which members
are not entitled to vote separately as a group or class and (ii)
no cooperative association stockholder is permitted to vote
shares of Common Stock representing 25% or more of the shares of
any class then outstanding with respect to any matter as to which
members are entitled to vote separately as a group or class.  A
majority of the outstanding shares of Common Stock entitled to
vote constitutes a quorum at any stockholder meeting, except that
if any class of capital stock is entitled to vote separately as a
class or group, such a quorum must also be obtained with respect
to such class.  The affirmative vote of at least two-thirds of
the shares represented at a meeting at which a quorum is present
is required to amend the Company's Articles of Incorporation, to
approve certain mergers, consolidations or sales of all or
substantially all of the Company's assets and to approve certain
other matters.  Holders of the Class A Common Stock, holders of
the Class B Common Stock and holders of the Class C Common Stock
must vote separately as groups or classes with respect to
amendments to the Articles of Incorporation that alter or change
the designation, preferences, limitations or relative rights of
their respective classes of stock so as to affect them adversely
and with respect to such other matters as may require group or
class votes under applicable law.  Holders of the Common Stock do
not have cumulative voting rights in the election of directors or
preemptive rights to purchase additional shares of Common Stock,
and have no subscription, redemption or conversion rights.  

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 pigs sold pursuant to the Pig
Purchase Agreements or the Swine Production Services Agreement. 
The Company's "net margins" for this purpose generally are equal
to the Company's net income under generally accepted accounting
principles (taxable income prior to September 1, 1997)
attributable to patronage sourced business done with or for the
Company's members (determined before reduction for patronage
distributions paid by the Company).  In this regard, the Company
will compute its net income separately for each group of members
(including successors and permitted assigns) whose shares of the
Company's Common Stock originally were issued in connection with
the Company's acquisition or development of one or more feeder or
weaned pig production units financed in part thereby.  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
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. 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.  AS USED IN THIS
REPORT, THE WORDS "SHOULD," "EXPECT," "ANTICIPATE," "BELIEVE,"
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS.  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

<PAGE> 



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. 

     FISCAL YEARS ENDED AUGUST 31, 1998 AND 1997.  Shipments of
feeder pigs and weaned pigs were higher for the fiscal year ended
August 31, 1998 than in the prior year.  Alliance shipped 304,049
feeder pigs and 4,337 weaned pigs during fiscal 1998 compared to
231,598 feeder pigs and no weaned pigs shipped during fiscal
1997, an increase in the number of feeder pigs shipped of
approximately 31%.  Net sales for the fiscal year ended August
31, 1998 increased to $17,731,585 from $13,669,706 for the prior
year, an increase of $4,061,879 or approximately 30%.  This
increase in volume and sales dollars is primarily due to eight
units operating for the fiscal year ended August 31, 1998 versus 
six units for the fiscal year ended August 31, 1997.   Net sales
for the fiscal year ended August 31, 1998 consisted of
$17,579,963 feeder pig sales and $151,622 weaned pig sales.

     Alliance incurred positive gross margins of $4,351,131 and
$2,447,537 for fiscal 1998 and 1997, 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 and weaned pigs to its members.  The selling price for
Alliance's feeder and weaned pigs is based on, among other
things, the twelve-month (five-month effective September 1, 1998)
and five-month rolling average of operating costs per pig for
feeder and weaned pigs, respectively.  For the month ended August
31, 1998, 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 $1.73 per head sold.  For
the month ended August 31, 1997, the Company's operating costs at
the time pigs were sold (the then current operating costs) were
lower than the historical rolling average of operating costs by
$1.39 per head sold.

     Sales to Farmland (including sales to Farmland of Yuma
Cooperative's share of feeder pigs produced by the Company) for
fiscal 1998 and 1997 were $10,251,093 and $7,924,763,
respectively.   The average feeder pig net sales price per head
was $57.82 and $59.02 and the average feeder pig industry market
price per head was $35.32 and $56.84 during 1998 and 1997,
respectively.  The average weaned pig net sales price per head
was $34.96 and the average weaned pig industry market price per
head was $29.04 during 1998.

     Alliance recorded start-up costs of $1,051,481 and $281,025
relating to the operation of new production facilities during the
fiscal years ended August 31, 1998 and 1997, respectively.  All
of the costs for the fiscal year ended August 31, 1998 and all of
the costs for the fiscal year ended August 31, 1997 were
comprised of utilities, feed, labor and other general expenses
prior to the operation of the new feeder pig production
facilities.

     Loss on sale of breeding stock was $266,602 for the fiscal
year ended August 31, 1998 as compared to a gain of $94,123 for
the prior year period.  This loss is attributable to an
accelerated cull rate during the third and fourth quarter of
fiscal 1998, partially offset with the existence of more mature
facilities culling animals as compared to an unusually strong
market for hogs, and the culling by Alliance of a larger
percentage of its herd, which consists of a higher quality of
animal.  In connection with the repopulation of the Company's
Colorado facilities completed in October 1998, Alliance culled
all of its DeKalb breeding stock and replaced it with P.I.C.
genetics.

     Administrative expenses were $745,400 for the fiscal year
ended 1998 compared to $424,565 for the prior year period.  This
increase reflects the increased operations and includes higher
administrative, payroll and professional fees. 



<PAGE> 



     Interest expense of $1,389,312 for fiscal 1998 compared to
$1,321,984 for fiscal 1997 was incurred in financing the
development of the six existing and two new pig production
facilities.  The increase reflects an increase in outstanding
borrowings in fiscal 1998.

     Alliance earned net income of $1,124,403 for the fiscal year
ended August 31, 1998 compared to net income of $658,295 for the
prior year period.  The increased fiscal 1998 net income was
attributable to eight units operating as of August 31, 1998
versus six units operating as of August 31, 1997 and improved
gross margins resulting from the per pig sales price exceeding
operating costs for most of fiscal 1998.  This was partially
offset by $1,051,481 of start-up expenses related to the
development of two pig production facilities.  The fiscal 1997
net income was attributable to improved gross margins resulting
from the per pig sales price exceeding operating costs, caused in
part by improved productivity as well as lower corn prices from
fiscal 1996. The selling price for Alliance's feeder and weaned
pigs is based on the twelve-month (five-month effective September
1, 1998) and five-month rolling average of operating costs per
pig for feeder and weaned pigs, respectively, the debt service
financing cost per pig, and a production margin of $4.50 per pig
(in the case of feeder pigs) and $0 to $4.50 per pig as
determined by the Board of Directors (in the case of weaned
pigs).  Effective September 1, 1998 this fixed amount per pig of
$4.50 for feeder pigs will be changed to $0 to $4.50 per pig as
determined by the Board of Directors at its discretion.  In
addition to 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 and the Company's selling price formula
that contains a production margin.

     FISCAL YEARS ENDED AUGUST 31, 1997 AND 1996.  Shipments of
feeder pigs were higher for the fiscal year ended August 31, 1997
than in the prior year.  Alliance shipped 231,598 feeder pigs
during fiscal 1997 compared to 148,926 feeder pigs shipped during
fiscal 1996, an increase of approximately 56%.  Net sales for the
fiscal year ended August 31, 1997 increased to $13,669,706 from
$7,037,927 for the prior year, an increase of $6,631,779 or
approximately 94%.  This increase in volume and sales dollars is
primarily due to six units operating for the fiscal year ended
August 31, 1997 versus four units for the fiscal year ended
August 31, 1996. 

     Alliance's sales for the fiscal year ended August 31, 1996
have been reduced by the accrual of a rebate of  $670,167 that
was 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 positive gross margins of $2,447,537 and $615,089 for
fiscal 1997 and 1996, 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 month ended August 31, 1997,
the Company's operating costs at the time pigs were sold (the
then current operating costs) were lower than the historical
rolling average of operating costs by $1.39 per head sold.  For
the month ended August 31, 1996, the Company's then current
operating costs exceeded the historical rolling average of
operating costs by $0.09 per head sold.

     Sales to Farmland (including sales to Farmland of Yuma
Cooperative's share of feeder pigs produced by the Company) for
fiscal 1997 and 1996 were $7,924,763 and $5,035,160,
respectively.   The average net sales price per head was $59.02
and $48.12 ($52.62 prior to giving effect to a $4.50 per pig
rebate) and the average industry market price per head was $56.84
and $41.15 during 1997 and 1996, respectively.

     Alliance recorded start-up costs of $281,025 and $426,926
relating to the operation of new production facilities during the
fiscal years ended August 31, 1997 and 1996, respectively.  All
of the costs for the fiscal year ended August 31, 1997 and all of
the costs for the fiscal year ended August 31, 1996 were
comprised of utilities, feed, labor and other general expenses
prior to the operation of the new feeder pig production
facilities.

     Gain on sale of breeding stock was $94,123 for the fiscal
year ended August 31, 1997 as compared to a loss of $226,738 for
the prior year period.  This increase is attributable to an
unusually strong market for hogs and the culling by Alliance of a
larger percentage of its herd, which consists of a higher quality
of animal.  In connection with the ongoing repopulation of the
Company's Colorado facilities, Alliance is culling all of its
DeKalb breeding stock and replacing it with P.I.C. genetics.



<PAGE> 



     Administrative expenses were $424,565 for the fiscal year
ended 1997 compared to $369,787 for the prior year period.  This
increase reflects the increased operations and includes higher
administrative, payroll and professional fees. 

     Interest expense of $1,321,984 for fiscal 1997 compared to
$1,001,329 for fiscal 1996 was incurred in financing the
development of the six existing and one new feeder pig
facilities.  The increase reflects an increase in outstanding
borrowings in 1997.

     Alliance earned net income of $658,295 for the fiscal year
ended August 31, 1997 compared to a net loss of $1,343,087 for
the prior year period.  The fiscal 1997 net income was
attributable to improved gross margins resulting from the per pig
sales price exceeding operating costs, caused in part by improved
productivity as well as lower corn prices from fiscal 1996.  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 remaining amount of the 1996 net loss was primarily
attributable to then current costs exceeding the rolling average
cost that per pig prices were based on, caused in part by high
death loss due to herd health issues, as well as rising corn
prices.  In addition, the Company's operating costs at the time
pigs were sold during part of fiscal 1997 and all of fiscal 1996
exceeded the historical rolling average of operating costs from
which the selling price for pigs was based.  The selling price
for Alliance's feeder pigs is 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.  During all
of fiscal 1996, however, the Company accrued a $670,167 rebate
that was 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.   There was no accrual of a
rebate during fiscal 1997.  In addition to 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 and the
Company's selling price formula for feeder pigs that contains a
$4.50 production margin.

     LIQUIDITY AND CAPITAL RESOURCES.  At August 31, 1998, the
Company reported a working capital deficit of $515,960 and total
assets of $29,524,555.  The Company issued 17 shares of Class A
Common Stock in August 1997 for net proceeds of $1,231,584. 
Alliance used these funds, in combination with $2,110,000 of
borrowings through August 31, 1998 for the repayment of a
$1,360,000 loan made by Farmland, and for the development,
population, and start-up of its second feeder pig facility in
Wayne County, Illinois.  Alliance issued 36 shares of Class B
Common Stock in November 1997 for net proceeds of $2,032,087. 
Alliance used these funds to repay the balance owed Farmland
pursuant to another $1,360,000 loan agreement, and for the
development, population, and start-up of one weaned pig facility
in Yuma County, Colorado and one in Wayne County, Illinois.

     As of the date of this report, the Company has 119 shares of
Class A Common Stock issued and outstanding, 36 shares of Class B
Common Stock issued and outstanding, no issued and outstanding
shares of Class C Common Stock, and is offering an additional 34
shares of Class A Common Stock, 18 shares of Class B Common Stock
and 72 shares of Class C Common Stock to qualified prospective
investors.  At August 31, 1998, Alliance had $7,001,597
immediately available under its credit facility with CoBank,
consisting of $5,014,893 of construction loans and $1,986,704 of
revolving term credit.  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, 1998, Alliance has borrowed
$333,172 from Farmland to purchase land for future expansion. 
See "Business--Financing" under Item 1.  In the opinion of
management, these arrangements for debt capital are adequate for
Alliance's present operating and capital plans. 

     As of August 31, 1998, Alliance has borrowed $966,572 from
Farmland.   This consists of $333,172 to purchase land for future
expansion and $633,400 to begin construction of the 5,000-sow pig
production facility in Yuma County, Colorado, prior to receiving
the equity from share sales.  During the fiscal year ended August
31, 1998, Alliance had capital expenditures of $2,530,837 for
construction of its first weaned pig production facility in Yuma
County, Colorado, $2,143,082 for its first weaned pig production
facility in Wayne County, Illinois, and $490,042 for construction
of the 5,000-sow pig production facility in Yuma County, Colorado
currently under construction.  The remaining capital expenditures
were for replacement breeding stock and building construction for
the first seven production facilities.

     Major uses of cash during the fiscal year ended August 31,
1998 include $9,269,112 for capital expenditures on new and
existing facilities, $1,048,573 decrease in revolving term
credit, and $7,480,500 of principal payments on long term debt. 
Major sources of cash include $2,032,087 of proceeds, net of
offering costs, from the issuance of capital stock, <PAGE> $10,404,276
of proceeds from the issuance of long term debt and $4,151,188 in
cash provided by operating activities.  The increase in cash
provided by  operating activities is primarily related to
increased earnings and changes in certain working capital items.

     On March 18, 1998, Alliance entered into a new $34,506,700
secured credit facility with CoBank to provide financing for the
debt portion of the construction of up to six 2,450-sow weaned
and/or feeder pig production facilities, related support
facilities and initial breeding stock associated with each unit
and to restate and modify the terms and conditions of the
existing loan agreements, including the commitments for financing
the debt portion of the two 2,450-sow weaned pig production
facilities then under construction, along with these units
related support facilities, initial breeding stock and
capitalized start-up costs.  This agreement provides for
$26,846,700 of term loans and $7,660,000 of revolving term
credit.  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.  There is no assurance that additional shares of
common stock will be sold and the specified equity investment
levels satisfied.  Under this new credit facility, proceeds from
the construction loan are used for construction of facilities and
are advanced by CoBank as construction costs are incurred by
Alliance.  Proceeds from the term loans and revolving term credit
are used to repay the construction loan upon completion of a
facility, and for working capital.

     The new credit facility provides for the monthly payment of
principal and interest.  The existing non-revolving term loans
changed from ten year to eight year terms effective August 31,
1998.  Each new tranche of non-revolving term credit will be
repaid with monthly interest payments and with 97 monthly
principal payments of $21,800 for feeder pig facilities and
$17,300 for weaned pig facilities to begin 18 months after the
initial advance on each new construction loan commitment.  The
revolving credit facility will mature on August 31, 2010 and will
decrease in 40 equal amounts at the end of each of the Company's
fiscal quarters based on the amount of available commitment at
August 31, 2001.

     Alliance is required to comply with various covenants,
including, but not limited to (i) maintaining a total equity to
total assets ratio of not less than 0.25 for the period ending
August 31, 1998, and thereafter 0.35 ratio of total equity to
total assets, (ii) maintaining a debt service coverage ratio of
not less than 1.00 (calculated as average annual cash flow
divided by current debt), (iii) restrictions on the occurrence of
additional indebtedness.  As of August 31, 1998, 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, 1998, substantially all assets of Alliance were
pledged to CoBank.

     INCOME TAXES.  The Company operates as a cooperative that is
not exempt from federal income taxes and, therefore, is subject
to taxes on all income not paid or allocated to members. 
Deferred income taxes have not been provided because virtually
all sales since inception have been to members and virtually all
future sales are anticipated to be to members.  For the years
ended August 31, 1998 and 1997, Alliance has not provided income
taxes, as member-sourced losses incurred in prior years have been
carried forward to offset member-sourced income in 1998 and 1997. 
At August 31, 1998, Alliance has member-sourced loss
carryforwards amounting to $2,874,000 available to offset future
member-sourced taxable income and $3,905,000 available to offset
future patronage refunds.

     Patronage refunds for reinvestment for the year ended August
31, 1998 represent nonqualified written notices of allocation
which are deductible by Alliance for Federal income tax purposes
upon redemption of the equities issued.

     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 and weaned
pig production under terms which cause the sales price of 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 PRONOUNCEMENTS.  In June 1997, the
Financial Accounting Standards Board ("FASB") issued SFAS No.
130, Reporting Comprehensive Income.  This statement establishes
standards for reporting and display of items <PAGE> that may affect
shareholder equity but are not components of reported net income. 
 SFAS No. 130 is effective for the first quarter of fiscal 1999. 
The Company currently has no items constituting other
comprehensive income.

     In June 1997, the FASB also issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information".  This statement supersedes and expands on the
segment disclosure requirements of SFAS No. 14.  The statement
requires certain financial disclosures about business segments. 
The definition of business segments has been changed from an
industry definition to that of a management definition.   SFAS
No. 131 is effective August 31, 1999.  It is not expected that
the statement will have an effect on the Company's financial
reporting.

     In February 1998, the FASB issued SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits".
SFAS No. 132 is effective August 31, 1999. The statement will not
effect the Company's financial reporting.

     In 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities."  This statement
is effective for all fiscal quarters beginning after June 15,
1999.  The Company currently has no derivative instruments
subject to SFAS No. 133.

     YEAR 2000.  The Company has completed an assessment of the
changes needed to make its financial system, operational system
and equipment year 2000 compliant.  A plan has been developed to
implement such changes.  Researching, selecting and purchasing a
software application that will meet the financial and reporting
needs of the Company and that is year 2000 compliant are expected
to be completed by late 1998.  Installation, testing and training
are anticipated to occur in early 1999.  The cost of replacement
software is anticipated to be approximately $20,000.  Currently,
the Company is reviewing the non-information technology related
systems.  At this time, no equipment that is date sensitive has
been identified.  The time frame and cost associated with
becoming year 2000 compliant is based on management's best
estimates, although no assurances can be given in this regard. 
The Company intends to evaluate its reliance on third parties to
determine and minimize the extent to which its operations may be
dependent on such third parties to remediate year 2000 issues in
their systems.  In addition, as systems are tested the Company
intends to develop a contingency backup plan for systems which
exhibit possible year 2000 problems.

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.  The Company was formed in May,
1994 (with its predecessor, Yuma LLC, being formed in October,
1991) and is at an early stage of development. Although the
Company has been engaged in the production of feeder pigs since
July 1994 (which process includes the production of weaned pigs),
the Company has not engaged at all in the production of weaned
pigs for sale until 1998.  The Company 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 the Company successfully will implement
its business plan to develop additional feeder pig production
facilities and weaned pig production facilities and realize any
significant economies of scale or that the feeder pigs and weaned
pigs, as the case may be, to be raised at such facilities will be
made available to Alliance's stockholders under the 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.



<PAGE> 




     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.  See "Business" under Item 1.

     HERD HEALTH.  The health of the breeding herd and pigs
produced by the Company can greatly impact, and has greatly
impacted, the profitability of the Company.  In the event that
the Company's breeding herd or feeder or weaned pig population
contracts a disease causing diminished breeding stock
productivity, or extreme mortality and morbidity, the Company
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 pigs under the Pig
Purchase Agreements as well as a reduction in the pigs available
for purchase by stockholders under said Agreements.  The Company
and its members have suffered the consequences referred to in
this paragraph as a result of herd health problems.  Although the
Company'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 the Company will be able to avoid
herd health problems.  See "Business--Pig Purchase Agreement"
under Item 1.

     VOLATILE INPUT COSTS.  Because the cost of feed and other
supplies constitute a substantial portion of the cost of
producing a feeder or weaned pig, the Company'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 the Company and
result in the price for pigs under the Pig Purchase Agreements
being higher than otherwise could be obtained from other sources. 
In this regard, the Company's average net sales price for its
pigs exceeded the average industry market price for pigs for the
1995, 1996, 1997 and 1998 fiscal years.  Moreover, the Company's
operating results are dependent upon the sale price paid to the
Company for feeder or weaned pigs, which in turn is or will be
determined in part based on the five month (changed from 12
months effective September 1, 1998 with respect to feeder pigs)
historical rolling average of operating costs incurred by the
Company in producing feeder pigs and weaned pigs, as the case may
be.  In addition, the fixed amount of $4.50 per pig, with respect
to feeder pigs, that was part of the contractual sales price
prior to September 1, 1998 has been changed to $0 to $4.50 per
pig as determined by the Board of Directors in its discretion
effective September 1, 1998.  Actual changes in the sale price of
feeder and weaned 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.  See "Business--
Purchase of Feed and Other Inputs" and "--Pig Purchase Agreement
" under Item 1.

     ADEQUATE WATER SUPPLY.  The Company's operations are
dependent upon the availability of an ample supply of pure water
at reasonable cost.  Although the Company has obtained the
necessary commercial water well permits to obtain the water
necessary to conduct its current operations in Colorado, 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.  The
Company's inability to obtain the necessary water well permits
for the expansion of its operations could have a material adverse
effect on the Company's business. 

     OBLIGATION TO PURCHASE PIGS.  Each member of the Company
owning one or more shares of Common Stock has entered into a Pig
Purchase Agreement, pursuant to which each member owning Class A
Common Stock is obligated to purchase his or her proportionate
share of the Company's feeder pig production for an initial term
of ten years and, unless earlier terminated by the member, for
succeeding one year renewal terms, and each member owning Class B
Common Stock or Class C Common Stock, as the case may be, is
obligated to purchase his or her proportionate share of the
Company's weaned pig production that is to be sold to members as
weaned pigs for an initial term of ten years and, unless earlier
terminated by the member, for succeeding one year renewal terms. 
In each such case, pigs will 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 ownership interest <PAGE> in the Company's outstanding
Class A Common Stock, with respect to feeder pigs, the member's
proportionate ownership interest in the Company's outstanding
Class B Common Stock or Class C Common Stock, as the case may be,
with respect to weaned pigs, and the actual production of
Qualifying Pigs from the Company's facilities.  No assurance can
be given that the availability of feeder or weaned pigs to
members will coincide with the member's needs or capacity to take
delivery.

     The purchase price for feeder and weaned 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 production margin of  $0 to $4.50 per pig (changed from
$4.50 effective September 1, 1998 with respect to feeder pigs) as
determined by the Board of Directors in its discretion (all as
defined in the Pig Purchase Agreement).  The Company believes the
effect of such pricing is to shift the risks of increasing
production costs and lower market prices for pigs from the
Company and to the member.  No assurance can be given that the
price for feeder and weaned pigs under the Pig Purchase Agreement
will be less than otherwise could be obtained from other sources. 
Indeed, for the 1995, 1996, 1997 and 1998 fiscal years, the
Company's average net sales price for its pigs exceeded the
average industry market price. 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
and weaned pigs than otherwise could be obtained from other
sources.  Moreover, the prevailing market price for feeder and
weaned pigs could decline below the price to be paid for pigs
under the Pig Purchase Agreement.  See "Business-- Pig Purchase
Agreement" under Item 1.

     UNPURCHASED AND EXCESS PIGS. Each member of Alliance owning
one or more shares of Common Stock has entered into a Pig
Purchase Agreement, pursuant to which each member owning Class A
Common Stock is obligated to purchase his or her proportionate
share of Alliance's feeder pig production, and each member owning
Class B Common Stock or Class C Common Stock, as the case may be,
is obligated to purchase his or her proportionate share (based on
the investor's proportionate ownership interest in the Company's
outstanding Class B Common Stock or Class C Common Stock, as the
case may be) of the Company's weaned pig production that is to be
sold to members of the Company as weaned pigs.  The failure of
the Company's stockholders to purchase their respective share of
the Company's pig production could materially adversely affect
the performance of the Company.  In the event that one or more
stockholders fail to purchase their respective share of the
Company's pig production, it will be necessary for the Company to
find alternate purchasers for its unpurchased pigs.  In addition,
it also may be necessary to find alternate purchasers to the
extent the Company's production of feeder pigs exceeds two and
seven-tenths (2.7) lots per share of Class A Common Stock on a
prospective rolling 12-month basis, to the extent the Company's
production of weaned pigs for sale to investors owning Class B
Common Stock exceeds two and seven-tenths (2.7) lots per share of
Class B Common Stock on a prospective rolling 12-month basis or
to the extent the Company's production of weaned pigs for sale to
investors owning Class C Common Stock exceeds two and one-tenth
(2.1) lots per share of Class C Common Stock on a prospective
rolling 12-month basis.  Stockholders will not be obligated under
the Pig Purchase Agreement to purchase their proportionate share
of such excess production.  Although the Company has agreed to
provide Farmland the first opportunity to purchase feeder and
weaned pigs that stockholders have failed to purchase and any
excess feeder and weaned 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 excess
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 or weaned pigs upon
terms as favorable to the Company as those contained in the Pig
Purchase Agreement.  To the extent that unpurchased feeder or
weaned pigs are sold to alternate purchasers at prices less than
would have been obtained under such Agreements, the price for
feeder or weaned pigs to stockholders may increase.  See
"Business--Pig Purchase Agreement " under Item 1 and "Certain
Relationships and Related Transactions--Farmland" under Item 12.

     LOSSES ASSOCIATED WITH START-UP.  The Company was formed
recently and has a limited history of operations.  The
development of feeder and weaned 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, the
Company anticipates that the development of feeder and weaned pig
production facilities likely will result in the Company's
continued incurrence of losses.  There can be no assurance that
the Company will become profitable after it ceases facilities
development activities. 

     SUBSTANTIAL INDEBTEDNESS.  The Company is highly leveraged. 
The degree to which the Company is and will be leveraged could
have an adverse impact on the Company, including (i) increased
vulnerability to adverse general economic <PAGE> 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.  The Company's ability to make required debt
service payments in the future will be dependent upon the
Company's operating results, which are subject to financial,
economic and other factors affecting the Company, many of which
are beyond its control.  Moreover, such operating results are
dependent upon the sale price paid to the Company for feeder pigs
and weaned pigs, which in turn is determined in part based on the
five month (changed from 12 months effective September 1, 1998
with respect to feeder pigs) historical rolling average of
operating costs incurred by the Company in producing such pigs. 
Actual changes in the sale price of feeder and weaned pigs
therefore will lag changes in the related operating costs and may
affect the Company's ability to timely make required debt service
payments.  No assurance can be given that the Company will be
able to make required debt service payments.  No person has
agreed to guarantee the obligation of the Company to make timely
debt service payments.  See "Business-- Pig Purchase Agreement "
under Item 1.

     ASSETS SECURING DEBT; CREDIT AGREEMENT RESTRICTIONS.  The
Company entered into various loan agreements and other
documentation with the Company's existing lender, CoBank. 
Pursuant to such loan documentation, the Company 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 the
Company will be able to achieve and maintain compliance with the
prescribed covenants of such loan documentation.  The Company 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 the Company
there can be no assurance that the Company's lender will again
grant such requests.  The failure to obtain any such consents,
waivers or amendments would reduce the Company's flexibility to
respond to adverse industry conditions and could have a material
adverse effect on the Company's results of operations, financial
condition and business.  If an event of default occurs under the
Company's loan documentation, the lender will have the right to
foreclose upon collateral pledged by the Company.  In addition,
the terms of the Company's financing with CoBank might adversely
affect the ability of the Company to obtain additional financing
for any future expansion efforts, including the development of
feeder or weaned pig production facilities.  No person has agreed
to guarantee the obligation of the Company to make timely debt
service payments.

     FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING. 
The Company is and will be subject to the risks normally
associated with debt financing, including the risk that the
Company'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 or weaned pigs made available under the Pig Purchase
Agreement.  As of August 31, 1998, the Company had a working
capital deficit of $515,960.  The Company 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 the
Company 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 the Company, dilution to then existing
stockholders may result.  If adequate funds are not available,
the Company may be required to significantly curtail a portion of
its planned operations.

     COMPETITION.  Many of the Company's existing or potential
competitors may have substantially greater financial, technical
and personnel resources than the Company.  There can be no
assurance that the Company's competitors will not be more
successful than the Company in developing and improving pork
production technologies and raising consistent high quality
feeder and weaned pigs that are more economical to raise than any
which may be developed or raised by the Company.  Moreover, as
additional competitors commence operations, the supply of feeder
or weaned pigs may exceed demand and result in a downward
pressure on the prevailing market prices for such pigs.  Under
the Pig Purchase Agreement each member is obligated to purchase
his proportionate share of the Company's feeder or weaned pig
production based in large part on the Company's cost of
production.  Accordingly, if the Company is not successful in
developing and improving pork production technologies relative to
its competitors or if the prevailing market prices for feeder or
weaned pigs decline <PAGE> below those applicable under such Agreements,
each member may be obligated to purchase his proportionate share
of the Company's feeder or weaned pig production at a price
higher than could be available from other sources.  The Company's
ability to achieve or maintain cost competitive feeder or weaned
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.  See "Business--
Business Environment," "-- Competition" and "-- Pig Purchase
Agreement " under Item 1.

     ANTI-CORPORATE FARMING SENTIMENT.  The development of large
corporate farming operations and concentration of hog production
in larger-scale facilities, such as those of the Company, has
increased dramatically over the last decade.  This development
has engendered opposition from residents of Colorado, Illinois
and other states in which the Company 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 the Company, national, state or local laws restricting their
operations may be and have been 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 the Company 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.  See "Recent Development--
Colorado Regulation of Commercial Swine Operations," "Business--
Business Environment" and "--Water Disposal and Environmental
Matters" under Item 1.

     EXPANSION.  The development and successful operation of each
new facility depends on various factors, including the
availability of suitable sites, regulatory compliance, the
ability to meet construction schedules, the capabilities of the
Company's contractors, the ability to maintain facility
construction costs within original estimates, the ability of the
Company 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 the Company or its contractors, and therefore no
assurance can be given that the Company's expansion objectives
and goals will be successfully implemented.

     CONTROL BY CURRENT STOCKHOLDERS; DISPARATE VOTING RIGHTS;
POTENTIAL CONFLICTS OF INTEREST.  As of the date of this report,
Farmland, Yuma Cooperative, Corn Plus II, L.C. and Welkco, L.L.C.
collectively own 74 shares of the Company's Class A Common Stock
and 22 shares of the Company's Class B Common Stock, which
together constitutes approximately 61.9% of the combined voting
power of the outstanding shares of the Company Common Stock. 
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 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), the above-named
stockholders could exercise a significant degree of influence or
control over the Company with respect to the election of
directors and other matters if they, or several of them, agree to
vote together on such matters.  See "Security Ownership of
Certain Beneficial Owners and Management" under Item 11.

     On all matters submitted to a vote of the Company's
stockholders, holders of Class A Common Stock and holders of
Class B Common Stock each are entitled to one vote per share
while holders of Class C Common Stock are entitled to three-
fourths of one vote per share.  See "Market for Common Equity and
Related Stockholder Matters" under Item 5.

     The Company has contracted with Farmland and Yuma
Cooperative for the provision of certain requirements of the
Company, including the supply of feed and other inputs, breeding
stock, and administrative services.  The Company's agreements
with Farmland and Yuma Cooperative may be modified in the future
and the Company 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 the Company in light of its other business activities. 
Similarly, Yuma Cooperative also may have conflicting interests
in the provision of goods and services to the Company.  See
"Certain Relationships and Related Transactions" under Item 12.


<PAGE> 




     ATTRACTION AND RETENTION OF EMPLOYEES.  The Company 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 the Company's success.  The
inability to acquire and retain the services of such management
and facilities operations personnel could have a material adverse
effect on the Company's operations and significantly impact its
prospects for success.  Although the Company has contracted with
Farmland and others to provide certain managerial, administrative
and other services, the Company 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
the Company on its Common Stock.  Although in the past the
Company has authorized the payment of cash rebates to its members
with respect to feeder pigs sold by the Company to such members,
the Company does not intend to authorize any future rebate
payments.  The Company, 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 the Company
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 the
Company's Board of Directors in its sole discretion.  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.  

     GOVERNMENT REGULATION.  The Company 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 the Company 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 the Company and its business.  In this regard,
in November 1998 Colorado voters adopted amendments to the
Colorado Revised Statutes concerning the regulation of housed
commercial swine feeding operations which may have material and
adverse consequences to the Company and its business.  See
"Recent Development--Colorado Regulation of Commercial Swine
Operations," "Business--Government Regulation" and "--Waste
Disposal and Environmental Matter" under Item 1.

     YEAR 2000.  The Company has made an assessment of its key
financial, informational and operational systems.  Management
does not anticipate that the Company will encounter significant
operational issues or difficulties related to the Year 2000. 
Furthermore, the financial impact of making systems changes is
not expected to be material to the Company's financial position,
results of operations or cash flows, although no assurances can
be given in this regard.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Year
2000."

     ADDITIONAL FACTORS.  Additional risk and uncertainties that
may affect future results of operations, financial condition or
business of the Company include, but are not limited to: the
effect of economic and industry conditions on prices for the
Company's feeder and weaned 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 the Company or
its feeder or weaned pigs which may have the effect of reducing
the reputation and goodwill of the Company; and the ability to
attract and retain capital for growth and operations on
competitive terms.

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.



<PAGE> 



                             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
as of the date of this report), their ages and present positions
and offices with the Company are as follows:

     Name                Age       Position and Offices Held

     Wayne N. Snyder     54        Chairman of the Board,
                                   President and Director  

     Doug Brown          40        Treasurer, Secretary and
                                   Director

     Merl A. Daniel      53        Director  

     Loren Keppy         37        Director

     Larry Welsh         45        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 Vice President of Livestock Production for
Farmland since July 1997 and as Director of Livestock Production
for Farmland from 1989 to June 1997.  In his present 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.

     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 A. 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.  

     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. 

     Larry Welsh has served as a Director of the Company since
November 1997.  Mr. Welsh has engaged in farming since 1976
through family partnerships with 1,100 acres of crops.  Mr. Welsh
serves as President of Welkco, L.L.C., a family-owned hog
enterprise capable of finishing 50,000 market hogs per year as a
member of Effingham Equity Cooperative.  He has  a Bachelor of
Science degree in Mechanical Technology and Business
Administration from Indiana State University.

     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, Keppy and
Welsh.  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, executive officers and
persons who own more than 10% of any class of equity securities
of the Company registered pursuant to Section 12 of the Exchange
Act 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, 1998, 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
and greater than 10% shareholders 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, 1998.  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, 1998 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, 1998.  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, 1998 regarding the beneficial ownership of Class A
Common Stock  and Class B Common Stock by each person  known to
the Board of Directors to own beneficially 5% or more of the
Company's capital stock, by each director and executive officer
of the Company owning any shares of the Company's capital stock,
and by all directors and executive officers of the Company as a
group.  As of that date, no shares of Class C Common Stock were
outstanding.  All information with respect to beneficial
ownership has been furnished by the respective stockholders.


<PAGE> 



NAME AND ADDRESS OF  AMOUNT AND NATURE OF     PERCENT OF CLASS A
BENEFICIAL OWNER     BENEFICIAL OWNER(1)      COMMON OUTSTANDING
                      CLASS A   CLASS B     CLASS A   CLASS B    ALL
                      COMMON    COMMON      COMMON    COMMON  CLASSES

Farmland Industries,     52        4         43.7%     11.1%     36.1%
 Inc. /2/
3315 North Oak 
 Trafficway
Kansas City, MO 64116    

Yuma Farmers Milling     12        --        10.1%     --         7.7%
 and Mercantile
 Cooperative Company/3/
101 South Detroit
Yuma, CO  80759

Corn Plus II, L.C./3/    10        --         8.4%     --         6.5%
212 North Agora Street
Marathon, IA  50565

Larry Welsh/Welkco,      --        18          --     50.0%     11.6%
 L.L.C. /3//4/
21101 East 1950 Road
Marshall, IL 62441

Loren Keppy              1         --         0.8%     --         0.6%
21641 First Avenue
Durant, IA  52747

All directors and        1         18         0.8%     50.0%     12.3%
 executive officers 
 as a group
_________________

/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 119 shares of Class A Common Stock and 36 shares of Class B
     Common Stock outstanding.

/2/  The voting and disposition of the shares of Class A Common Stock and
     Class B 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,
     1998, the Company had borrowed funds 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 Class A Common Stock and
     Class B Common Stock held by these beneficial owners are subject to the
     discretion of the Board of Directors (Manager in the case of Corn Plus
     II, L.C.) of the applicable beneficial owner.

/4/  Includes 18 shares of Class B Common Stock held by Welkco, L.L.C.  Mr.
     Welsh is President and one of the two largest members of Welkco, L.L.C.,
     and therefore may be deemed to be the indirect beneficial owner of such
     shares.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

GENERAL

     As of August 31, 1998, Farmland and Yuma Cooperative owned
approximately 36.1% and 7.7%, respectively, of the outstanding
Common Stock of the Company.  In connection with the formation of
the Company as a Colorado <PAGE> cooperative association on May 3, 1994,
one share of the Company's Class A 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 Class A Common Stock. 
Yuma LLC thereupon was dissolved and liquidated and its assets
and liabilities were assigned to and assumed by Alliance.  As of
the date of this report, the Company has consummated its issuance
and sale to Farmland of additional shares  of Alliance capital
stock.  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
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 and weaned pig
production facility; logistical backup and coordination,
including facilitating the acquisition, servicing, transportation
and sale of genetic stock, breeding stock, feeder pigs and weaned
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 pig production facilities. The Company will cause
the new 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 or weaned pig <PAGE> 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 years
ended August 31, 1998 and 1997, the Company paid Farmland a total
of $344,269 and $250,967, respectively, 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 years ended August 31, 1998
and 1997, the Company purchased $207,518 and $638,730,
respectively, 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 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 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 years ended August 31, 1998 and 1997, the
Company purchased finished gilts from Farmland at an aggregate
price of $3,355,357 and $2,367,524, respectively.  In the event
that the Company does not purchase any such finished gilts,
Farmland may either market such gilts for slaughter or retain
such gilts for use as breeding stock.  Farmland has agreed to pay
a $10.00 per head fee to the Company for any such finished gilts
that are retained by Farmland for use as breeding stock.   For
the years ended August 31, 1998 and 1997, Farmland paid $34,810
and $123,620, respectively, of such fees to the Company.

     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  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 and weaned pigs produced by
the Company at the price per pig equal to the average price per
pig paid by stockholders under Pig Purchase Agreement for the
then immediately preceding month, and (b) feeder pigs and weaned
pigs that a stockholder has failed to purchase under such
stockholder's Pig Purchase Agreement at the price per pig
determined pursuant to such Agreement.  The Company also has
granted Farmland an option to purchase any shares of Common Stock
reacquired by the Company.

     Pig Purchase Agreements.  As a member of the Company,
Farmland has contracted with the Company to purchase a share of
the feeder and weaned pigs to be produced by the Company under
the same terms required of the Company's other members. 
Commencing on August 11, 1995, the date the Company first
produced and shipped feeder pigs pursuant to the Pig Purchase
Agreement with the Company's existing members (other than
Farmland and Yuma Cooperative), the price paid by Farmland for
pigs has been under terms comparable to those applicable to the
Company's other members.  For the years ended August 31, 1998 and
1997, Farmland purchased feeder pigs from the Company (including
Yuma Cooperative's share of feeder pigs produced by the Company)
at an aggregate price of $10,251,093 and $7,924,763,
respectively.  Finally, the Company has agreed to provide
Farmland the first opportunity to purchase any feeder pigs and
weaned 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).  The Company intends to cause any
such excess production of weaned pigs, however, to be retained by
the Company for development into feeder pigs.  See "Description
of Business--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
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 <PAGE> 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, 1998,
CoBank's prime rate was 8.50%.  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
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 "45
Acre Tract") on which the Company has commenced development
activities with respect to a second Illinois sow production
facility.  The Company obtained  funding for the purchase of the
45 Acre Tract, and subsequent development of a feeder pig
facility, from the proceeds of a $1,360,000 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%.  This loan was
repaid by Alliance in full in August 1997, and the promissory
note has been canceled.  In November 1997, the Company obtained a
second loan of $1,360,000 from Farmland to provide for additional
facilities expansion.  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%
This loan was repaid by the Company in full in November 1997, and
the promissory note has been canceled.  In May 1998, the Company
obtained a $2,160,000 loan from Farmland to provide for the
development of a 5,000-sow pig production facility in Yuma
County, Colorado.    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 requires the Company
to make interest-only payments for the life of the loan, with a
balloon payment of one-half of the principal and interest to be
made upon the Company's issuance and sale of a minimum block of
17 shares of Class A Common Stock or 18 shares of Class B Common
Stock.  The remaining principal and interest is payable upon the
Company's issuance and sale of a second minimum block of shares. 
To the extent that there remains any unpaid amount owed under
this loan as of the May 1, 2008 maturity date, the entire loan is
then payable in full. 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 approximately 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 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. 

     Colorado Repopulation.  In connection with the repopulation
of the Company's feeder pig production facilities located in Yuma
County, Colorado, the Company arranged for the finishing of new
breeding sows on facilities of independent producers.  In this
regard, Alliance has contracted with Farmland for the use of
facilities as to which Farmland has acquired rights from the
owners of such facilities.  During the approximately 14 months
that Alliance used such facilities, Alliance had approximately
9,240 pig spaces available to it.  Alliance was obligated to pay
the facilities owner a monthly fee equal to $31.50 per pig space
divided by twelve  In addition, Farmland was entitled to a
monthly fee from Alliance equal to $1.00 per pig space divided by
12.

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 <PAGE> 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 ($12.00 per ton as of the
date of this report), in addition to the actual delivered cost of
the feed ingredients.   Feed rations which are pelleted are
subject to a surcharge ($6.00 per ton as of the date of this
report).  The fixed charge was reduced from $13.00 to $12.00 per
ton on September 1, 1998, and both the fixed charge and the
surcharge will remain fixed through the expiration of the Feed
Purchase Agreement on August 31, 1999.  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 years ended August 31, 1998 and 1997, the
Company purchased $3,641,442 and $4,338,732, respectively, of
feed from Yuma Cooperative.  See "Description of
Business--Purchase of Feed and Other Inputs" under Item 1.

     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.  Commencing on
August 11, 1995, the date the Company first produced and shipped
feeder pigs pursuant to the Pig Purchase Agreements with the
Company's existing members (other than Farmland and Yuma
Cooperative), the price paid by Yuma Cooperative for feeder pigs
has been under terms comparable to those applicable to the
Company's other members.  For the years ended August 31, 1998 and
1997, 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 -- 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                                   39

Balance Sheets as of August 31, 1998 and 1997                  40

Statements of Earnings for the years ended August 31, 
     1998 and 1997                                             41

Statements of Shareholders' Equity for the years ended 
     August 31, 1998 and 1997                                  42

Statements of Cash Flows for the years ended August 31, 
     1998 and 1997                                             43

Notes to Financial Statements                                  44

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

Exhibit   
   No.                                  Description

3.1       Articles of Incorporation (filed on May 23, 1997 as
          Exhibit 3.1 to Amendment No. 1 to the Company's
          Registration on Form SB-2 (Registration No. 333-25501)
          and incorporated herein by reference).


<PAGE> 



3.1.1     Articles of Amendment (filed on May 23, 1997 as Exhibit
          3.1.1 to Amendment No. 1 to the Company's Registration
          on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).

3.1.2     Articles of Amendment (filed on May 23, 1997 as Exhibit
          3.1.2 to Amendment No. 1 to the Company's Registration
          Statement on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).

3.1.3     Articles of Amendment (filed on May 23,, 1997 as
          Exhibit 3.1.3 to Amendment No. 1 to the Company's
          Registration Statement on Form SB-2 (Registration No.
          333-25501) and incorporated herein by reference).

3.1.4     Articles of Amendment (filed on May 23, 1997 as Exhibit
          3.1.4 to Amendment No. 1 to the Company's Registration
          Statement on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).

3.2       Amended and Restated Bylaws (filed on May 23, 1997 as
          Exhibit 3.2 to Amendment No. 1 to the Company's
          Registration on Form SB-2 (Registration No. 333-25501)
          and incorporated herein by reference).

3.2.1     Amendments to Amended and Restated Bylaws (filed on May
          23, 1997 as Exhibit 3.2.1 to Amendment No. 1 to the
          Company's Registration on Form SB-2 (Registration No.
          333-25501) and incorporated herein by reference).

4.1       Articles of Incorporation (filed on May 23, 1997 as
          Exhibit 3.1 to Amendment No. 1 to the Company's
          Registration on Form SB-2 (Registration No. 333-25501)
          and incorporated herein by reference).

4.1.1     Articles of Amendment (filed on May 23, 1997 as Exhibit
          3.1.1 to Amendment No. 1 to the Company's Registration
          on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).

4.1.2     Articles of Amendment (filed on May 23, 1997 as Exhibit
          3.1.2 to Amendment No. 1 to the Company's Registration
          Statement on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).

4.1.3     Articles of Amendment (filed on May 23, 1997 as Exhibit
          3.1.3 to Amendment No. 1 to the Company's Registration
          Statement on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).

4.1.4     Articles of Amendment (filed on May 23, 1997 as Exhibit
          3.1.4 to Amendment No. 1 to the Company's Registration
          Statement on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).

4.2       Amended and Restated Bylaws (filed on May 23, 1997 as
          Exhibit 3.2 to Amendment No. 1 to the Company's
          Registration on Form SB-2 (Registration No. 333-25501)
          and incorporated herein by reference).

4.2.1     Amendments to Amended and Restated Bylaws (filed on May
          23, 1997 as Exhibit 3.2.1 to Amendment No. 1 to the
          Company's Registration on Form SB-2 (Registration No.
          333-25501) and incorporated herein by reference).

4.3       Specimen Form of Certificate Representing Membership in
          the Company and the Class A 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       Specimen Form of Certificate Representing Membership in
          the Company and the Class B Common Stock (filed on
          April 18, 1997 as Exhibit 4.4 to the Company's
          Registration Statement on Form SB-2 (Registration No.
          333-25501) and incorporated herein by reference).

4.5       Specimen Form of Certificate Representing Membership in
          the Company and the Class C Common Stock (filed on May
          23, 1997 as Exhibit 4.15 to Amendment No. 1 to the
          Company's Registration Statement on Form SB-2
          (Registration No. 333-25501) and incorporated herein by
          reference).


<PAGE> 



4.6       Master Loan Agreement, dated as of March 18, 1998,
          between CoBank, ACB and the Registrant (filed as
          Exhibit 10.1 to the Company's Quarterly Report on Form
          10-QSB for the fiscal quarter ended February 28, 1998
          and incorporated herein by reference).

10.1      Form of Pig Purchase Agreement (filed on October 9,
          1998 as Exhibit 10.1 to Post-Effective Amendment No. 1
          to the Company's Registration Statement on Form SB-2
          (Registration No. 333-25501) and incorporated herein by
          reference).

10.2      Swine 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 (filed as Exhibit 10.1 to the
          Registrant's Quarterly Report on Form 10-QSB for the
          quarter ended February 28, 1997 and incorporated herein
          by reference).

10.2.2    Second Amendment to Swine Production Services
          Agreement, dated as of April 14, 1997, between
          Farmland Industries, Inc. and the Registrant
          (filed on April 18, 1997 as Exhibit 10.2.2 to the
          Registrant's Registration Statement on Form SB-2
          (No. 333-25501) and incorporated herein by
          reference).

10.3      Feed 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).

10.4      Interim 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 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).

10.5      Interim 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 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).

10.6      Master Loan Agreement, dated as of March 18, 1998,
          between CoBank, ACB and the Registrant (filed as
          Exhibit 10.1 to the Company's Quarterly Report on Form
          10-QSB for the fiscal quarter ended February 28, 1998
          and incorporated herein by reference).

10.7      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).

10.8      Loan Agreement, dated as of May 1, 1998, between the
          Registrant and Farmland Industries, Inc. (filed on
          October 9, 1998 as Exhibit 10.10 to Post-Effective
          Amendment No. 1 to the Company's Registration Statement
          on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).



<PAGE> 


10.9      Excess Pig Purchase Agreement, dated as of May 1, 1998,
          between the Registrant and Farmland Industries, Inc.
          (filed on October 9, 1998 as Exhibit 10.10 to Post-
          Effective Amendment No. 1 to the Company's Registration
          Statement on Form SB-2 (Registration No. 333-25501) and
          incorporated herein by reference).

10.10     Camborough-22 Closed Herd Multiplier Agreement, dated
          March 1, 1996, between Pig Improvement Company, Inc.
          and the Registrant (filed with the Registrant's
          Quarterly Report on Form 10-QSB for the quarter ended
          February 28, 1997 as Exhibit 10.2 and incorporated
          herein by reference)

10.11     Option Contract, dated November 20, 1996, between Bill
          L. Bailey and Norma Jean Bailey, and the Registrant
          (filed with the Registrant's Quarterly Report on Form
          10-QSB for the quarter ended February 28, 1997 as
          Exhibit 10.3 and incorporated herein by reference)

10.12     Colorado Breeding Farm Side Agreement, dated April 11,
          1997, between the Registrant and Farmland Industries,
          Inc. (filed on May 23, 1997 as Exhibit 10.35 to
          Amendment No. 1 to the Registrant's Registration
          Statement on Form SB-2 (No. 333-25501) and incorporated
          herein by reference).

10.13     Colorado Breeding Farm Agreement, dated April 11, 1997,
          between the Registrant, G & G Pork Producers, LLC and
          Farmland Industries, Inc. (filed on May 23, 1997 as
          Exhibit 10.36 to Amendment No. 1 to the Registrant's
          Registration Statement on Form SB-2 (No. 333-25501) and
          incorporated herein by reference).

10.14     Colorado Breeding Farm Agreement, dated April 21, 1997,
          between the Registrant, Triple R and Farmland
          Industries, Inc. (filed on May 23, 1997 as Exhibit
          10.37 to the Registrant's Registration Statement on
          Form SB-2 (No. 333-25501) and incorporated herein by
          reference).

24.1      Power of Attorney

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.



<PAGE> 



                   Independent Auditor's 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, 1998 and 1997 and the
related statements of earnings, 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, 1998
and 1997 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 9, 1998, except as to the second
and third paragraphs of Note 8, which are
as of November 3, 1998



<PAGE> 



              ALLIANCE FARMS COOPERATIVE ASSOCIATION
                          BALANCE SHEETS
August 31, 1998 and 1997

                         August 31, 1998      August 31, 1997
ASSETS
Current Assets:
   Receivables, trade       $     4,620      $    69,550
   Receivables, non-trade 
     (Note 3)                   145,832          200,137
   Inventory  (Note 4)        3,591,665        3,179,402
   Other current assets          5,0160                0
    Total current assets    $ 3,792,277      $ 3,449,089

   Property, plant and 
     equipment, at cost 
     (Notes 5 and 6)        $25,140,867      $19,610,833
   Less accumulated 
     depreciation             3,266,290        2,193,650
                            $21,874,577      $17,417,183

   Breeding stock           $ 4,515,230      $ 4,603,996
   Less accumulated 
     depreciation             1,027,749        1,353,650
                            $ 3,487,481      $ 3,250,346
   Other assets, net of 
     $109,218 and $77,261
     accumulated 
     amortization           $   370,220      $   263,788
                            $29,524,555      $24,380,406
               
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Bank Overdraft           $   279,069      $ 1,106,122
   Current maturities of 
     long-term debt 
     (Note 6)                 1,812,000        1,262,700
   Accounts payable 
     (Note 3)                   917,338          577,106
   Patronage refund 
     payable                    433,115                0
   Accrued property tax         332,587          220,508
   Accrued payroll              145,118          120,570
   Other accrued expenses       389,010          274,508
     Total current 
          liabilities       $ 4,308,237      $ 3,563,514

Long-term debt (Note 6)     $15,996,775      $14,320,724
Shareholders' equity:
   Class A common stock 
     of $.01 par value;  
     authorized 5,000 
     shares, issued and 
     outstanding 119 
     shares                 $         1      $         1

   Class B common stock 
     of $.01 par value;  
     authorized 2,500 
     shares, issued and 
     outstanding 36 shares, 
     none issued at August 
     31, 1997                         0                0
    
   Class C common stock of 
     $.01 par value;  authorized
     2,500 shares, none issued        0                0

   Additional paid-in 
     capital                 10,751,324        8,719,237
   Patronage refund for 
     reinvestment             1,031,533                0
   Accumulated deficit       (2,563,315)      (2,223,070)
      Total shareholders' 
          equity            $ 9,219,543      $ 6,496,168
     Commitments and 
      Contingencies
        (Notes 6 and 8)          ----              ---
                            $29,524,555      $24,380,406


          See accompanying notes to financial statements




<PAGE> 


              ALLIANCE FARMS COOPERATIVE ASSOCIATION
                      STATEMENTS OF EARNINGS
           For the years ended August 31, 1998 and 1997

                                      1998           1997

Net sales  (Notes 2 and 3)         $17,731,585    $13,669,706
Cost of goods sold (Note 3)         13,380,454     11,222,169

     Gross margin                  $ 4,351,131    $ 2,447,537

Expenses related to start-up
  of new production facilities     $ 1,051,481    $   281,025
Administrative expenses                745,400        424,565
(Gain) loss on sale of 
     breeding stock                    266,602        (94,123)

Operating income                   $ 2,287,648    $ 1,836,070

Other income (expense):
   Interest expense                ($1,389,312)   ($1,321,984)
   Other                               226,067        144,209
                                   ($1,163,245)   ($1,177,775)

Net income                         $ 1,124,403    $   658,295

Distribution of net income:
   Patronage refunds:
     Cash                          $   433,115    $        0
     Equities                        1,031,533             0
   Accumulated deficit                (340,245)      658,295
                                   $ 1,124,403    $  658,295


          See accompanying notes to financial statements



<PAGE> 

<TABLE>


                          ALLIANCE FARMS COOPERATIVE ASSOCIATION
                            STATEMENTS OF SHAREHOLDERS' EQUITY
                  For the years ended August 31, 1998 and August 31, 1997
<CAPTION>
                                              Additional     Patronage                         Total
                                 Common         paid-in     refund for      Accumulated      Shareholders'
                                 stock          capital     reinvestment     deficit           equity

<S>                              <C>         <C>            <C>            <C>            <C>
Balance at August 31, 1996         $1        $7,487,653          $0        ($2,881,365)   $4,606,289

Sale of 17 shares of Class A
common stock - $.01 par per
share, net of $128,416 
offering costs                    ---         1,231,584          ---            ---        1,231,584

Net Income                        ---          ---               ---           658,295       658,295

Balance at August 31, 1997         $1        $8,719,237          $0        ($2,223,070)   $6,496,168

Sale of 36 shares of Class B 
common stock - $.01 par per
share, net of $127,913 
offering costs                    ---         2,032,087          ---            ---       2,032,087
                                             
Net income                        ---           ---              ---         1,124,403    1,124,403

Patronage refund payable 
in cash transferred to 
current liabilities                ---          ---              ---          (433,115)    (433,115)

Patronage refund allocable
 in equities                       ---          ---         1,031,533       (1,031,533)            0

Balance at August 31, 1998         $1        $10,751,324   $1,031,533       ($2,563,315)  ($9,219,543)


                      See accompanying notes to financial statements
</TABLE>

<PAGE>



              ALLIANCE FARMS COOPERATIVE ASSOCIATION
                     STATEMENTS OF CASH FLOWS
           For the years ended August 31, 1998 and 1997

                                                1998          1997

Cash flow from operating activities:
   Net income                                $1,124,403    $  658,295
   Adjustment to reconcile net income to net cash
     provided by operating activities:
        Provision for depreciation and 
          amortization                        2,597,200     2,179,473 
        Loss (gain) on sale of breeding stock   266,602       (94,123)
   Changes in assets and liabilities:
        Receivables                             119,235      (197,239)
        Inventory                              (412,263)     (743,925)
        Other current assets                    (50,160)       48,273 
        Other assets                            (83,190)      (70,896)
        Accounts payable                        340,232       143,488
        Accrued expenses                        249,129      (316,947)
            Net cash provided by operating 
               activities                    $4,151,188     $1,606,399

Cash flows from investing activities:
   Capital expenditures                     ($9,269,112)  ($5,896,799)
   Proceeds from sale of breeding stock       1,742,739     1,246,443
          Net cash used in investing
            activities                      ($7,526,373)  ($4,650,356)

Cash flows from financing activities:
   Proceeds from issuance of long term
     debt                                   $10,404,276    $1,877,131
   Net increase (decrease) in revolving
      term credit                            (1,048,573)      300,869
   Payment on long term debt                 (7,480,500)     (870,000)
   Increase (decrease) in note payable to 
     Farmland                                    350,148      (20,000)
   Loan origination fees                         (55,200)      (6,000)
   Issuance of common shares, net of
      offering cost                            2,032,087     1,231,584
   Increase (decrease) in bank overdraft        (827,053)      530,373
           Net cash provided by
               financing activities           $3,375,185    $3,043,957 

            Change in cash                    $        0    $        0 

Cash at beginning of period                            0             0
Cash at end of period                         $        0    $        0

Supplemental schedule of cash paid 
     for interest                             $ 1,688,494  $1,337,319 

Supplemental schedule of noncash 
     financing activities -
     appropriation of current year's 
     net income as patronage refunds          $ 1,464,648 $         0


          See accompanying notes to financial statements



<PAGE> 


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 and weaned pigs for sale to its members. As of August
     31, 1998, Alliance owned and was operating five 2,450-sow
     feeder pig production facilities in Yuma County, Colorado,
     two 2,450-sow feeder pig production facilities in Wayne
     County, Illinois, one 2,450-sow weaned pig production
     facility in Yuma County, Colorado, and one 2,450-sow weaned
     pig production facility in Wayne County, Illinois.  A 5,000-
     sow pig production facility is currently being developed in
     Yuma County, Colorado.

     (a)  Inventory

     Inventories are stated at the lower of cost or market.  Cost
     has been determined by the average cost method for feeder
     and weaned pigs and under the FIFO method for other
     inventories.

     Inventoriable costs are costs incurred in producing feeder
     and weaned pigs at the pig production facility from the time
     of gestation through sale of the 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 is based upon
     the ultimate sale price of feeder and weaned 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.

     Long-lived assets are reviewed for impairment whenever
     events or changes in circumstances indicate that the
     carrying amount may not be recoverable.  Recoverability of
     assets to be held and used is measured by a comparison of
     the carrying amount of the asset to future net cash flows
     expected to be generated by the asset.  If such assets are
     considered to be impaired, the impairment to be recognized
     is measured by the amount by which the carrying amount of
     the assets exceed the fair value of the assets.  Assets to
     be disposed of are reported at the lower of the carrying
     amount or fair value less costs to sell.

     (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)  Other Assets

     Other assets consist principally of loan origination fees
     which are amortized over the term of the loan.

     (e)  Sales

     Alliance Farms recognizes sales at the time pigs are
     shipped.


<PAGE> 



     (f)  Income Taxes

     Alliance operates as a cooperative that is not exempt from
     federal income taxes and, therefore, is subject to taxes on
     all income not paid or allocated to members.  Deferred
     income taxes have not been provided because virtually all
     sales since inception have been to members and virtually all
     future sales are anticipated to be to members.  For the
     years ended August 31, 1998 and 1997, Alliance has not
     provided income taxes, as member-sourced losses incurred in
     prior years have been carried forward to offset member-
     sourced income in 1998 and 1997.  At August 31, 1998,
     Alliance has member-sourced loss carryforwards amounting to
     $2,874,000 available to offset future member-sourced taxable
     income and $3,905,000 available to offset future patronage
     refunds.

     Patronage refunds for reinvestment for the year ended August
     31, 1998 represent nonqualified written notices of
     allocation which are deductible by Alliance for Federal
     income tax purposes upon redemption of the equities issued.
     
     (h)  Common Stock

     The common stock of Alliance is subject to certain
     restrictions as to transferability and Alliance has the
     right to purchase a member's common stock under certain
     circumstances.

     The authorized common stock of Alliance consists of Class A
     common stock, Class B common stock and Class C common stock. 
     Only qualified agricultural producers who have executed and
     delivered a Pig Purchase Agreement may own Class A common
     stock, Class B common stock, or Class C common stock. 
     Holders of Class A common stock and Class B common stock are
     entitled to one vote for each share held, and holders of
     Class C common stock are entitled to three-fourths of one
     vote for each share held.  The preferences, powers and
     rights of Class A, Class B and Class C common stock are
     otherwise identical.

     Alliance intends to compute its patronage-sourced income or
     loss separately for each class of stockholders (members).

     (i)  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.
     
     (j)  Reclassifications

     Certain 1997 amounts have been reclassified to conform with
     the 1998 presentation.

2.   Sales

     Alliance has sold virtually all of its feeder and weaned
     pigs to its members for the fiscal years ended August 31,
     1998 and 1997 at a contractual price which is based on
     Alliance's operating costs (which are based on a twelve
     month rolling average for feeder pigs and a five month
     rolling average for weaned pigs), debt service and, in the
     case of feeder pigs, an additional $4.50 per pig.  Effective
     September 1, 1998 the contractual price for feeder pigs will
     be based on a five month rolling average for operating
     costs, and the additional fixed amount of $4.50 per pig will
     be adjusted to an amount of $0 to $4.50 as determined
     periodically by the Board of Directors at its discretion.

     Because the contractual price for the sale of a feeder pig
     and a weaned pig is determined based upon, among other
     things, a twelve month or five 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 and weaned pigs during periods of
     rising costs. 



<PAGE> 


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

                                               Fiscal Year Ended
                                                     August 31  
                                        1998           1997
     Feeder Pig Average Net 
       Sales Price                      $57.82           $59.02
     Feeder Pig Average Industry 
       Market*                           35.32            56.84

     Weaned Pig Average Net 
       Sales Price                      $34.96            N/A
     Weaned Pig Average Industry 
       Market*                           29.04            N/A

*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, 1998 and 1997, Farmland Industries, Inc.
(Farmland) owned approximately 36.1% and 43.7%, respectively, of
the Common Stock of Alliance, and Yuma Farmers' Milling and
Mercantile Cooperative (Yuma Cooperative) owned approximately
7.7% and 10.08%, 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 or weaned pigs to Farmland and Yuma Cooperative. 
Such purchases and sales were as follows:

                                        Fiscal Year Ended
                                             August 31
                                          1998          1997

     Feed Purchases                $3,641,442      $4,338,732
     Animal Health Purchases          207,518         638,730
          Breeding Stock            3,355,357        2,367,524   
          Pig Sales                10,251,093        7,924,763
     
Farmland also pays Alliance a royalty for any pigs raised by
Alliance and sold to a Farmland finisher that are then selected
as breeding stock for Farmland's contract herds pursuant to a
swine production services agreement.  The royalty, which is $10
per head selected, paid to Alliance under such agreement was as
follows:

                                      Fiscal Year Ended
                                              August 31
                                     1998            1997

          Royalty Income           $34,810        $123,620

Farmland provided Alliance with an administrative office in Yuma,
Colorado through July 31, 1998 at no cost.  As of August 1, 1998,
Alliance and Farmland equally share the office rent.  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:


<PAGE> 



                                      Fiscal Year Ended
                                          August 31
                                     1998            1997

     Management Fee                $344,269       $250,967

     Alliance had $145,832 and $200,137 of non-trade receivables
     at August 31, 1998 and 1997, respectively.  The $145,832 due
     Alliance at August 31, 1998 was due from Farmland for
     royalty fees incurred and the remainder was due from Pig
     Producers I, LP ("Pig Producers"), a limited partnership in
     which Farmland holds a 12.5% interest, for the reimbursement
     of wages, benefits and other costs attributable to Alliance
     employees that are assigned to perform various duties at Pig
     Producers, as well as for items received out of Alliance's
     shop stock inventory.  Of the $200,137 due Alliance at
     August 31, 1997, $120,195 was due from Yuma Cooperative as a
     result of a feed pricing adjustment and the remainder was
     due from Farmland for items received out of Alliance's shop
     stock inventory, and from Pig Producers I, LP for the
     reimbursement of wages, benefits and other costs
     attributable to Alliance employees as well as for items
     received out of Alliance's shop stock inventory. 
     
     Alliance owed $278,650 and $87,389 at August 31, 1998 and
     $197,755 and $185,413 at August 31, 1997 to Farmland and
     Yuma Cooperative, respectively, for goods and services. 
     Alliance is also obligated under a note payable to Farmland
     in the amount of $966,572 at August 31, 1998.   This
     consists of $333,172 to purchase land for future expansion
     and $633,400 to finance construction of the 5,000-sow pig
     production facility in Yuma County, Colorado, prior to
     receiving the permanent financing.  See note 6. 

4.   Inventory

     Major components of inventories as of August 31, 1998 and 
     August 31, 1997 are as follows:

                            1998                  1997

Feeder and Weaned Pigs   $3,467,308          $2,922,594
Other                       124,357             256,808
                         $3,591,665          $3,179,402

5.   Property, Plant and Equipment

     Property, plant and equipment at August 31, 1998 and 1997
     consisted of  the following:

                             1998              1997

Land                     $ 1,942,211         $ 1,875,125
Buildings                 18,053,348          15,693,994
Site Improvements          1,865,102           1,494,249
Machinery and equipment    2,185,276             368,572
Mobile equipment              70,803              60,719
Furniture and office 
   equipment                  29,545              21,454
Construction in progress     994,582              96,720
                         $25,140,867         $19,610,833



<PAGE> 


6.   Long-Term Debt

Long term debt at August 31, 1998 and 1997 consisted of the
following:

                              1998                 1997  
CoBank Term Loan            $11,823,800      $12,525,131
CoBank Construction Loan      3,625,107               0
CoBank Revolving Term 
     Credit                   1,393,296        2,441,869
Note Payable to Farmland        966,572          616,424
                            $17,808,775      $15,583,424

Less Current Maturities       1,812,000        1,262,700
                            $15,996,775      $14,320,724

On March 18, 1998, the Company entered into various loan
agreements with CoBank, ACB ("CoBank") related to a secured
credit facility which provides for up to $26,846,700 of
non-revolving term debt,  $7,660,000 of revolving term credit and
$18,400,00 of construction financing.  Proceeds from the term
debt were used for refinancing the then existing non-revolving
term debt, and will be used to finance the construction or
acquisition of additional pig production facilities.  Proceeds
from the revolving term credit were used for refinancing the
existing revolving term credit, and will be used to provide
working capital.  Proceeds from the construction loan may be used
for the construction or acquisition of pig production facilities
and are advanced by CoBank as construction costs are incurred by
Alliance.  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.  The unused portion of the credit facility expires
August 31, 2001 with the unpaid balance on that date due by
September 30, 2011 with respect to the revolving term credit,
December 31, 2001 with respect to the non-revolving term debt and
September 30, 2001 with respect to the construction financing.  

The availability of non-revolving term debt, revolving term
credit and construction debt under the CoBank credit facility is
subject to specified equity investment levels in the Company
being satisfied.  As of August 31, 1998, $7,001,597 was
immediately available to Alliance under its credit facility.  
The availability of $15,022,900 of unused term loans and
$4,280,000 of revolving term credit and $9,760,000 of
construction loans under the CoBank credit facility is restricted
and may be 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 Class A common stock sold and
$1,675,000 of term loans and $485,000 of revolving term credit
for every $1,080,000 of Class B or Class C common stock sold). 

The  CoBank credit facility provides for the monthly payment of
principal and interest.  Principal payments pursuant to the
existing non-revolving term debt are to be made in equal monthly
installments of $151,000, with the remaining unpaid balance being
due and payable on that date which is ninety-nine months after
the final advance under the non-revolving term loan.  Principal
payments pursuant to each $2,110,000 of new non-revolving term
loans are to be made in monthly installments of $21,800 each,
beginning on the 20th day of the eighteenth month following the
date of the initial advance of such $2,110,000 loan.  For each
$2,720,000 of new construction loans, payment of the entire
outstanding principal balance is to be made on that date that is
sixteen (16) months after the date of the initial advance for
construction of the proposed facility.  The revolving loan
commitment will be reduced in 40 equal payments commencing on
August 31, 2001, such that after the fortieth reduction, the
revolving loan commitment will be zero.  To the extent that the
outstanding principal balance under the revolving loan exceeds
the revolving loan commitment, the Company will be required to
immediately make a principal payment in a amount sufficient to
reduce the outstanding principal balance under the revolving loan
to an amount not exceeding the revolving loan commitment. 
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 a base rate margin of 1.25% for
non-revolving term loans and for revolving loans or 2.25% for
construction loans, 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, <PAGE> 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, 1998, interest accrued on the
outstanding principal balance on the respective loan portions
under variable rates at 9.75% per annum for non-revolving term
loans, 9.75% per annum for revolving term loans and 10.75% per
annum for construction loans and between 8.26% and 9.39% for
those portions under fixed rates.  The interest rates 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, 1998, 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.  Alliance capitalized $104,912 and $29,533 of
interest on construction for the fiscal years ended August 31,
1998 and 1997 respectively. 

In obtaining the secured credit facility, and for each year in
which the credit facility is effective, the Company is required
to pay a commitment fee equal to 0.5% on the outstanding
revolving loan commitment and 0.25% on the unadvanced amount of
the construction loan commitment.  In addition, the Company will
be required to pay an activation fee equal to 1% on the amount
withdrawn under the construction loan, along with 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 and future 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 a 0.25 ratio of total
equity to total assets for the period ending August 31, 1998, and
thereafter a 0.35 ratio of total equity to total assets, (ii)
maintenance of a debt service coverage ratio (calculated by
dividing average annual cash flow by the current debt) of not
less than one, (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 patronae
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, 1998.

As of August 31, 1998, Alliance has borrowed $966,572 from
Farmland. This consists of $333,172 to purchase land for future
expansion and $633,400 to begin construction of the 5,000-sow pig
production facility in Yuma County, Colorado, prior to receiving
the equity from stock sales.  The loan agreement with Farmland
for the purchase of land 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 (8.5% at August 31,
1998).  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 in September 30, 2005.  The loan
agreement with Farmland for the construction of the 5,000-sow pig
production facility provides for interest at CoBank's national
variable rate plus 1.25% and requires repayment on the closing
dates of the first and second issuance and sale of share blocks. 
Any remaining indebtedness shall be payable in 2008.

Long-term debt as of August 31, 1998 matures during the fiscal
years ending August 31 in the following amounts:

                    1999        $1,812,000
                    2000          2,227,200
                    2001          2,262,032
                    2002          2,366,530
               Thereafter         9,141,013
                                $17,808,775


<PAGE> 


7.   Operating Leases

     Alliance incurred $333,080 and $121,754 of rent expenses
     related to operating lease agreements for facilities and
     equipment for the fiscal years ended August 31, 1998 and
     1997, respectively.  Future minimum lease payments for
     fiscal years ending August 31 are as follows:
     
                    1999                    $28,664
                    2000                     28,236
                    2001                     28,236
                    2002 and thereafter      13,288
                                            $98,424

8.   Commitments and Contingencies

     As of August 31, 1998, Alliance Farms was operating five
     2,450-sow feeder pig production facilities in Yuma County,
     Colorado, two 2,450-sow feeder pig production facilities in
     Wayne County, Illinois, one 2,450-sow weaned pig production
     facility in Yuma County, Colorado, and one 2,450-sow weaned
     pig production facility in Wayne County, Illinois.  A 5,000
     sow unit is under construction at August 31, 1998.   At
     August 31, 1998, commitments for construction of such
     facilities totaled $3,057,650.  These commitments will be
     funded through bank borrowings.  As of August 31, 1997,
     Alliance Farms was operating six 2,450 sow feeder pig
     production units and had an additional unit under
     construction.   
     
     In the November 1998 general election, Colorado voters
     adopted amendments to the Colorado Revised Statutes
     concerning the regulation of housed commercial swine feeding
     operations.  Such amendments may have material and adverse
     consequences to Alliance Farms and its business.  These
     amendments mandate certain water and air quality control
     measures that must be implemented by commercial swine
     feeding operations housing at least 800,000 pounds of swine
     or which are deemed commercial under local law.  Although
     regulations implementing the amendments have not yet been
     promulgated, the amendments potentially are applicable to
     Alliance's Colorado operations.
     
     Although Alliance has begun to evaluate the impact that the
     amendments would have, Alliance presently is unable to
     estimate the costs that reasonably could be expected to be
     incurred to comply with the amendments and any related
     regulations that may be promulgated.

9.   Fair Value of Financial Instruments

     Alliance has financial instruments which are comprised of
     receivables, payables, and long-term debt.  The fair value
     of long-term debt is estimated using current interest rates
     for similar instruments.  The fair value of long-term debt
     approximates the carrying amount at August 31, 1998. The
     carrying amounts of receivables and payables approximate
     fair value because of the short maturity of these
     instruments.


<PAGE> 



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, 1998 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.



<PAGE> 


                            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  24, 1998

     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 24, 1998
Wayne N. Snyder
Chairman of the Board, President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)


     *                                  November 24, 1998
Doug Brown
Treasurer, Secretary and Director


     *                                  November 24, 1998
Merl A. Daniel
Director


     *                                  November 24, 1998
Larry Welsh
Director


     *                                  November 24, 1998
Loren Keppy
Director



*    By    /s/ Wayne N. Snyder          November 24, 1998
          Wayne N. Snyder, Attorney-in-Fact