Registration Statement No.

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM S-1
                             REGISTRATION STATEMENT
                           THE SECURITIES ACT OF 1933
                            FARMLAND INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

    Kansas                                         44-0209330
(State or other jurisdiction of                (I.R.S. Employer
incorporation or organization)              Identification No.)

                                   2011
            (Primary Standard Industrial Classification Code Number)
            3315 N. Oak Trafficway, Kansas City, Missouri 64116-0005

                                  816-459-6000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

                                  J. F. Berardi
                            Executive Vice President
                             Chief Financial Officer
                            Farmland Industries, Inc.
            3315 N. Oak Trafficway, Kansas City, Missouri 64116-0005
                                  816-459-6201

(Name, Address, including zip code, and telephone number, including area code,
of agent for service)

Approximate date of commencement of proposed sale to the public:    
                        DECEMBER 30, 1994

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. ( X )

<TABLE>
                 CALCULATION OF REGISTRATION FEE            
<CAPTION>
                                                              PROPOSED        PROPOSED MAXIMUM
                                            Amount            Maximum             Aggregate           Amount of
    Title of Each Class of                  Being          Offering Price        Offering or        Registration
    Security Being Registered             Registered          Per Unit         Exchange Price            Fee     
    <S>                                 <C>                       <C>        <C>                  <C>
    Demand Loan Certificates            $     13,600,000          100%        $      13,600,000    $   4,690
    Subordinated Capital
     Investment Certificates
         -Ten Year                      $     44,100,000          100%        $      44,100,000    $  15,207
         -Five Year                     $     44,000,000          100%        $      44,000,000    $  15,172
    Subordinated Monthly Income
    Capital Investment Certificates
         -Ten Year                      $     26,700,000          100%        $      26,700,000    $   9,207
         -Five Year                     $     13,100,000          100%        $      13,100,000    $   4,517
    Total                                                                     $     141,500,000    $  48,793
</TABLE>

Pursuant to Rule 429, the combined prospectus filed as a part of this
Registration Statement relates as well to Registrant's Form S-1 Registration
Statement No. 33-49253 and No. 33-51319.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

                                    PART I
                           FARMLAND INDUSTRIES, INC.
        CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K

            ITEM NUMBER AND CAPTION                 LOCATION IN PROSPECTUS



1. Forepart of registration statement and    Cover of Registration Statement
   outside front cover page of Prospectus    Cross Reference Sheet
                                             Front Page of Prospectus

2. Inside front and outside back             Available Information
   cover pages of Prospectus                 Reports to Security Holders

3. Summary Information, Risk Factors         Prospectus Summary
   and Ratio of Earnings to Fixed Charges    Risk Factors
4. Use of Proceeds                           Use of Proceeds

5. Determination of Offering Price           Not Applicable

6. Dilution                                  Not Applicable
7. Selling Security Holders                  Not Applicable

8. Plan of Distribution                      Plan of Distribution

9. Description of Securities 
    to be Registered                         Description of the Ten-Year
                                               Subordinated Capital Investment
                                               Certificates
                                             Description of the Five-Year
                                               Subordinated Capital Investment
                                               Certificates

                                             Description of the Ten-Year
                                               Subordinated Monthly Income 
                                               Capital
                                               Investment Certificates

                                             Description of the Five-Year
                                               Subordinated Monthly Income 
                                               Capital
                                               Investment Certificates

                                             Description of the Demand Loan
                                               Certificates

10.Interest of Named Experts and Counsel     Interest of Named Experts 
                                               and Counsel

11.Information with Respect to the 
    Registrant

   (a)   1.   General Development of 
               Business                      The Company
                                             Business - General
         2.   Financial Information About    Note 12 of Notes to Consolidated
              Industry Segments                Financial Statements

         3.   Description of Business        Business

   (b)   Description of Properties           Business

   (c)   Legal Proceedings                   Legal Proceedings

   (d)   Market Price of and Dividends 
          on the                             Not Applicable
         Registrant's Common Equity and 
         Related 
         Stockholder Matters

   (e)   Financial Statements                Index to Farmland Consolidated
                                              Financial Statements

   (f)   Selected Financial Data             Selected Consolidated Financial
                                              Data
   (g)   Supplementary Financial 
          Information                        Not Applicable

   (h)   Management's Discussion 
          and Analysis of                    Management's Discussion and
          Financial Condition and             Analysis of Financial  
          Results of Operations               Condition and Results
                                              of Operations

   (i)   Changes in and Disagreements with   Not Applicable
         Accountants on Accounting and 
         Financial Disclosure

   (j)   Directors and Executive Officers    Management

   (k)   Executive Compensation              Executive Compensation

   (l)   Security Ownership of Certain 
          Beneficial                         Not Applicable
          Owners and Management

   (m)   Certain Relationships and           Certain Transactions
         Related Transactions

12.Disclosure of Commission Position on      Not Applicable
   Indemnification for Securities Act 
   Liabilities
   


PROSPECTUS
                         FARMLAND INDUSTRIES, INC.
<TABLE>
<CAPTION>
                                                                                         AMOUNTS OFFERED TO:
                                                                                                             
                                                                              THE GENERAL           EXISTING
                                                                                 PUBLIC         SECURITY HOLDERS
<S>                                                                         <C>                <C>
SUBORDINATED CAPITAL INVESTMENT CERTIFICATES
      TEN-YEAR                                                               $      40,000,000  $      20,000,000
      FIVE-YEAR                                                              $      45,000,000  $      25,000,000
SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT CERTIFICATES
      TEN-YEAR                                                               $      20,000,000  $      20,000,000
      FIVE-YEAR                                                              $      12,000,000  $      10,000,000
 DEMAND LOAN CERTIFICATES                                                    $      60,000,000  $             -0-
</TABLE>




    CERTAIN RISK FACTORS CONNECTED WITH THE PURCHASE OF THESE SECURITIES ARE
DISCUSSED ON PAGE 10.  IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON
THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE
TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.

    THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

    Farmland Industries, Inc. ("Farmland") is offering: (1) to the owners of
its Subordinated Capital Investment Certificates ("Certificates")  the right to
exchange (see "Exchange Offer")  such Certificates for an equivalent  principal
amount of any Subordinated Monthly Income Capital Investment  Certificate
($5,000 minimum) which, at the time of the exchange, is  being offered by this
Prospectus, and  (2) to the owners of its Subordinated Capital Investment
Certificates,  which have been held until eligible for redemption prior to
maturity at  the option of the owner, the right to exchange such certificates
for an  equivalent principal amount of any Subordinated Capital Investment
Certificate which, at the time of the exchange, is being offered by this
Prospectus.  This offer will expire at 12:00 P.M. Eastern Standard Time on
December 31, 1995, unless terminated prior to such date.

(Continued from preceding page)
<TABLE>
<CAPTION>
                                                                          Underwriting
                                                           Price to        Discounts          Proceeds to
                                                          Public(1)       Commissions(2)      Farmland(2)   
 <S>                                                 <C>                  <C>              <C>
 Subordinated Capital Investment Certificates*
      --$100 minimum
            Ten-Year Total                           $         40,000,000                  $       40,000,000
            Five-Year Total                          $         45,000,000                  $       45,000,000
 Subordinated Monthly Income Capital
   Investment Certificates*
      --$5,000 minimum (additional units in 
      incremental amounts of $1,000 or more)
            Ten-Year Total                           $         20,000,000                  $       20,000,000
            Five-Year Total                          $         12,000,000                  $       12,000,000
 Demand Loan Certificates*
      --$100 minimum
            Total                                    $         60,000,000                  $       60,000,000
<FN>
*See "Determination of the Certificate Interest Rate."
</TABLE>
(1) Farmland's offering of debt certificates is being made in compliance with
    the terms of a partial exemption from the requirements of Schedule E of the
    Bylaws of the National Association of Securities Dealers, Inc. (NASD).  As
    a condition of this partial exemption, a minimum of 80 percent of the
    dollar amount of aggregate sales made in this offering must be to
    individuals or entities who are members of a defined group, the definition
    of which has been approved by the NASD.

(2) The debt certificates offered hereby for cash and for exchange are offered
    on a "best efforts" basis by Farmland Securities Company and American
    Heartland Investments, Inc. and may be offered by other broker-dealers
    selected by Farmland.  See "Plan of Distribution."  The offering is for an
    indeterminate period of time, not expected to be in excess of two years
    with no minimum amount of securities which must be sold.  The proceeds to
    Farmland are before deducting estimated commissions and expenses to be paid
    by Farmland of $5,272,000 and $1,365,000, respectively, assuming that all
    securities offered hereby are sold.


                             AVAILABLE INFORMATION

    Farmland is subject to certain of the informational requirements of the
Securities and Exchange Act of 1934, as amended, and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission").  Information filed by Farmland can be inspected and copied
at the offices of the Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C.; Room 1100, Federal Building, 26
Federal Plaza, New York, New York 10278; and Room 1228, Everett McKinley
Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604.  Copies
of such material may be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549.


                          REPORTS TO SECURITY HOLDERS

    Farmland intends to make available to holders of its Certificates, upon
written request from any such holder to the address stated on page 4, a copy of
the latest annual report containing the audited consolidated financial
statements of Farmland and its subsidiaries.

    NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF SO GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY FARMLAND.  THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES.  THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION.  NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY DISTRIBUTION OF THE SECURITIES UNDER THIS PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AT ANY TIME SUBSEQUENT TO THE RESPECTIVE DATES AT WHICH INFORMATION IS
GIVEN HEREIN OR THE DATE OF THIS PROSPECTUS.

                               TABLE OF CONTENTS

                                                                           Page

   PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
   RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
   DETERMINATION OF THE CERTIFICATE INTEREST RATE . . . . . . . . . . . . .  12
   USE OF PROCEEDS  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
   PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . .  13
   EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
   HOW TO ACCEPT EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . .  14
   HOW TO TRANSFER OWNERSHIP  . . . . . . . . . . . . . . . . . . . . . . .  15
   DESCRIPTION OF THE TEN-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES  15
   DESCRIPTION OF THE FIVE-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES 19
   DESCRIPTION OF THE TEN-YEAR SUBORDINATED MONTHLY INCOME CAPITAL
      INVESTMENT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . .  23
   DESCRIPTION OF THE FIVE-YEAR SUBORDINATED MONTHLY INCOME CAPITAL
      INVESTMENT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . .  26
   DESCRIPTION OF THE DEMAND LOAN CERTIFICATES  . . . . . . . . . . . . . .  29
   INTEREST OF NAMED EXPERTS AND COUNSEL  . . . . . . . . . . . . . . . . .  31
   THE COMPANY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
   BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
   PATRONAGE REFUNDS AND DISTRIBUTION OF NET INCOME . . . . . . . . . . . .  40
   EQUITY REDEMPTION PLANS  . . . . . . . . . . . . . . . . . . . . . . . .  41
   LEGAL PROCEEDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
   EXPERTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
   QUALIFIED INDEPENDENT UNDERWRITER  . . . . . . . . . . . . . . . . . . .  47
   INDEX TO FARMLAND CONSOLIDATED FINANCIAL STATEMENTS  . . . . . . . . . .  48
   SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . .  75
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .  78
   MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  87
   EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . .  91
   CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . .  93


                              PROSPECTUS SUMMARY

    The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and related notes appearing
elsewhere in this Prospectus.


                       FARMLAND INDUSTRIES, INC.
                       P. O. Box 7305
                       Kansas City, Missouri 64116
                       Telephone (816) 459-6000


Business  Farmland Industries, Inc. ("Farmland") is a regional farm supply and
          marketing cooperative.  Farmland is owned by its members and only its
          members are eligible to vote for directors or for the management or
          affairs of Farmland.  Members are entitled to receive patronage
          refunds distributed by Farmland from its member-sourced annual net
          income.  See "Business and Properties - Patronage Refunds and
          Distribution of Net Income." Farmland and subsidiaries (the
          "Company") conducts business primarily in two operating areas -
          cooperative farm supply operations and cooperative processing and
          marketing operations.

           Cooperative farm supply operations consists of three product
           divisions--petroleum, crop production and feed.  The Company
           distributes farm supply products at wholesale.  Approximately 65% of
           the Company's sales of farm supply products in 1994 were to farm
           cooperative associations (members and owners of Farmland).  These
           farm cooperatives  distribute products primarily to farmers and
           ranchers in states which comprise the corn belt and the wheat belt
           who utilize the products in the production of farm crops and
           livestock.

           Cooperative marketing operations include the storage and marketing
           of grain, processing pork and beef, and marketing fresh pork,
           processed pork, fresh beef and boxed beef.  In 1994, approximately
           61% of the hogs processed and 46% of the grain marketed were
           supplied to the Company by its members.  Cattle are purchased from
           producers in the proximity of beef plants at Liberal and Dodge City,
           Kansas.  

           A substantial portion of the Company's farm supply, pork and beef
           products are produced in facilities owned by the Company or operated
           by the Company under long-term lease arrangements.  No material part
           of the business of any segment of the Company is dependent on a
           single customer or a few customers.  The Company competes for market
           share with numerous participants (including other regional
           cooperatives) with various levels of vertical integration, product
           diversification, sizes and types of operations.
                                   THE OFFERING
<TABLE>
<CAPTION>
                                                                                  OFFERED AT 100% OF
                                                                                AGGREGATE FACE AMOUNT
                                                                              FOR                    FOR
                                                                             CASH                  EXCHANGE  
 <S>                                                                      <C>                   <C>
 Description of Securities* (see pages 15 to 29):
      Subordinated Capital Investment Certificates - $100 Minimum
         Interest payable or compounded semiannually at the 
         Certificate Interest Rate
            10-year maturity                                              $     40,000,000      $       20,000,000
              5-year maturity                                             $     45,000,000      $       25,000,000
      Subordinated Monthly Income Capital Investment Certificates
      - $5,000 Minimum 
         Interest payable monthly at the Certificate Interest Rate (additional
         units may be purchased in increments of $1,000 or more)
            10-year maturity                                              $     20,000,000      $       20,000,000
              5-year maturity                                             $     12,000,000      $       10,000,000
      Demand Loan Certificates - $100 minimum                             $     60,000,000      $              -0-

*Subordinated Capital Investment Certificates and Subordinated
Monthly Income Capital Investment Certificates are referred 
to in this Prospectus as "Subordinated Debt Certificates."
</TABLE>

PLAN OF DISTRIBUTION
    Offered on a best efforts basis by Farmland Securities Company ("FSC") and
    American Heartland Investments, Inc. ("AHI") and may be offered by selected
    broker-dealers.  See "Plan of Distribution."

UNDERWRITING DISCOUNTS AND COMMISSIONS
    Farmland will pay commissions to FSC not to exceed 4% of the sale price of
    Demand Loan Certificates and Subordinated Debt Certificates being offered. 
    Farmland will pay all expenses and liabilities incurred by FSC, limited to
    an amount not to exceed 3% of the aggregate sales price of Demand Loan and
    Subordinated Debt Certificates being offered.  Farmland will pay to AHI and
    to other selected broker-dealers for their services a sales commission of
    not more than 4% of the face amount of the Subordinated Debt Certificates
    and not more than 1/2 of 1% of the face amount of the Demand Loan
    Certificates which the broker-dealers sell.  See "Plan of Distribution."

PURPOSE OF THE EXCHANGE OFFER
    The purpose of the exchange offer is to extend the period of time for which
    Farmland may utilize funds borrowed from an investor in its securities.

METHOD OF TRANSACTING AN EXCHANGE
    The exchange offer may be accepted by delivering any of the Certificates,
    which are eligible for exchange, to Farmland Securities Company ("FSC")
    P.O. Box 7305, Kansas City, Missouri 64116.  The Certificates should be
    assigned to Farmland in the transfer section (on the reverse side of the
    Certificate) and endorsed by all persons whose names appear on the face of
    the Certificate.  For additional information regarding the exchange, see
    "How to Accept Exchange Offer," or call (816) 459-6360 or write to the
    above address for specific information.

USE OF PROCEEDS
    Any proceeds received will be used to fund portions of capital expenditures
    which are estimated to be approximately $289.9 million through August 31,
    1996, or to redeem any of the $43.3 million of outstanding Subordinated
    Debt Certificates, which mature at various times prior to August 31, 1996,
    or to redeem any outstanding Subordinated Debt Certificates prior to
    maturity at the request of owners to the extent provided in each
    Subordinated Debt Certificates respective trust indenture.  Any proceeds in
    excess of amounts required for these purposes would be used to reduce bank
    or other borrowings with rates of interest higher than the Certificate
    Interest Rate of the securities offered hereby.  If proceeds from sales of
    the securities offered hereby are less than amounts required for these
    purposes, additional funds may be obtained from operations or from bank
    borrowings.  Farmland has reserved the right to change the use of the
    proceeds from this offering.  See "Use of Proceeds," "Business - Other
    Matters - Capital Expenditures," and "Description of Subordinated Capital
    Investment Certificates," "Description of Subordinated Monthly Income
    Capital Investment Certificates" and "Description of Demand Loan
    Certificates."

SELLING PRICE
    100% of Face Amount.

PROVISIONS FOR REDEMPTION OR PREPAYMENT
    Owners of the Subordinated Debt Certificates may not liquidate their
    investments except under restricted conditions summarized below and as more
    fully stated in each of the Subordinated Debt Certificates respective trust
    indenture.

    A.  Farmland will not redeem any of the Subordinated Capital Investment
        Certificates prior to maturity except:

        (i) upon death of an owner; or,

        (ii)    after the date any Subordinated Capital Investment Certificate
                becomes eligible for redemption prior to maturity at the option
                of the owner, in additional amounts limited in any month to the
                greater of $500,000 or 1/2 of 1% of the balance outstanding
                under the Subordinated Capital Investment Certificates
                respective trust indenture at the end of the previous month,
                provided such balance outstanding is greater than $5,000,000. 
                If such balance outstanding is less than $5,000,000 there will
                be no limitation on early redemption of eligible Subordinated
                Capital Certificates outstanding under such trust indenture.

    B.  Farmland will not redeem the Subordinated Monthly Income Capital
        Investment Certificates prior to maturity except upon the death of an
        owner.

    Farmland has the right to call the Subordinated Capital Investment
    Certificates any time after two years from the date of issuance thereof. 
    See the subcaption, "Redemption" within the description of each type of
    certificate.


                           FARMLAND INDUSTRIES, INC.
                 SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                                                        Year Ended August 31                  
                                                   1994         1993         1992         1991        1990    
                                                                        (Dollars in Thousands)
 <S>                                            <C>          <C>          <C>          <C>          <C>
 Summary of Operations(1)(2)(3):
   Sales           . . . . . . . . . . . . . .  $ 6,677,933  $ 4,722,940  $ 3,429,307  $ 3,638,072  $ 3,377,603
   Income (Loss) before Income Taxes and
      Extraordinary Item   . . . . . . . . . .  $    78,766  $   (36,833) $    70,504  $    50,166  $    58,184
   Net Income (Loss)   . . . . . . . . . . . .  $    73,876  $   (30,400) $    62,313  $    42,693  $    48,580 

 Ratio of Earnings to Fixed Charges (4)  . . .          2.2       Note 4          2.5          1.9          2.2

 Balance Sheets:
   Working Capital   . . . . . . . . . . . . .  $   290,704  $   260,519  $   208,629  $   122,124  $   121,518
   Property, Plant and Equipment, Net  . . . .  $   501,290  $   504,378  $   446,002  $   490,712  $   469,710
 Total Assets      . . . . . . . . . . . . . .  $ 1,926,631  $ 1,719,981  $ 1,526,392  $ 1,369,231  $ 1,352,889
 Long-Term Debt    . . . . . . . . . . . . . .  $   517,806  $   485,861  $   322,377  $   291,192  $   273,071
 Capital Shares and Equities . . . . . . . . .  $   585,013  $   561,707  $   588,129  $   497,364  $   476,011
<FN>
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for details.
</TABLE>

(1)   On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
      ("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration
      and production operations, and exited its oil and gas exploration and
      production activities.  The gain from the sale of Terra amounted to
      $237,200,000 for tax reporting purposes.  During 1983, and prior to the
      sale of the Terra stock, Farmland received certain distributions from
      Terra totaling $24,800,000.  For tax purposes, Farmland claimed
      intercorporate dividends-received deductions for the entire amount of
      such distributions.

   On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
   notice to Farmland asserting deficiencies in federal income taxes (exclusive
   of statutory interest thereon) in the aggregate amount of $70,775,000.  The
   asserted deficiencies relate primarily to the Company's tax treatment of the
   sale of the Terra stock and the distributions received from Terra prior to
   the sale.  The IRS asserts that Farmland incorrectly treated the Terra sale
   gain as income against which certain patronage-sourced operating losses
   could be offset, and that, as a nonexempt cooperative, Farmland was not
   entitled to an intercorporate dividends-received deduction in respect of the
   1983 distribution by Terra.  It further asserts that Farmland incorrectly
   characterized gains for tax purposes aggregating approximately $14,600,000,
   and a loss of approximately $2,300,000, from the disposition of certain
   other assets.  On June 11, 1993, Farmland filed a petition in the United
   States Tax Court contesting the asserted deficiencies in their entirety. 
   Discovery and other pre-trial phases of the litigation have since been
   ongoing.  The case is scheduled for trial on March 6, 1995.

   If the IRS ultimately prevails on all of the adjustments asserted in the
   statutory notice, Farmland would have additional federal and state income
   tax liabilities aggregating approximately $85,800,000 plus accumulating
   statutory interest thereon through October 31, 1994, of approximately
   $154,900,000 (before tax benefits of the interest deduction).  In addition,
   such adjustments would affect the computation of Farmland's taxable income
   for its 1989 tax year and, as a result, could increase Farmland's federal
   and state income taxes for that year by approximately $5,000,000 plus
   applicable statutory interest thereon.

   No provision has been made in the consolidated financial statements for
   federal or state income taxes (or interest thereon) in respect of the IRS
   claims described above.  Farmland believes that it has meritorious positions
   with respect to all of these claims and will continue to vigorously pursue
   their favorable resolution through the pending litigation.

   In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
   likely than not that the courts will ultimately conclude that (i) Farmland's
   treatment of the Terra sale gain was substantially, if not entirely,
   correct; and (ii) Farmland properly claimed a dividends-received deduction
   in respect of the 1983 distributions which it received from Terra prior to
   the sale of the Terra stock.  Counsel has further advised, however, that
   none of the issues involved in these disputes is free from doubt, and that
   there can be no assurance that the courts will ultimately rule in favor of
   Farmland on any of these issues.

   Should the IRS ultimately prevail on all of its asserted claims, all claimed
   federal and state income taxes as well as accrued interest would become
   immediately due and payable, and would be charged to current operations.  In
   such case, the Company would be required to renegotiate agreements with its
   banks to maintain compliance with various requirements of such agreements,
   including working capital and funded indebtedness provisions.  However, no
   assurance can be given that such renegotiation would be successful. 
   Alternatives could include other financing arrangements or the possible sale
   of assets.

(2)   During the year ended August 31, 1991, the Company changed its method for
      inventory pricing of certain petroleum inventories from the first-in,
      first out (FIFO) method previously used to the last-in, first out (LIFO)
      method because the LIFO method better matches current costs with current
      revenues.  Pro forma effects of retroactive application of the LIFO
      method are not determinable.

(3)   Acquisitions and Dispositions:

   (a)   In October 1993, the Company acquired approximately 53% of the common
         stock of National Carriers, Inc. ("NCI") and increased its ownership
         of NCI to 79% in August 1994.  NCI is a trucking company located in
         Liberal, Kansas.  NCI provides substantially all the trucking service
         needs of NBPC.  The purchase price of NCI ($4,423,000) was paid in
         cash.  See note 2 of the notes to consolidated financial statements.

   (b)   In December 1993, the Company acquired all the common stock of seven
         international grain trading companies (collectively referred to as
         "Tradigrain").  The purchase price for Tradigrain ($31,367,000) was
         paid in cash.  See note 2 of the notes to consolidated financial
         statements.

   (c)   During 1993, Farmland obtained a 58% interest in National Beef Packing
         Company, L.P. ("NBPC"), a limited partnership.  Effective April 15,
         1993, NBPC acquired Idle Wild Food's beef packing plant and feedlot
         located in Liberal, Kansas.  See note 2 of the notes to consolidated
         financial statements.

   (d)   On August 30, 1993, Farmland reduced its ownership interest in The
         Cooperative Finance Association, Inc. ("CFA") to 49%.  In addition,
         CFA purchased the assets and operations of Farmland Financial Services
         Company ("FFSC").  Effective December 1, 1993, CFA owners approved a
         recapitalization plan which limits the voting rights of any owner
         (including Farmland) to 25% or less regardless of the number of voting
         shares held.  Effective August 31, 1993, CFA is not included in the
         consolidated balance sheet of the Company and Farmland is no longer
         engaged in commercial lending operations.

   (e)   Effective June 30, 1992, the Company acquired the grain marketing
         assets of Union Equity Co-Operative Exchange ("Union Equity").  See
         note 2 of the notes to consolidated financial statements.
<TABLE>
   (f)   The following unaudited financial information for the year ended
         August 31, 1993 and 1992 presents pro forma results of operations of
         the Company as if the disposition of CFA and the acquisition of NBPC
         had occurred at the beginning each period presented.  The pro forma
         financial information includes adjustments for amortization of
         goodwill, additional depreciation expense, and increased interest
         expense on debt assumed in the acquisitions.  The pro forma financial
         information does not necessarily reflect the results of operations
         that would have occurred had the Company been a single entity which
         excluded CFA and included Union Equity and NBPC for the full years
         1993 and 1992.  See note 2 of the notes to consolidated financial
         statements.
<CAPTION>
                                                                            August 31 (Unaudited)
                                                                         1993                 1992     
                                                                           (Amounts in Thousands)
            <S>                                                    <C>                     <C>
                 Net sales . . . . . . . . . . . . . . . . . . .   $       5,357,867       $    5,441,303

                 Income (loss) before extraordinary item . . . .   $         (44,040)        $     47,225
</TABLE>
(4)   In computing the ratio of earnings to fixed charges, income (loss)
      represents pretax income (loss) for the enterprise as a whole including
      100% of such income (loss) of minority-owned subsidiaries which have
      fixed charges, the registrant's share of 50%-owned persons and any
      distributed earnings (but not losses or undistributed earnings) of
      less-than-fifty percent-owned persons plus fixed charges.  Fixed charges
      consist of interest and finance charges on all indebtedness plus that
      portion of rentals considered to be the interest factor.  Income was
      inadequate to cover fixed charges for the year ended August 31, 1993. 
      The dollar amount of the coverage deficiency was $36,609,000.


                                 RISK FACTORS

    Prospective investors in the Demand Loan Certificates and Subordinated Debt
Certificates offered hereby are advised to consider the following risk factors:

INCOME TAX MATTERS

    The Internal Revenue Services ("IRS") has asserted that Farmland
incorrectly treated as patronage-sourced income a gain for income tax purposes
of $237,200,000 which resulted from the sale of the stock of Terra Resources,
Inc. ("Terra") and that Farmland, as a nonexempt cooperative, was not entitled
to intercorporate dividends-received deductions with respect to distributions
of $24,800,000 received in 1983 from Terra.

    On March 24, 1993, the IRS issued a statutory notice to Farmland asserting
deficiencies in federal income taxes (exclusive of statutory interest thereon)
in the aggregate amount of $70,775,000.  The asserted deficiencies relate
primarily to the Company's tax treatment of the sale of the Terra stock and the
distributions received from Terra prior to the sale.  It further asserts that
Farmland incorrectly characterized gains for tax purposes aggregating
approximately $14,600,000, and a loss of approximately $2,300,000, from
dispositions of certain other assets.  On June 11, 1993, Farmland filed a
petition in the United States Tax Court contesting the asserted deficiencies in
their entirety.  Discovery and other pre-trial phases of the litigation have
since been ongoing.  The case is scheduled for trial on March 6, 1995.

    If the IRS ultimately prevails on all of the adjustments asserted in the
statutory notice, Farmland would have additional federal and state income tax
liabilities aggregating approximately $85,800,000 plus accumulating statutory
interest thereon through October 31, 1994, of approximately $154,900,000
(before tax benefits of the interest deduction).  In addition, such adjustments
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $5,000,000 plus applicable statutory interest
thereon.

    Should the IRS ultimately prevail on all of its asserted claims, all
claimed federal and state income taxes as well as accrued interest would become
immediately due and payable, and would be charged to current operations.  In
such case, the Company would be required to renegotiate agreements with its
banks to maintain compliance with various requirements of such agreements,
including working capital and funded indebtedness provisions.  However, no
assurance can be given that such renegotiation would be successful. 
Alternatives could include other financing arrangements or the possible sale of
assets.  See note 7 of the notes to consolidated financial statements.


GENERAL FACTORS AFFECTING THE COMPANY'S BUSINESS

    The Company's revenues depend, to a large extent, on conditions in
agriculture and may be volatile due to factors beyond the Company's control,
such as weather, crop failures, federal agricultural programs, production
efficiencies, and U.S. imports or exports.  In addition, various federal and
state regulations to protect the environment encourage farmers to reduce the
amount of fertilizer and other chemicals applications.  Federal agricultural
programs continue to encourage U.S. farmers to reduce planted acreage.  Global
variables which affect supply, demand and price of crude oil and refined fuels
impact the Company's petroleum operations.  Management cannot determine the
extent to which these factors may impact future operations of the Company.  The
Company's cash flow and net income may continue to be volatile as conditions
affecting agriculture and markets for the Company's products change.  See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."


SOURCE OF FUNDS TO PAY INTEREST AND PRINCIPAL

    Farmland does not establish special cash reserves for payment of principal
or interest on its Demand Loan and Subordinated Debt Certificates.  In the
past, Farmland has relied on general corporate funds provided by operations,
sales of assets, and other borrowings (including the issuance of other Demand
Loan and Subordinated Debt Certificates) to fund such payments.  Farmland
intends to make interest payments on and to redeem Demand Loan and Subordinated
Debt Certificates in accordance with the respective trust indentures with cash
from operations, borrowings, and from issuance of other Demand Loan or
Subordinated Debt Certificates.


SUBORDINATION AND ADDITIONAL DEBT

    The Subordinated Debt Certificates offered by this Prospectus for sale and
for exchange are unsecured and subordinated to "senior indebtedness."    Such
"senior indebtedness" includes money borrowed from time to time from certain
financial institutions and amounts due and payable under any instrument which
provides that such amounts are to be "senior indebtedness."  At August 31,
1994, such money borrowed aggregated approximately $450,827,000.  In addition,
such other instruments (principally long-term leases) then in effect provided
for aggregate payments over nine years of approximately $126,505,000.  There is
no limitation on the amount of additional senior debt for which Farmland may
become liable, except that, in accordance with covenants in certain borrowing
and lease agreements, the total amount of funded debt and senior funded debt
outstanding may not exceed 52% and 43% of capitalization, respectively.  See
"Management Discussion and Analysis of Financial Condition and Results of
Operations" and the subcaption "Subordination" within the description of each
type of certificate.  The Demand Loan Certificates are unsecured general
obligations of Farmland Industries, Inc.


RESTRICTED REDEMPTION RIGHTS OF HOLDERS OF SUBORDINATED DEBT CERTIFICATES

    OWNERS OF THE SUBORDINATED DEBT CERTIFICATES MAY NOT LIQUIDATE THEIR
INVESTMENTS EXCEPT UNDER RESTRICTED CONDITIONS SUMMARIZED BELOW AND MORE FULLY
STATED IN EACH OF THE SUBORDINATED DEBT CERTIFICATES RESPECTIVE TRUST
INDENTURE.  THE RESTRICTED REDEMPTION RIGHTS OF HOLDERS OF THE SUBORDINATED
DEBT CERTIFICATES MAY BE UNSUITABLE TO THE INVESTMENT OBJECTIVES OF CERTAIN


PROSPECTIVE INVESTORS.

    Farmland will not redeem any of the Subordinated Capital Investment
Certificates prior to maturity except:
     (i)        upon death of an owner; or,
     (ii)       after the date any Subordinated Capital Investment Certificate
                becomes eligible for redemption prior to maturity at the option
                of the owner, in additional amounts limited in any month to the
                greater of $500,000 or 1/2 of 1% of the balance outstanding
                under the Subordinated Capital Investment Certificates'
                respective trust indenture at the end of the previous month,
                provided such balance outstanding is greater than $5,000,000. 
                If such balance outstanding is less than $5,000,000, there will
                be no limitation on early redemption of eligible Subordinated
                Capital Investment Certificates outstanding under such trust
                indenture.. 

    Farmland will not redeem the Subordinated Monthly Income Capital Investment
Certificates prior to maturity except upon the death of an owner.

    Farmland has the right to call the Subordinated Capital Investment
Certificates any time after two years from the date of issuance thereof.  See
the subcaption "Redemption" within the description of each type of certificate.


LACK OF AN ESTABLISHED MARKET FOR THE SECURITIES TO BE OFFERED

    There is no secondary market for Farmland's Subordinated Debt Certificates
or Demand Loan Certificates presently outstanding and there likely will be no
secondary market for these securities.

AFFILIATED UNDERWRITER

    Farmland Securities Company ("FSC") is a wholly-owned subsidiary of
Farmland.  FSC's business is limited to the offer and sale of securities issued
by Farmland.  This offering is being made in compliance with terms of a partial
exemption from requirements of Schedule E of the NASD Bylaws; no persons, other
than persons associated with Farmland or FSC, participated in determining the
price and other terms of the securities offered hereby.  See "Plan of
Distribution." 


POTENTIAL TAXABLE GAINS OR LOSSES FROM THE EXCHANGE

    An exchange of Certificates in a transaction permitted by this Prospectus
could result in a gain or a loss for purposes of determining taxable income of
holders of Certificates.  See "Exchange Offer."


                DETERMINATION OF THE CERTIFICATE INTEREST RATE

    The Certificate Interest Rate ("CIR") is the interest rate per annum on the
Certificates as determined by the President of Farmland, from time to time, at
his sole discretion after giving consideration to the current rates of interest
established by various money markets, and Farmland's need for funds.  Any
change in the CIR will not affect the CIR on any Subordinated Capital
Investment Certificates or Subordinated Monthly Income Capital Investment
Certificates for which the full purchase price was received prior to the
change.  With respect to the Demand Loan Certificates, the CIR is the interest
rate for Demand Loan Certificates as determined, from time to time, by the
President of Farmland, in his sole discretion.  Except as hereinafter provided,
each Demand Loan Certificate shall earn interest at the CIR in effect on the
date of issuance of such Demand Loan Certificate for a period of six (6) months
only:  provided, however, that if during such six (6) month period the CIR for
Demand Loan Certificates is increased to a rate higher than that currently in
effect for a Demand Loan Certificate, then each such Demand Loan Certificate
shall earn interest at the increased rate from the effective date of the
increase to the end of such Demand Loan Certificate's then current six (6)
month period.  Six (6) months from the date of issuance of each Demand Loan
Certificate and each six (6) month anniversary date thereafter, such Demand
Loan Certificate shall, if not redeemed, earn interest at the CIR for Demand
Loan Certificates in effect on such anniversary date, but only for a six (6)
month period from such anniversary date, subject to the escalation provisions
previously set forth.  A decrease in the CIR for Demand Loan Certificates will
have no effect on the CIR of any Demand Loan Certificate issued prior to the
decrease unless such decreased rate is in effect on the first day of the next
subsequent six (6) month period of such outstanding Demand Loan Certificate.

    On the date of this Prospectus, the CIR was 7.75% on Five-Year and 8.25% on
Ten-Year Subordinated Capital Investment Certificates; 7.75% on Five-Year, and
8.25% on Ten-Year Subordinated Monthly Income Capital Investment Certificates;
and 4.75% on Demand Loan Certificates.  Whenever the CIR is changed, this
Prospectus shall be amended to specify the interest rate in effect, after the
effective date of the change as specified in the amendment, on the Certificates
to be offered pursuant to such Prospectus.  Whenever the CIR is changed each
respective Demand Loan Certificate and Subordinated Debt Certificate owner is
notified in writing of the change as specified in the amendment.  Information
concerning the CIR can be obtained from the Prospectus or from Farmland
Securities Company, Post Office Box 7305, Kansas City, Missouri 64116
(telephone 1-800-821-8000, extension 6360).  See "Description of the Ten-Year
and Five-Year Subordinated Capital Investment Certificates," "Ten-Year and
Five-Year Subordinated Monthly Income Capital Investment Certificates" and
"Demand Loan Certificates."
 

                                USE OF PROCEEDS

    The offering is made on a best efforts basis with no established minimum
amount of Subordinated Debt and Demand Loan Certificates that must be sold.  No
assurance can be provided as to the amount of net proceeds the Company may
receive as a result of this offering.  Assuming that all of the Subordinated
Debt and Demand Loan Certificates offered hereby are sold, net proceeds to the
Company will be approximately $170,363,000 after deducting estimated
commissions and expenses.  Any proceeds to the Company from this offering may
be used: 1) to fund portions of the Company's capital expenditures which are
expected to be approximately $289.9 million through the two-year period ending
August 31, 1996; 2) to refinance approximately $43.3 million of Subordinated
Debt Certificates which mature at various times prior to August 31, 1996; 3) to
fund call options which, subject to provisions in each respective trust
indenture, may be exercised by Farmland; or 4) to redeem Subordinated Debt
Certificates prior to maturity at owners' requests, restricted to the limited
redemption rights of owners as described in each Subordinated Debt Certificates
respective trust indenture.  See "Other Matters - Capital Expenditures" and the
subcaption "Redemptions" within the description of each type of certificate.

    Any proceeds in excess of amounts required for the above purposes would be
applied to reduce bank or other borrowings being used to finance inventories,
operations or facilities provided that such borrowings have interest rates
higher than the CIR of the securities offered hereby.  To the extent that
proceeds from sales of the securities offered hereby are less than amounts
required for these purposes, such insufficient amounts may be obtained from
operations, from bank or other borrowings or from other financing arrangements.

    At November 30, 1994, under a syndicated credit facility provided by eight
domestic and international banking institutions, additional borrowings of
approximately $371,937,000 were available to Farmland.  A summary of the terms
and conditions of these credit agreements is set out in "Management's
Discussion and Analysis of Financial Condition and Results of Operations." 
Farmland has reserved the right to obtain funds in any manner deemed advisable. 
Farmland intends to maintain a continuous offering of securities as it has done
in the past.  Farmland has reserved the right to change the use of the proceeds
of this offering due to contingencies related to the volatile nature of the
Company's cash flows as discussed elsewhere herein.  See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
General."


                             PLAN OF DISTRIBUTION

    The securities offered by this Prospectus for cash and for exchange are
offered by Farmland Securities Company ("FSC"), American Heartland Investments,
Inc. ("AHI") and may be offered by other broker-dealers selected by Farmland. 
The offering is on a best efforts basis.  There is no requirement that any
minimum amount of securities offered hereby must be sold.  The offering shall
be for an indeterminate period of time not expected to be in excess of two
years.

    FSC, located at 3315 North Oak Trafficway, Kansas City, Missouri, is a
wholly-owned subsidiary of Farmland organized for the sole purpose of offering
Farmland's Demand Loan and Subordinated Debt Certificates for sale to the
general public and/or for exchange and to solicit offers therefor which are
subject to acceptance by Farmland.  FSC is a member of The National Association
of Securities Dealers, Inc. (NASD) and the Securities Investor Protection
Corporation (SIPC).  FSC's involvement in this offering is in compliance with
terms of a partial exemption from requirements of Schedule E of the NASD
Bylaws; no persons, other than persons associated with Farmland or FSC,
participated in determining the price and other terms of the securities offered
hereby.  FSC is under no firm commitment or obligation to solicit offers for
any specified amount of such debt securities.  FSC's commitment is to use its
best efforts to solicit such orders.  Farmland will pay commissions to FSC not
to exceed 4% of the aggregate price of Demand Loan Certificates and
Subordinated Debt Certificates being offered.  Farmland will pay all expenses
and liabilities incurred by FSC, limited to an amount not to exceed 3% of the
aggregate sales price of Demand Loan and Subordinated Debt Certificates being
offered.  FSC is a registered broker-dealer under the Securities Exchange Act
of 1934, but has only limited authority to engage in the offer and sale of
securities issued by Farmland.  Farmland will indemnify FSC for certain
liabilities under the Securities Act of 1933. 

    The Company has engaged AHI, located at 219 South Santa Fe, P. O. Box 1303,
Salina, Kansas 67402, to offer Farmland Demand Loan and Subordinated Debt
Certificates to the general public and for exchange and to solicit offers
therefore which are subject to acceptance by Farmland.  Farmland may engage
other broker-dealers that are qualified to offer and sell the Demand Loan
Certificates and Subordinated Debt Certificates in a particular state and that
are members of the National Association of Securities Dealers, Inc.  AHI and
each broker-dealer participating in this offering shall be held responsible for
complying with all statutes, rules and regulations of all jurisdictions in
which each participating broker-dealer offers the Demand Loan and Subordinated
Debt Certificates for sale.  Farmland will pay to AHI and may pay to other
selected broker-dealers for their services a sales commission of not more than
4% of the face amount of Subordinated Debt Certificates and not more than 1/2
of 1% of the face amount of Demand Loan Certificates which AHI and other
selected broker-dealers sell.  In addition, Farmland will pay to AHI and may
pay to other selected broker-dealers an unallocated due diligence and marketing
fee of not more than 1/2 of 1% of the face amount of such certificates the
broker-dealers sell.  Farmland may indemnify AHI and other selected
broker-dealers for certain liabilities arising out of violations by Farmland of
blue sky laws, or the Securities Act.

    Interstate/Johnson Lane Corporation, a member of the NASD, participated as
a qualified independent underwriter in the "due diligence" review with respect
to the preparation of this Prospectus, however, as discussed above,
Interstate/Johnson Lane Corporation will not be participating in the pricing of
this issue.


                                EXCHANGE OFFER

    Farmland is offering: (1) to the owners of its Subordinated Capital
Investment Certificates the right to exchange such certificates for an
equivalent principal amount of any Subordinated Monthly Income Capital
Investment Certificate ($5,000 minimum) which, at the time of the exchange, is
being offered by this Prospectus, and (2) to the owners of its Subordinated
Capital Investment Certificates, which have been held until eligible for
redemption prior to maturity at the option of the owner, the right to exchange
such certificates for an equivalent principal amount of any Subordinated
Capital Investment Certificate which, at the time of the exchange, is being
offered by this Prospectus.

    The exchange will be made effective on the day certificates eligible for
exchange are received at Farmland's office in Kansas City, Missouri, provided,
however, that any certificates received within a ten (10) day period preceding
the record date of such certificates, the exchange shall be made effective as
of the first day following such record date.  The exchange is irrevocable after
the effective date, but is revocable at any time prior to the effective date. 
Notice of an owner's revocation may be in writing, delivered to the address
given below (see "How to Accept Exchange Offer") or by telephone to (816)
459-6360.  This exchange offer will expire at 12:00 P.M. Eastern Standard Time
on December 31, 1995, unless terminated prior to such date.  Owners of
certificates eligible for exchange shall be notified by letter from Farmland at
least 30 days prior to the effective date of Farmland's termination of this
exchange offer.

    Any interest accrued on a certificate being exchanged will be paid on the
day the exchange is made effective.

    The opinion of Robert B. Terry, Vice President and General Counsel of
Farmland, which opinion is set forth herein in full as follows, is:  The
exchange of certificates would be considered as taxable exchanges.  The basis
for determining a taxable gain or loss on a taxable exchange is for an owner to
take into account as gain or loss the difference between the fair market value
of the security being received and his basis (usually cost) in the security
being exchanged.  As a practical matter, most owners should have no gain or
loss since the securities were sold at 100% of Face Amount and are being
exchanged at 100% of Face Amount.  However, since it is possible for a prior
owner to have sold his certificate to another person at a cost which is more or
less than he had paid for it, a subsequent owner could have a different cost
than the original issued cost.  Any gain or loss recognized on a taxable
exchange would be taken into account for purpose of federal income taxes as a
gain or loss from the sale or disposition of a capital asset and would be
short-term gain or loss unless, at the time of exchange, it had been held for a
period of more than twelve months.  Owners of these certificates should seek
advice from their tax advisor before accepting the exchange offer.


                         HOW TO ACCEPT EXCHANGE OFFER

    The exchange offer may be accepted by delivering any of the Subordinated
Capital Investment Certificates, which are eligible for exchange (see "Exchange
Offer" immediately above), to Farmland Securities Company, P.O. Box 7305,
Kansas City, Missouri 64116 or American Heartland Investments, Inc. P. O. Box
1303, Salina, Kansas, 67402.  The certificates should be assigned to Farmland
in the transfer section (on the reverse side of the certificate) and endorsed
by all of the persons whose names appear on the face of the certificate. 
Should any registered owner be incapable of endorsing the certificate,
additional documentation may be necessary.  Call (816) 459-6360 or write to the
above address for specific information.  Should registered owners wish to have
the new certificate issued to persons other than as shown on the certificate
being surrendered in the exchange, the endorsement signatures must be
guaranteed by a commercial bank or trust company officer or a NASD member firm
representative.  The exchange offer must be accompanied by a completed "Order
and Receipt for Investment" form supplied by Farmland Securities Company or
American Heartland Investments, Inc.  The U.S. Treasury Form W-9 Backup
Withholding Certificate included on the order form must be completed and signed
by the principal owner of the new certificate.


                           HOW TO TRANSFER OWNERSHIP

    To transfer ownership of certificates, the certificates should be assigned
to the new owner(s) in the transfer section on the reverse side of the
certificate and endorsed by all persons named on the face of the certificate. 
Should any registered owner be incapable of endorsing the certificate,
additional documentation may be necessary.  Call (816) 459-6360 or write
Farmland Industries, Inc., P.O. Box 7305, Kansas City, Mo. 64116 for specific
information.  All transfer requests require that endorsement signatures be
guaranteed by a commercial bank or trust company officer or an NASD member firm
representative.  Requests for transfer should be accompanied by a completed
"Order and Receipt for Investment" form supplied by Farmland Securities
Company.  The U.S. Treasury Form W-9 Backup Withholding Certificate included on
the order form must be completed and signed by the new principal owner.


DESCRIPTION OF THE TEN-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES

    The Ten-Year Subordinated Capital Investment Certificates, hereinafter
referred to as "Certificates," bearing an interest rate hereinafter described
and referred to as the "Certificate Interest Rate," are issued under an
indenture (the "Indenture of November 8, 1984") dated November 8, 1984, as
amended January 3, 1985 and December 3, 1991, between Farmland Industries, Inc.
("Farmland") and Commerce Bank of Kansas City, National Association, Kansas
City, Missouri, as Trustee (the "Trustee.")

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 8, 1984.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
a part of the statements, made, and such statements are qualified in their
entirety by such reference.


GENERAL

    The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable.  Interest on the principal sum at the Certificate
Interest Rate per annum is payable at the election of the owner, made at the
time of purchase, (i) semiannually or (ii) at maturity or at the date of
redemption if redeemed prior to maturity.  See "Certificate Interest Rate"
below.  The Certificates are issued in amounts of $100 or more as of the first
day on which offers acceptable to Farmland and accompanied by payment of the
full purchase price have been received by Farmland in Kansas City, Missouri. 
The Certificates mature ten years from date of issue.  The payment of the
principal at maturity may, at the request of the owner, be paid in a lump sum
or in equal monthly, quarterly, semiannual or annual installments, including
interest on the unpaid balance at the rate of six percent (6%) per annum, over
a period of not more than thirty-six months.

    The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 8, 1984, but such Indenture does not limit
the amount of other securities, either secured or unsecured, which may be
issued by Farmland.  At August 31, 1994, a total of $108,125,000 was
outstanding.

    Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statements
upon written request of the owner to Farmland Industries, Inc., P. O. Box 7305,
Kansas City, Missouri 64116.  Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.


CERTIFICATE INTEREST RATE

    The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate.  The Certificate Interest Rate will be such as Farmland may
from time to time determine but any change of the Certificate Interest Rate
will not affect the Certificate Interest Rate on any Certificate for which the
full purchase price was received prior to the change.  See "Determination of
the Certificate Interest Rate."

    Interest at the Certificate Interest Rate per annum is payable on the
principal sum at the election of the purchaser, made at the time of purchase,
in one of the following ways:  (i) semiannually on January 1 and July 1 to
owners of record on the last preceding December 31 and June 30, respectively;
or (ii) at maturity, or at the date of redemption if redeemed prior to
maturity, compounded semiannually on December 31 and June 30 at the Certificate
Interest Rate which is stated on the face of the Certificate.  Any election to
receive payment of the interest semiannually is irrevocable.  The election to
receive payment of the interest at maturity, or at the date of redemption if
redeemed prior to maturity, will be terminated upon written request of the
owner, such termination to be effective as of the last previous interest
compounding date.  Such termination is irrevocable and, at the same time, is an
election to thereafter receive payment of the interest semiannually.  Any
interest attributable to periods starting with the date of purchase and ending
with the effective date of the written request of the holder to terminate the
election to receive payment of the interest at maturity or at the date of
redemption if redeemed prior to maturity will be paid upon receipt of the
written request to terminate the election.  Farmland shall have the right at
any time by notice to the owner to terminate any obligation to continue
retaining the interest of any owner pursuant to an owner's election.  Such
termination shall be effective as of the opening of business on the day
following the first interest compounding date after such notice is mailed to
the owner and the owner will be paid all the interest in the owner's account on
the effective date.


REMEDIES IN EVENT OF DEFAULT

    The Indenture of November 8, 1984 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes).  The Indenture
describes the duties and alternative courses of action which, upon the
occurrence of a default, will be taken by the Trustee as directed by written
notice of the holders of a majority of the principal amount of the Certificates
then outstanding.  The Indenture provides that action taken by the Trustee, as
a result of default, will not impair and that no other provisions in the
Indenture will impair the rights of any certificate owner to receive payment of
the principal of and interest on such Certificates on or after the respective
dates expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of
an interest payment for a period not exceeding three years from its due date.


SUBORDINATION

    The payment of the principal and interest on the Certificates is
subordinate in right of payment to the extent set forth in the Indenture to the
prior payment in full of all Senior Indebtedness.  Senior Indebtedness is
defined as (a) the principal of and interest on indebtedness of Farmland (other
than the indebtedness of Farmland with respect to its Subordinated Certificates
of Investment issued under indentures dated February 25, 1970 and under
indentures dated November 29, 1971; and with respect to its Subordinated
Capital Investment Certificates issued under indentures dated July 29, 1974,
and under an indenture dated November 29, 1976, and under an indenture dated
October 24, 1978, and under an indenture dated October 24, 1979, and under an
indenture dated May 20, 1980, and under indentures dated November 5, 1980 and
under indentures dated November 8, 1984; and with respect to its Subordinated
Monthly Income Capital Investment Certificates issued under an indenture dated
July 29, 1974, and under an indenture dated October 24, 1979, and under an
indenture dated November 5, 1980, and under an indenture dated November 8,
1984, and under an indenture dated November 11, 1985; and with respect to its
Subordinated Individual Retirement Account Certificates issued under an
indenture dated November 20, 1981 and under an indenture dated November 8,
1984) for money borrowed from or guaranteed to banks, trust companies,
insurance companies, or pension trusts or evidenced by securities issued under
the provisions of an indenture or similar instrument between Farmland and a
bank or trust company other than indebtedness evidenced by instruments which
expressly provide that such indebtedness is not superior, or (b) indebtedness
created after the date of the Indenture of November 8, 1984, as to which the
instrument creating or evidencing the indebtedness provides that such
indebtedness is superior in right of payment to the Certificates.

    In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or in
bankruptcy, insolvency, receivership or other proceeding of Farmland, the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment.  After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have
been entitled if there had been no subordination.  By reason of such
subordination, in the event of Farmland's insolvency, holders of Senior
Indebtedness may receive more, ratably, and owners of the Certificates may
receive less, ratably, than other creditors of Farmland (Section 4.05(a)).


REDEMPTION

    The Certificates may be redeemed, after two (2)  years from date of
issuance, at the option of Farmland at any time prior to maturity, on at least
ten days written notice, at face value plus accrued interest to the date of
redemption only.  The Indenture of November 8, 1984 permits Farmland to select
in any manner at its discretion the Certificates to be redeemed.

    Commencing three (3) years after date of issuance, a limited amount of
Certificates can be redeemed prior to maturity during each month.  The maximum
amount that Farmland will redeem prior to maturity during any month is the
greater of $500,000 or 1/2 of 1% of the balance outstanding provided the
balance outstanding is greater than $5,000,000.  If the balance outstanding is
less than $5,000,000 there will be no limitation on early redemption of
eligible Certificates.

    The 1/2 of 1% limitation is determined as follows:

        (1) Add the face amount of Certificates held by all investors
            at the end of the preceding month to establish the
            "combined amount" held by investors at the end of the
            preceding month.

        (2) Multiply the "combined amount" by 1/2 of 1%.

    If the amount made available for redemption prior to maturity (as
determined in step one and two) exceeds the amount requested for redemption
prior to maturity, such excess is carried over to the next month and added to
the amount available for redemption prior to maturity, provided however that
any excess will not be carried beyond Farmland's fiscal year end.

    Redemption prior to maturity will be made upon the surrender of such
eligible Certificates properly endorsed accompanied by written request for
early redemption to Farmland, in the order in which such written requests for
redemption prior to maturity are received by Farmland.  In addition to the
amount available for redemption prior to maturity as determined above,
redemptions will be made in the case of death of an owner of the Certificates
upon written request of the legal owner accompanied by satisfactory proof of
ownership.  Redemptions prior to maturity will be made at the face value of the
Certificates plus interest to the date of redemption only.  Amounts available
for redemption prior to maturity are not set aside in a separate fund (Section
3.01 and 3.02).


CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture.  In
the case of a default, the owners of a majority in aggregate principal amount
of the Certificates outstanding at the time of the occurrence of a default have
the right to require the Trustee to take action to remedy such default.  Upon
the occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).


MODIFICATION OF THE INDENTURE

    The Indenture of November 8, 1984 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

    The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indenture shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce  the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
Certificates then outstanding (Section 10.02).


DEFAULTS AND NOTICE THEREOF

    The Indenture of November 8, 1984 provides that any of the following shall
constitute a default: (1) failure to pay principal when due; (2) failure to pay
interest on Certificates when due, continued for 60 days; (3) certain events of
bankruptcy or insolvency; and (4) failure to perform any other covenant or
agreement contained in the Indenture, continued for 90 days.  Failure to pay
either principal or interest when due during the pendency of any dissolution or
liquidation proceeding or action to endorse payment of indebtedness shall also
constitute such a default (Section 6.01).

    The Indenture of November 8, 1984 provides that the Trustee shall within 90
days after the occurrence of a default, not including periods of grace, give to
the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment of
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate
owners (Section 6.02).

    The Indenture of November 8, 1984 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the indenture.


SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).


DESCRIPTION OF THE FIVE-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES

    The Five-Year Subordinated Capital Investment Certificates, hereinafter
referred to as "Certificates," bearing an interest rate herein after described
and referred to as the "Certificate Interest Rate," are issued under an
indenture (the "Indenture of November 8, 1984") dated November 8, 1984, as
amended January 3, 1985 and December 3, 1991, between Farmland Industries, Inc.
("Farmland") and Commerce Bank of Kansas City, National Association, Kansas
City, Missouri, as Trustee (the "Trustee.")

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 8, 1984.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
a part of the statements made, and such statements are qualified in their
entirety by such reference.


GENERAL

    The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable.  Interest on the principal sum at the Certificate
Interest Rate per annum is payable at the election of the owner made at the
time of purchase (i) semiannually or (ii) at maturity or at the date of
redemption if redeemed prior to maturity.  See "Certificate Interest Rate"
below.  The Certificates are issued in amounts of $100 or more as of the day on
which offers acceptable to Farmland and accompanied by payment of the full
purchase price have been received by Farmland in Kansas City.  The Certificates
mature five years from date of issue.  The payment of the principal at maturity
may, at the request of the owner, be paid in a lump sum or in equal monthly,
quarterly, semiannual or annual installments, including interest on the unpaid
balance at the rate of six percent (6%) per annum, over a period of not more
than thirty-six months.

    The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 8, 1984, but such Indenture does not limit
the amount of other securities, either secured or unsecured, which may be
issued by Farmland.  At August 31, 1994, a total of $86,561,000 was
outstanding.

    Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statements
upon written request of the owner to Farmland Industries, Inc., P.O. Box 7305,
Kansas City, Missouri 64116.   Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.


CERTIFICATE INTEREST RATE

    The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate.  The Certificate Interest Rate will be such as Farmland may
from time to time determine but any change of the Certificate Interest Rate
will not affect the Certificate Interest Rate on any Certificate for which the
full purchase price was received prior to the change.  See "Determination of
the Certificate Interest Rate."

    Interest at the Certificate Interest Rate per annum is payable on the
principal sum at the election of the purchaser, made at the time of purchase,
in one of the following ways:  (i) semiannually on January 1 and July 1, to
owners of record on the last preceding December 31 and June 30, respectively;
or  (ii) at maturity or at the date of redemption if redeemed prior to
maturity, compounded semiannually, on December 31 and June 30 at the
Certificate Interest Rate which is stated on the face of the Certificate.  Any
election to receive payment of the interest semiannually is irrevocable.  The
election to receive payment of the interest at maturity, or at the date of
redemption if redeemed prior to maturity, will be terminated upon written
request of the owner, such termination to be effective as of the last previous
interest compounding date.  Such termination is irrevocable and, at the same
time, is an election to thereafter receive payment of the interest
semiannually.  Any interest attributable to periods starting with the date of
purchase and ending with the effective date of the written request of the
holder to terminate the election to receive payment of the interest at maturity
or at the date of redemption if redeemed prior to maturity will be paid upon
receipt of the written request to terminate the election.  Farmland shall have
the right at any time by notice to the owner to terminate any obligation to
continue retaining the interest of any owner pursuant to an owner's election. 
Such termination shall be effective as of the opening of business on the day
following the first interest compounding date after such notice is mailed to
the owner and the owner will be paid all the interest in the owner's account on
the effective date.


REMEDIES IN EVENT OF DEFAULT

    The Indenture of November 8, 1984 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes).  The Indenture
describes the duties and alternative courses of action which, upon the
occurrence of a default, will be taken by the Trustee as directed by written
notice of the holders of a majority of the principal amount of the Certificates
then outstanding.  The Indenture provides that action taken by the Trustee, as
a result of default, will not impair and that no other provisions in the
Indenture will impair the rights of any certificate owner to receive payment of
the principal of and interest on such Certificates on or after the respective
dates expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of
an interest payment for a period not exceeding three years from its due date.


SUBORDINATION

    The payment of the principal and interest on the Certificates is
subordinate in right of payment to the extent set forth in the Indenture to the
prior payment in full of all Senior Indebtedness.  Senior Indebtedness is
defined as (a) the principal of and interest on indebtedness of Farmland (other
than the indebtedness of Farmland with respect to its Subordinated Certificates
of Investment issued under indentures dated February 25, 1970 and under
indentures dated November 29, 1971; and with respect to its Subordinated
Capital Investment Certificates issued under indentures dated July 29, 1974,
and under an indenture dated November 29, 1976, and under an indenture dated
October 24, 1978, and under an indenture dated October 24, 1979, and under an
indenture dated May 20, 1980, and under indentures dated November 5, 1980 and
under indentures dated November 8, 1984; and with respect to its Subordinated
Monthly Income Capital Investment Certificates issued under an indenture dated
July 29, 1974, and under an indenture dated October 24, 1979, and under an
indenture dated November 5, 1980, and under an indenture dated November 8,
1984, and under an indenture dated November 11, 1985; and with respect to its
Subordinated Individual Retirement Account Certificates issued under an
indenture dated November 20, 1981 and under an indenture dated November 8,
1984) for money borrowed from or guaranteed to banks, trust companies,
insurance companies, or pension trusts or evidenced by securities issued under
the provisions of an indenture or similar instrument between Farmland and a
bank or trust company other than indebtedness evidenced by instruments which
expressly provide that such indebtedness is not superior, or (b) indebtedness
created after the date of the Indenture of November 8, 1984, as to which the
instrument creating or evidencing the indebtedness provides that such
indebtedness is superior in right of payment to the Certificates.

    In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or in
bankruptcy, insolvency, receivership or other proceeding of Farmland the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment.  After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have
been entitled if there had been no subordination.  By reason of such
subordination, in the event of Farmland's insolvency, holders of Senior
Indebtedness may receive more, ratably, and owners of the Certificates may
receive less, ratably, than other creditors of Farmland (Section 4.05(a)).


REDEMPTION

    The Certificates may be redeemed, after two (2) years from date of
issuance, at the option of Farmland at any time prior to maturity, on at least
ten days' written notice, at face value plus accrued interest to the date of
redemption only.  The Indenture of November 8, 1984 permits Farmland to select
in any manner at its discretion the Certificates to be redeemed.

    Commencing two (2) years after date of issuance, a limited amount of
Certificates can be redeemed prior to maturity during each month.  The maximum
amount that Farmland will redeem prior to maturity during any month is the
greater of $500,000 or 1/2 of 1% of the balance outstanding provided the
balance outstanding is greater than $5,000,000.  If the balance outstanding is
less than $5,000,000 there will be no limitation on early redemption of
eligible Certificates.

    The 1/2 of 1% limitation is determined as follows:

        (1) Add the face amount of Certificates held by each investor
            at the end of the preceding month to establish the
            "combined amount" held by investors at the end of the
            preceding month.

        (2) Multiply the "combined amount" by 1/2 of 1%.

    If the amount made available for redemption prior to maturity (as
determined in step one and two) exceeds the amount requested for redemption
prior to maturity, such excess is carried over to the next month and added to
the amount available for redemption prior to maturity, provided however that
any excess will not be carried beyond Farmland's fiscal year end.

    Redemption prior to maturity will be made upon the surrender of such
eligible Certificates properly endorsed accompanied by written request for
early redemption to Farmland,  the order in which such written requests for
redemption prior to maturity are received by Farmland.  In addition to the
amount available for redemption prior to maturity as determined above,
redemptions will be made in the case of death of an owner of the Certificates
upon written request of the legal owner accompanied by satisfactory proof of
ownership.  Redemptions prior to maturity will be made at the face value of the
Certificates plus interest to the date of redemption only.  Amounts available
for redemption prior to maturity are not set aside in a separate fund (Section
3.01 and 3.02).


CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture.  In
the case of a default, the owners of a majority in aggregate principal amount
of the Certificates outstanding at the time of the occurrence of a default have
the right to require the Trustee to take action to remedy such default.  Upon
the occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

    The Indenture of November 8, 1984 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

    The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in the
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indenture shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
Certificates then outstanding (Section 10.02).


DEFAULTS AND NOTICE THEREOF

    The Indenture of November 8, 1984 provides that any of the following shall
constitute a default:  (1) failure to pay principal when due; (2) failure to
pay interest on Certificates when due, continued for 60 days; (3) certain
events of bankruptcy or insolvency; and (4) failure to perform any other
covenant or agreement contained in the Indenture, continued for 90 days. 
Failure to pay either principal or interest when due during the pendency of any
dissolution or liquidation proceeding or action to endorse payment of
indebtedness shall also constitute such a default (Section 6.01).

    The Indenture of November 8, 1984 provides that the Trustee shall within 90
days after the occurrence of a default, not including periods of grace, give to
the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment of
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate
owners (Section 6.02).

    The Indenture of November 8, 1984 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).


DESCRIPTION OF THE TEN-YEAR SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT
CERTIFICATES

    The Ten-Year Subordinated Monthly Income Capital Investment Certificates,
hereinafter referred to as "Certificates," bearing an interest rate hereinafter
described and referred to as the "Certificate Interest Rate," are issued under
an indenture (the "Indenture of November 8, 1984") dated November 8, 1984, as
amended January 3, 1985, between Farmland Industries, Inc. ("Farmland") and
Commerce Bank of Kansas City, National Association, Kansas City, Missouri, as
Trustee (the "Trustee.")

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 8, 1984.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
a part of the statements made, and such statements are qualified in their
entirety by such reference.


GENERAL

    The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable.  The Certificates are issued in amounts of $5,000 or
more and in additional increments of $1,000 or more as of the day on which
offers acceptable to Farmland and accompanied by payment of the full purchase
price have been received by Farmland in Kansas City, Missouri.  The
Certificates mature ten years from date of issue.  Interest on the principal
sum at the Certificate Interest Rate per annum is payable monthly on the first
day of each month following the month in which a Certificate is issued.  The
payment of the principal at maturity may, at the request of the owner, be paid
in a lump sum or in equal monthly, quarterly, semiannual or annual
installments, including interest on the unpaid balance at the rate of six
percent (6%) per annum, over a period of not more than thirty-six months.

    The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 8, 1984, but such Indenture does not limit
the amount of other securities, either secured or unsecured, which may be
issued by Farmland.  At August 31, 1994, a total of $51,446,000 was
outstanding.

    Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statement
upon written request of the owner to Farmland Industries, Inc., P.O. Box 7305,
Kansas City, Missouri 64116.   Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.

CERTIFICATE INTEREST RATE

    The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate.  The Certificate Interest Rate will be such as Farmland may
from time to time determine but any change of the Certificate Interest Rate
will not affect the Certificate Interest Rate on any Certificate for which the
full purchase price was received prior to the change.  See "Determination of
the Certificate Interest Rate."


REMEDIES IN EVENT OF DEFAULT

    The Indenture of November 8, 1984 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes).  The Indenture
describes the duties and alternative courses of action which, upon the
occurrence of a default, will be taken by the Trustee as directed by written
notice of the holders of a majority of the principal amount of the Certificates
then outstanding.  The Indenture provides that action taken by the Trustee, as
a result of default, will not impair and that no other provisions in the
Indenture will impair the rights of any certificate owner to receive payment of
the principal of and interest on such Certificates on or after the respective
dates expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of
an interest payment for a period not exceeding three years from its due date.


SUBORDINATION

    The payment of the principal and interest on the Certificates is
subordinate in right of payment to the extent set forth in the Indenture to the
prior payment in full of all Senior Indebtedness.  Senior Indebtedness is
defined as (a) the principal of and interest on indebtedness of Farmland (other
than the indebtedness of Farmland with respect to its Subordinated Certificates
of Investment issued under indentures dated February 25, 1970 and under
indentures dated November 29, 1971; and with respect to its Subordinated
Capital Investment Certificates issued under indentures dated July 29, 1974,
and under an indenture dated November 29, 1976, and under an indenture dated
October 24, 1978, and under an indenture dated October 24, 1979, and under an
indenture dated May 20, 1980, and under indentures dated November 5, 1980, and
under indentures dated November 8, 1984, and under an indenture dated November
11, 1985; and with respect to its Subordinated Monthly Income Capital
Investment Certificates issued under an indenture dated July 29, 1974, and
under an indenture dated October 24, 1979, and under an indenture dated
November 5, 1980 and under an indenture dated November 8, 1984, and under an
indenture dated November 11, 1985; and with respect to its Subordinated
Individual Retirement Account Certificates issued under an indenture dated
November 20, 1981 and under an indenture dated November 8, 1984) for money
borrowed from or guaranteed to banks, trust companies, insurance companies, or
pension trusts or evidenced by securities issued under the provisions of an
indenture or similar instrument between Farmland and a bank or trust company
other than indebtedness evidenced by instruments which expressly provide that
such indebtedness is not superior, or (b) indebtedness created after the date
of the Indenture of November 8, 1984, as to which the instrument creating or
evidencing the indebtedness provides that such indebtedness is superior in
right of payment to the Certificates.

    In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or
bankruptcy, insolvency, receivership or other proceeding of Farmland, the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment.  After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have
been entitled if there had been no subordination.  By reason of such
subordination, in the event of Farmland's insolvency, holders of Senior
Indebtedness may receive more, ratably, and owners of the Certificates may
receive less, ratably, than other creditors of Farmland (Section 4.05(a)).


REDEMPTION

    The Certificates can not be called for redemption by Farmland at any time
prior to maturity (Section 3.01).

    In addition, Farmland will not redeem the Certificates prior to maturity
upon request of the owner.  Redemption will be made in the case of death of an
owner of the Certificates upon written request of the legal owner accompanied
by satisfactory proof of ownership.  Redemptions prior to maturity will be made
at the face value of the Certificates plus interest to the date of redemption
only.  Amounts available for redemption prior to maturity are not set aside in
a separate fund (Section 3.02).


CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture.  In
the case of a default, the owners of a majority in aggregate principal amount
of the Certificates outstanding at the time of the occurrence of a default have
the right to require the Trustee to take action to remedy such default.  Upon
the occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).


MODIFICATION OF THE INDENTURE

    The Indenture of November 8, 1984 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

    The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indentures shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
certificates then outstanding (Section 10.02).


DEFAULTS AND NOTICE THEREOF

    The Indenture of November 8, 1984 provides that any of the following shall
constitute a default:  (1) failure to pay principal when due; (2) failure to
pay interest on Certificates when due, continued for 60 days; (3) certain
events of bankruptcy or insolvency; and (4) failure to perform any other
covenant or agreement contained in the Indenture, continued for 90 days. 
Failure to pay either principal or interest when due during the pendency of any
dissolution or liquidation proceeding or action to endorse payment of
indebtedness shall also constitute such a default (Section 6.01).

    The Indenture of November 8, 1984 provides that the Trustee shall within 90
days after the occurrence of a default, not including periods of grace, give to
the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment or
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate
owners (Section 6.02).

    The Indenture of November 8, 1984 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the Indenture.


SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).


DESCRIPTION OF THE FIVE-YEAR SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT
CERTIFICATES
    The Five-Year Subordinated Monthly Income Capital Investment Certificates,
hereinafter referred to as "Certificates," bearing an interest rate hereinafter
described and referred to as the "Certificate Interest Rate," are issued under
an indenture dated November 11, 1985 (the "Indenture of November 11, 1985")
between Farmland Industries, Inc. ("Farmland") and Commerce Bank of Kansas
City, National Association, Kansas City, Missouri, as Trustee (the "Trustee").

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 11, 1985, and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 11, 1985.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
a part of the statements made, and such statements are qualified in their
entirety by such reference.


GENERAL

    The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable.  The Certificates are issued in amounts of $5,000 or
more and in additional increments of $1,000 or more as of the day on which
offers acceptable to Farmland and accompanied by payment of the full purchase
price have been received by Farmland in Kansas City, Missouri.  The
Certificates mature five years from date of issue.  Interest on the principal
sum at the Certificate Interest Rate per annum is payable monthly on the first
day of each month to the owners of record on such payment date commencing with
the first day of the month which follows the month in which the certificate is
issued.  The payment of the principal at maturity may, at the request of the
owner, be paid in a lump sum or in equal monthly, quarterly, semiannual or
annual installments, including interest on the unpaid balance at the rate of
six percent (6%) per annum, over a period of not more than thirty-six months.

    The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 11, 1985, but such Indenture does not
limit the amount of other securities, either secured or unsecured, which may be
issued by Farmland.  At August 31, 1994 a total of $18,611,000 was outstanding.

    Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statements
upon written request of the owner to Farmland Industries, Inc., P. O. Box 7305,
Kansas City, Missouri 64116.  Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.


CERTIFICATE INTEREST RATE

    The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate.  The Certificate Interest Rate will be such as Farmland may
from time to time determine but any change of the Certificate Interest Rate
will not affect the Certificate Interest Rate on any Certificate for which the
full purchase price was received prior to the change.  See "Determination of
the Certificate Interest Rate."


REMEDIES IN EVENT OF DEFAULT

    The Indenture of November 11, 1985 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes).  The Indenture
describes the duties and alternative courses of action which, upon the
occurrence of a default, will be taken by the Trustee as directed by written
notice of the holders of a majority of the principal amount of the Certificates
then outstanding.  The Indenture provides that action taken by the Trustee, as
a result of default, will not impair and that no other provisions in the
Indenture will impair the rights of any certificate owner to receive payment of
the principal of and interest on such Certificates on or after the respective
dates expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of
an interest payment for a period not exceeding three years from its due date.


SUBORDINATION

    The payment of the principal and interest on the Certificates is
subordinate in right of payment to the extent set forth in the Indenture to the
prior payment in full of all Senior Indebtedness.  Senior Indebtedness is
defined as (a) the principal of and interest on indebtedness of Farmland (other
than the indebtedness of Farmland with respect to its Subordinated Certificates
of Investment issued under indentures dated February 25, 1970, and under
indentures dated November 29, 1971; and with respect to its Subordinated
Capital Investment Certificates issued under indentures dated July 29, 1974,
and under an indenture dated November 29, 1976, and under an indenture dated
October 24, 1978, and under an indenture dated October 24, 1979, and under an
indenture dated May 20, 1980, and under indentures dated November 5, 1980, and
under indentures dated November 8, 1984, and under an indenture dated November
11, 1985; and with respect to its Subordinated Monthly Income Capital
Investment Certificates issued under an indenture dated July 29, 1974, and
under an indenture dated October 24, 1979, and under an indenture dated
November 5, 1980, and under an indenture dated November 8, 1984, and under an
indenture dated November 11, 1985; and with respect to its Subordinated
Individual Retirement Account Certificates issued under an indenture dated
November 20, 1981, and under an indenture dated November 8, 1984) for money
borrowed from or guaranteed to banks, trust companies, insurance companies, or
pension trusts or evidenced by securities issued under the provisions of an
indenture or similar instrument between Farmland and a bank or trust company
other than indebtedness evidenced by instruments which expressly provide that
such indebtedness is not superior, or (b) indebtedness created after the date
of the Indenture of November 11, 1985, as to which the instrument creating or
evidencing the indebtedness provides that such indebtedness is superior in
right of payment to the Certificates.
 
    In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or
bankruptcy, insolvency, receivership or other proceeding of Farmland, the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment.  After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have
been entitled if there had been no subordination.  By reason of such
subordination, in the event of Farmland's insolvency, holders of Senior
Indebtedness may receive more, ratably, and owners of the Certificates may
receive less, ratably, than other creditors of Farmland (Section 4.05(a)).

REDEMPTION

    The Certificates can not be called for redemption by Farmland at any time
prior to maturity (Section 3.01).

    In addition, Farmland will not redeem the Certificates prior to maturity
upon request of the owner.  Redemption will be made in the case of death of an
owner of the Certificates upon written request of the legal owner accompanied
by satisfactory proof of ownership.  Redemptions prior to maturity will be made
at the face value of the Certificates plus interest to the date of redemption
only.  Amounts available for redemption prior to maturity are not set aside in
a separate fund (Section 3.02).


CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 11, 1985, and is to
perform only such duties as are specifically set forth in that Indenture.  In
the case of a default, the owners of a majority in aggregate principal amount
of the Certificates outstanding at the time of the occurrence of a default have
the right to require the Trustee to take action to remedy such default.  Upon
the occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).


MODIFICATION OF THE INDENTURE

    The Indenture of November 11, 1985 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

    The Indenture of November 11, 1985 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures,provided that no such supplemental indentures shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
certificates then outstanding (Section 10.02).


DEFAULTS AND NOTICE THEREOF

    The Indenture of November 11, 1985 provides that any of the following shall
constitute a default:  (1) failure to pay principal when due; (2) failure to
pay interest on Certificates when due, continued for 60 days; (3) certain
events of bankruptcy or insolvency; and (4) failure to perform any other
covenant or agreement contained in the Indenture, continued for 90 days. 
Failure to pay either principal or interest when due during the pendency of any
dissolution or liquidation proceeding or action to endorse payment of
indebtedness shall also constitute such a default (Section 6.01).

    The Indenture of November 11, 1985 provides that the Trustee shall within
90 days after the occurrence of a default, not including periods of grace, give
to the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment or
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate
owners (Section 6.02).

    The Indenture of November 11, 1985 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 11, 1985 does not require any periodic evidence
to be furnished as to the absence of default or as to compliance with the terms
of the Indenture.


SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 11, 1985 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).


                  DESCRIPTION OF THE DEMAND LOAN CERTIFICATES

    The Demand Loan Certificates are issued under an indenture (the "Indenture
of November 20, 1981") dated November 20, 1981, as amended January 4, 1982,
between Farmland Industries, Inc. ("Farmland") and Commerce Bank of Kansas
City, National Association, Kansas City, Missouri as Trustee (the "Trustee.")
Effective January 31, 1989, Commerce Bank resigned as Trustee and UMB Bank,
National Association, Kansas City, Missouri has been appointed the Trustee.

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 20, 1981 and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 20, 1981.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
part of the statements made, and such statements are qualified in their
entirety by such reference.


GENERAL

    The Demand Loan Certificates are direct obligations of Farmland but are not
secured and are not negotiable.  The Demand Loan Certificates are issued in
amounts of $100 or more, and dated on the day payment of the full purchase
price is received by Farmland in Kansas City, Missouri.  If purchased and held
by a member of Farmland for a one (1) month period or by any other purchaser
for a six (6) month period immediately following the date of issue the
principal amount of the Demand Loan Certificates will bear interest at the
Certificate Interest Rate (herein referred to as the "CIR.") The CIR is the
interest rate for the Demand Loan Certificates as determined, from time to
time, by Farmland.  Except as hereinafter provided, each Demand Loan
Certificate shall earn interest at the CIR in effect on the date of issuance of
such Demand Loan Certificate for a period of six (6) months only; provided,
however, that if during such six (6) month period the CIR is increased to a
rate higher than that currently in effect for the Demand Loan Certificates,
then each such Demand Loan Certificate shall earn interest at the increased
rate from the effective date of the increase to the end of such Demand Loan
Certificate's then current six (6) month period.  Six (6) months from the date
of issue of each Demand Loan Certificate and each six (6) month anniversary
date thereafter, such Demand Loan Certificate shall, if not redeemed, earn
interest at the CIR in effect on such anniversary date, but only for a six (6)
month period from such anniversary date, subject to the escalation provisions
previously set forth.  A decrease in the CIR will have no effect on any Demand
Loan Certificate issued prior to the decrease until the first day of the next
subsequent six (6) month period of such outstanding Demand Loan Certificate. 
Holders of Demand Loan Certificates are notified of the effective date of any
change of the CIR which effects the Demand Loan Certificates held.  The Demand
Loan Certificates may be redeemed at face value plus interest to date of
redemption at the option of the owner, at any time.  No partial redemptions
will be permitted.  If redeemed by a Farmland member cooperative during a one
(1) month period or by any other purchaser during a six (6) month period
immediately following the date of issuance, the Demand Loan Certificates shall
bear interest from date of issuance to date of redemption at a demand rate of
2% below the CIR.  Interest on the principal amount of any Demand Loan
Certificate held longer than six (6) months will be computed at the effective
CIR and is payable in one of the following ways at the option of the owner,
made at the time of purchase and irrevocable as to the purchaser:  (i) six (6)
months after the date of issuance and at the end of each and every six (6)
month period thereafter until the Demand Loan Certificate is surrendered for
redemption, or (ii) only at the date of redemption compounded semi-annually at
the effective CIR.

    The issuance of Demand Loan Certificates is limited to $500,000,000
outstanding at any one time under the Indenture of November 20, 1981 but such
Indenture does not limit the amount of other securities either secured or
unsecured, which may be issued by Farmland.  At August 31, 1994, a total of
$23,158,000 was outstanding.

REDEMPTION

    Farmland will redeem the Demand Loan Certificates at any time upon written
request of the owner.  If the certificate is surrendered for redemption by a
Farmland member cooperative during a one (1) month period or by any other owner
during a six (6) month period immediately following the date of issuance,
interest computed at the applicable demand rate from date of issuance to date
of redemption will be paid at the time of redemption of the Demand Loan
Certificate.  If the Demand Loan Certificate is held for a period longer than
six (6) months from date of issuance, interest from the last previous date on
which interest was paid or compounded to the date of redemption computed at the
applicable CIR will be paid upon redemption.  Any interest held for compounding
by Farmland in accordance with an interest option made by the purchaser will be
paid upon redemption of the Demand Loan Certificate.


CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, the corporation designated to act as Trustee under the Indenture,
resigned effective January 31, 1989 and UMB Bank, National Association, Kansas
City, Missouri, has been appointed the Trustee under the Indenture of November
20, 1981 and is to perform only such duties as are specifically set forth in
that Indenture.  In the case of a default, the owners of a majority in
aggregate principal amount of the Demand Loan Certificates outstanding at the
time of the occurrence of a default have the right to require the Trustee to
take action to remedy such default.  Upon the occurrence of a default, the
Trustee may, and upon the written request of a majority in aggregate principal
amount of the Demand Loan Certificates outstanding shall, declare the principal
of all Demand Loan Certificates and interest accrued thereon immediately due
and payable (Section 6.03 and 7.02).


MODIFICATION OF THE INDENTURE

    The Indenture of November 20, 1981 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Demand Loan Certificates then outstanding, to
execute supplemental indentures adding to or changing any provisions of the
indenture of November 20, 1981, or supplemental indentures, provided that no
such supplemental indenture shall (1) extend the fixed maturity of any Demand
Loan Certificates, or reduce the principal amount thereof, or reduce the rate
or extend the time of payment of interest, without the consent of the owner of
each Demand Loan Certificate so affected, or (2) reduce the 66-2/3% requirement
as to the consent of the owners of the Demand Loan Certificates for changes in
any supplemental indenture, without the consent of the owner of all Demand Loan
Certificates then outstanding (Section 10.02).


DEFAULTS AND NOTICE THEREOF

    The Indenture of November 20, 1981 provides that any of the following shall
constitute a default: (1) failure to pay principal when due; (2) failure to pay
interest on Demand Loan Certificates when due, continued for 60 days; (3)
certain events of bankruptcy or insolvency; and (4) failure to perform any
other covenant or agreement contained in the Indenture, continued for 90 days. 
Failure to pay either principal or interest when due during the pendency of any
dissolution or liquidation proceeding or action to endorse payment of
indebtedness shall also constitute such a default (Section 6.01).

    The Indenture of November 20, 1981 provides that the Trustee shall within
90 days after the occurrence of a default, not including periods of grace, give
to the Demand Loan Certificate owners notice of all such defaults unless such
defaults have been cured; provided, that, except in the case of default in the
payment of principal of or interest on any of the Demand Loan Certificates, the
Trustee shall be protected in withholding such notice if and so long as the
Trustee determines that the withholding of such notice is in the interest of
the Demand Loan Certificate owners (Section 6.02).

    The Indenture of November 20, 1981 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 20, 1981 does not require any periodic evidence
to be furnished as to the absence of default or as to compliance with the terms
of the Indenture.


SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 20, 1981 shall be discharged upon payment or
redemption of all Demand Loan Certificates or upon deposit with the Trustee of
funds sufficient therefor (Section 12.01).


                     INTEREST OF NAMED EXPERTS AND COUNSEL

    Robert B. Terry, Vice President and General Counsel of the Registrant, has
given an opinion upon the legality of the securities being registered and upon
certain other legal matters in connection with the registration of these
securities.


                                  THE COMPANY

    Farmland Industries, Inc. ("Farmland") is a regional farm supply and
marketing cooperative.  Farmland is owned by its members and only its members
are eligible to vote for directors or for the management or affairs of
Farmland.  Members are entitled to receive patronage refunds distributed by
Farmland from its member-sourced annual net income.  See "Business and
Properties - Patronage Refunds and Distribution of Net Income."

    Farmland was incorporated in Kansas in 1931.  Its principal executive
offices are at 3315 North Oak Trafficway, Kansas City, Missouri 64116
(telephone 816-459-6000).  Unless otherwise noted, references to years are to
fiscal years ended August 31.


MEMBERSHIP

    Farmland's membership includes voting members and associate members. 
Membership requirements are determined by the Farmland Board of Directors. 

  VOTING MEMBERS

    The current requirements for membership are as follows:  1) Voting
membership is limited to:   (a) farmers' and ranchers' cooperative associations
which have purchased farm supplies from or provided grain to Farmland during
Farmland's two most recently completed years, and (b) producers of hogs and
cattle or associations of such producers which have provided hogs or cattle to
Farmland during Farmland's two most recent years.  2)  Voting members must
maintain a minimum investment of $1,000 in par value of Farmland common stock. 
3) A cooperative must limit voting to agricultural producers and conduct a
majority of their business with voting producers.

  ASSOCIATE MEMBERS

    Associate members have all the rights of membership except that they do not
have the right to vote at a meeting of the shareholders.

    Associate membership requirements in Farmland are as follows:  1) Any
person meeting the requirements for voting membership can be an associate
member.  2) Associate members must maintain a minimum investment of $1,000 in
par value of Farmland associate member common stock.  3) Associations other
than those owned 100% by members, associate members or Farmland must conduct
business on a cooperative basis.  4) Hog and/or cattle feeding businesses must
derive a majority of earned income from such feeding business and agree to
provide the information Farmland needs to pay patronage refunds from its hog
and/or cattle marketing operations to members or other associate members that
are eligible to receive such refunds.

    At August 31, 1994, Farmland's membership consisted of 1,480 cooperative
associations of farmers and ranchers and 1,365 pork or beef producers or
associations of such producers.  See "Patronage Refunds and Distribution of Net
Income."

    In the event the Board of Directors of Farmland shall determine that any
holder of the common stock or associate member common stock of Farmland does
not meet the qualifications as may be established by the Board of Directors for
holders thereof, such person shall have no rights or privileges on account of
such common stock to vote for director(s) or to vote on the management or
affairs of Farmland, and Farmland shall have the right, at its option, (a) to
purchase such common stock at its book or par value, whichever is less, as
determined by the Board of Directors of Farmland, or (b) in exchange for such
common stock or associate member common stock to issue or record on the books
of Farmland capital credits in an equivalent amount.  On the failure of any
holder, following any demand by Farmland therefor, to deliver the certificate
or certificates evidencing any common stock or associate member common stock,
Farmland may cancel the same on its books and issue or record on the books of
Farmland an equivalent amount of capital credits in lieu thereof.  


                                   BUSINESS

GENERAL

    Farmland and subsidiaries (the "Company") conducts business primarily in
two operating areas.  On the input side of the agricultural industry, the
Company operates as a farm supply cooperative.  On the output side of the
agricultural industry, the Company operates as a processing and marketing
cooperative.

    Cooperative farm supply operations consist  of three product
divisions--petroleum, crop production and feed.  Products of the petroleum
division are principally refined fuels, propane, by-products of petroleum
refining and a complete line of car, truck and tractor tires, batteries and
accessories.  Principal products of the crop production division are nitrogen,
phosphate and potash fertilizers and a complete line of insecticides,
herbicides and mixed chemicals.  Feed division products include swine, dairy,
pet, beef, poultry, mineral and specialty feeds, feed ingredients and
supplements, animal health products and livestock services.

    Geographically, the Company's markets are mid-western states which comprise
the corn belt and the wheat belt.  The Company distributes products at
wholesale.  Approximately 65% of the Company's farm supply sales in 1994 were
to local farm cooperative associations which are members and owners of
Farmland.  These cooperatives distribute products primarily to farmers and
ranchers who utilize the products in the production of farm crops and
livestock.

    Cooperative marketing operations include the storage and marketing of
grain, processing pork and beef, and marketing fresh pork, processed pork,
fresh beef and boxed beef.  In 1994, approximately 61% of the hogs processed
and 46% of the grain marketed were supplied to the Company by members.  Cattle
are purchased from producers in the proximity of the beef plants at Liberal and
Dodge City, Kansas.

    A substantial portion of the Company's farm supply, pork and beef products,
is produced in facilities owned by the Company or operated by the Company under
long-term lease arrangements.  No material part of the business of any segment
of the Company is dependent on a single customer or a few customers. 
Information regarding the Company's property and its business is presented
below.  Financial information about the Company's industry segments is
presented in note 12 of the notes to consolidated financial statements.

    The Company competes for market share with numerous participants with
various levels of vertical integration, product and geographical
diversification, sizes and types of operations.  In the petroleum industry,
competitors include major oil companies, independent refiners, other
cooperatives and product brokers.  Competitors in the crop production industry
include global producers of nitrogen and phosphate fertilizers (some of which
are cooperatives) and product importers and brokers.  The feed, pork and beef
industries are comprised of an infinite variety of competitive participants. 
Approximately 57% of the Company's supply product sales are manufactured by the
Company.  See "Cooperative Farm Supply Business and Properties - Petroleum,
Crop Production and Feed" for information regarding the Company's manufacturing
properties by business segment.


COOPERATIVE FARM SUPPLY BUSINESS AND PROPERTIES

PETROLEUM

  MARKETING

    The principal product of this business segment is refined fuels. 
Approximately 68% of refined product sales in 1994 resulted from transactions
with Farmland's members.  The balance of the Company's refined product sales
were principally through retailing chains in urban areas.  Based on total
volume of refined fuels withdrawn at terminal storage facilities along
pipelines which serve most of the Company's trade territory, the Company
estimates its market share in rural markets is approximately 8%.  Other
petroleum products include lube oil, grease, by-products of petroleum refining,
and a complete line of car, truck and tractor tires, batteries and accessories. 
Sales of petroleum products as a percent of the Company's consolidated sales
for 1994, 1993 and 1992 were 13%, 19% and 29%, respectively.

    Competitive methods in the petroleum industry include service, product
quality and pricing.  However, in refined fuel markets, price competition is
most dominant.  Many participants in the industry engage in one or more of the
industry's processes (oil production and transportation, refining, wholesale
distribution and retailing).  The Company participates in the industry
primarily as a midcontinent refiner and as a wholesale distributor of petroleum
products.

  PRODUCTION

    The Company owns a refinery at Coffeyville, Kansas and at Phillipsburg,
Kansas.  Prior to June 30, 1992 the Company owned approximately 30% of the
National Cooperative Refinery Association ("NCRA").  As a 30% owner, Farmland
was required to purchase 30% of the production of this refinery.  On June 30,
1992, the Company sold its ownership interest in NCRA. 

    The Company owns a refinery at Phillipsburg, Kansas which is closed.  A
loading terminal located at the refinery remains in operation.  The carrying
value of this refinery at August 31, 1994 was approximately $2,400,000.  The
Company is evaluating alternative uses for this facility and cannot at this
time determine the extent of any losses related to the closure of the refinery,
but such losses are expected not to be significant.  During the four months of
1992 in which it operated, sales associated with products of the Phillipsburg
refinery amounted to approximately $20,900,000 and the barrels processed by the
refinery were 871,000.

<TABLE>
    Production volume for 1994, 1993 and 1992 is as follows:
<CAPTION>
                             Barrels of Crude Oil Processed
                                   Daily Average
                             Based on 365 Days per Year
                                      (barrels)
    Location                 1994        1993      1992 
  <S>                       <C>          <C>       <C>
  Coffeyville, Kansas       64,211       53,000    57,000
</TABLE>

     The Coffeyville refinery produced 25 million barrels of motor fuels and
heating fuels in 1994, 20 million barrels in 1993, and 23 million barrels in
1992.  Approximately 68% of petroleum product sales in 1994 represented
products produced at this location.

  Management terminated negotiations with a potential purchaser of the
Coffeyville refinery in 1994 when final sale terms were determined not to be in
the Company's best interest.  See note 17 of the notes to consolidated
financial statements.  The Company acquired a mothballed refinery in Texas
which is being reassembled at the Coffeyville refinery site.  When reassembly
is complete in 1996, crude oil processing capacity is expected to increase. 
See "Business - Capital Expenditures."

  RAW MATERIALS

     Farmland's refinery at Coffeyville, Kansas is designed to process high
quality crude oil with low sulfur content ("sweet crude").  Competition for
sweet crude and declining production in proximity of the refinery has increased
its cost of raw material relative to such cost for coastal refineries with the
capacity for processing and access to lower quality crude grades.  The
Company's pipeline/trucking gathering system collects approximately 27% of its
crude oil supplies from producers near its refineries.  Additional supplies are
acquired from diversified sources.  Modifications to the Coffeyville refinery
which increase its capability to efficiently process crude oil streams
containing greater amounts of lower quality crude are continuing.  

     Crude oil is purchased approximately 45 to 60 days in advance of the time
the related refined products are marketed.  Certain of these advance crude oil
purchase transactions, as well as fixed price refined products advance sales
contracts, are hedged utilizing petroleum futures contracts.

     During periods of volatile crude oil price changes or in extremely short
crude supply conditions, the Company's petroleum operations could be affected
to a greater extent than petroleum operations of more vertically integrated
competitors with crude oil supplies available from owned producing reserves. 
In past periods of relatively severe crude oil shortages, various governmental
regulations such as price controls and mandatory crude oil allocating programs
have been implemented to spread the adversity among all industry participants. 
There can be no assurance as to what, if any, government action would be taken
in the event a crude oil shortage developed.


CROP PRODUCTION

  MARKETING

     The Company's crop production business segment includes nitrogen-,
phosphate-, and potash-based  fertilizer products and a complete line of crop
protection products such as insecticides, herbicides and mixed chemicals. 
Sales of the crop production business segment as a percent of consolidated
sales for 1994, 1993 and 1992 were 17%, 19% and 26%, respectively.

     Competition in the plant nutrient industry is dominated by price
considerations.  However, during the spring and fall plant nutrient application
seasons, farming activities intensify and delivery service capacity is a
significant competitive factor.  Therefore, the Company maintains a significant
capital investment in distribution assets and a seasonal investment in
inventory to support its manufacturing operations.  The Company has plant
nutrient custom dry blending, liquid mixing, storage and distribution
facilities at 15 locations throughout its trade territory.

     The Company's sales of crop production products are primarily at wholesale
to local cooperative associations (the members, owners and customers of the
Company).  In view of this owner/customer relationship, management believes
that, with respect to such customers, the Company has a slight competitive
advantage.

     Domestic competition, mainly from other regional cooperatives, major
petroleum companies with chemical divisions and integrated chemical companies,
is very aggressive due to customers' sophisticated buying tendencies and
production strategies that focus on costs and service.  Also, foreign
competition exists from producers of crop production products  manufactured in
countries with lower cost natural gas supplied (the principal raw material in
nitrogen-based fertilizer products).  In certain cases, foreign producers of
fertilizer for export to the U.S. may be subsidized by their governments.

  PRODUCTION

     The Company manufacturers nitrogen-based crop production products.  Based
on total production capacity, the Company is one of the largest producers of
anhydrous ammonia fertilizer in the U.S.  The Company owns and produces
nitrogen-based products at four anhydrous ammonia plants, four urea ammonium
nitrate plants and two urea plants.  In addition, the Company operates three
anhydrous ammonia plants under long-term lease arrangements. 

     The Company owns and produces phosphate-based products at one plant and
has 50% ownership interest in two ventures which produce phosphate-based
products.

<TABLE>
     Nitrogen fertilizer production information for 1994, 1993 and 1992 is as
follows:

                                  Actual Annual Production
                                     Anhydrous Ammonia   
  Plant Location                1994      1993     1992 
                                      (tons)
<S>                            <C>       <C>     <C>
  Lawrence                     443,000   375,000   450,000
  Dodge City                   257,000   241,000   254,000
  Fort Dodge                   256,000   232,000   240,000
  Beatrice                     277,000   243,000   250,000
  Enid (2 plants)*             985,000   969,000 1,017,000
  Pollock*                     526,000   490,000   501,000

 *Indicates leased plants
</TABLE>

    Synthetic anhydrous ammonia is the basic component of other commercially
produced nitrogen-based crop production products and uses natural gas as the
major raw material.  

    Ammonia is used as the principal raw material in the production of value-
added nitrogen-based products such as urea, ammonium nitrate, urea ammonium
nitrate solutions and other products.

<TABLE>
    Production of urea, ammonium nitrate, urea ammonium nitrate solutions and
other nitrogen-based products from anhydrous ammonia, as a raw material, for
1994, 1993 and 1992 is as follows:
<CAPTION>
                                 Actual Annual Production
           Location            1994      1993      1992
                                        (tons)
           <S>                <C>       <C>       <C>
           Lawrence           654,000   661,000   691,000
           Enid               433,000   473,000   452,000
           Dodge City         163,000   241,000   217,000
           Beatrice           162,000   166,000   177,000
</TABLE>

    Ammonia is also used to react with phosphoric acid to produce phosphoric
acid products such as liquid mixed fertilizer, diammonium phosphate and
monoammonium phosphate.

    The Company owns a phosphate chemical plant located in Joplin, Missouri and
land in Florida which contains an estimated 40 million tons of phosphate rock. 
The Joplin plant produces ammonium phosphate which is combined in varying
ratios with muriate of potash to produce 12 different fertilizer grade
products.  In addition, feed grade phosphate (dicalcium phosphate) is produced
at this facility.

<TABLE>
    Production at the Joplin plant for 1994, 1993 and 1992 is as follows:
<CAPTION>
                                Actual Annual Production
              Product          1994        1993      1992
                                        (tons)
        <S>                     <C>       <C>       <C>
        Ammonium Phosphate       75,000    72,000    88,000
        Feed Grade Phosphate    157,000   141,000   129,000

</TABLE>

    Prior to November 15, 1991, the Company owned and operated a phosphate
chemical plant located in Green Bay, Florida.  Effective November 15, 1991, the
Company and Norsk Hydro a.s. formed Farmland Hydro, L.P. ("Hydro") to
manufacture phosphate fertilizer products for distribution to international
markets.  Hydro operates a phosphate plant at Green Bay, Florida and owns
phosphate rock reserves located in Hardee County, Florida which contain an
estimated 40 million tons of phosphate rock.  The Company provides management
and administrative services and Norsk Hydro a.s. provides marketing services to
Hydro.  The joint venture's plant produces phosphoric acid products such as
super acid, diammonium phosphate and monoammonium phosphate.  Annual production
in short tons of such products for 1994, 1993 and for the ten months in 1992
during which the venture operated is 1,437,000, 1,216,000 and 880,000,
respectively.  The phosphate rock required to operate the joint venture's plant
is presently purchased from outside suppliers and adequate supplies of sulfur
are available from several producers.  

    Plans for development of the phosphate reserves owned by the Company and
Hydro have not been established in view of the availability of adequate
supplies of phosphate rock from alternative sources.

    The Company and J.R. Simplot Company formed a joint venture in April 1992,
SF Phosphates, Limited, to own and operate a phosphate mine located in Vernal,
Utah, a phosphate chemical plant located in Rock Springs, Wyoming and a 96-mile
pipeline connecting the mine to the plant.  The plant produces monoammonium
phosphate and super acid with annual production of 465,000 tons for 1994,
440,000 tons for 1993 and 131,000 tons for the five months of operations in
1992.  Under the venture agreement, the Company and J.R. Simplot Company
purchase the production of the venture in proportion to their ownership.

    The Company, The National Gas Company of Trinidad and Tobago LTD., and
Enron International C.V. have entered into an agreement to develop a new
ammonia production facility in LaBrea, Trinidad, West Indies.  Upon completion,
the plant contemplated at this time is expected to have a production capacity
of approximately 675,000 short tons of ammonia annually.  The Company intends
to operate the plant and to receive and market the production under agreements
being negotiated at this time.  The cost to complete this project has not been
determined.

  RAW MATERIALS

    Natural gas, the largest single component of nitrogen-based fertilizer
production, is purchased directly from natural gas producers.  Natural gas
purchase contracts are generally market sensitive and contract prices change as
the market price for natural gas changes.  The Company's management believes
that the flexible pricing attributes of its gas supply contracts, without
relinquishing rights to long-term supplies, are essential to its competitive
position.  In addition, the Company has a hedging program which utilizes
natural gas futures and options to reduce risks of market price volatility.

    Natural gas is delivered to the Company's facilities under pipeline
transportation delivery contracts which have been negotiated with each plant's
delivering pipeline.  Transportation delivery contracts, for the most part, are
interruptible as defined by the Federal Energy Regulatory Commission.  No
significant production of nitrogen-based products has been lost, and none is
anticipated, because of curtailments in transportation.


FEED

    Products in the Company's feed line include swine, beef, poultry, dairy,
pet, mineral and specialty feeds, feed ingredients and supplements, animal
health products and livestock services.

    This business segment's sales were approximately 8%, 10% and 13% of
consolidated sales for the years 1994, 1993 and 1992, respectively. 
Approximately 45% of the feed business segment's sales in 1994 was attributable
to products manufactured in the Company's feed mills.  The Company operates
feed mixing plants at 19 locations throughout its territory, an animal protein
and premix plant located in Eagle Grove, Iowa and a pet food plant in Muncie,
Kansas.

<TABLE>
    Feed production is as follows:
<CAPTION>
                                   Actual Annual Production
        Location                 1994        1993      1992
                                        (tons)
     <S>                       <C>        <C>         <C>
     22 feed mills (combined)  1,118,000  1,030,000   954,000
</TABLE>

    In addition, the Company's feed operations include placement of
Company-owned feeder pigs with individuals who have contractual arrangements
with the Company to feed pigs on a fee basis until weight gain is finished. 
During 1994, 1993 and 1992, approximately 250,100 pigs, 113,000 pigs and 46,300
pigs, respectively, were finished under this program.  The majority of the
finished pigs were sold to Farmland Foods, Inc. ("Foods") for processing.

    The Company owns a 45% interest in Alliance Farm Cooperative Association
(formerly Yuma Feeder Pig Limited Liability Company) which operates farrowing
facilities.

    The Company operates a facility for production of quality swine breeding
stock.  These animals are placed with farrowers under contractual arrangements. 
In addition, the Company purchases swine breeding stock for placement with such
farrowers.

    The Company conducts research in genetic selection, breeding, animal health
and nutrition at its research facility in Bonner Springs, Kansas.  Through
local cooperative associations of farmers and ranchers, the Company
participates in livestock and hog services designed to produce lean,
feed-efficient animals and help livestock producers select feed formulations
which maximize weight gain.


COOPERATIVE PROCESSING AND MARKETING BUSINESS AND PROPERTIES


PORK PROCESSING AND MARKETING

  PRODUCTION

    The Company's pork processing and marketing operations are conducted
through a 99%-owned subsidiary, Farmland Foods, Inc. ("Foods").  Foods operates
eight food processing facilities.  Meat processing facilities at Springfield,
Massachusetts, Carey, Ohio, and New Riegel, Ohio produce Italian-style
specialty meats and ham products.  A facility at Wichita, Kansas processes pork
into fresh sausage, and pork and beef into hot dogs, dry sausage and other
luncheon meats.  A facility at San Leandro, California was closed on September
1, 1993.  A facility in Denison, Iowa and one in Crete, Nebraska function as
pork abattoirs and have additional capabilities for processing pork into bacon,
ham and smoked meats.  An additional facility at Monmouth, Illinois was
purchased on February 15, 1993.  These facilities also process fresh pork into
primal cuts for additional processing into fabricated meats which are sold to
commercial users and to retail grocery chains, as well as case-ready and
label-branded cuts for retail distribution.  The eighth plant located in
Carroll, Iowa is primarily a packaging facility for canned or cook-in-bag
products.  A previously closed pork processing plant at Iowa Falls, Iowa is
currently held for sale.

<TABLE>
    Production for 1994, 1993 and 1992 is as follows:
<CAPTION>
                                   Actual Weekly Production
                                    On a One-Shift Basis   
            Location           1994           1993      1992
                                           (tons)
        <S>                   <C>          <C>        <C>
        Wichita               1,884,000    1,514,000  1,618,000
        San Leandro**               -0-      243,000    269,000
        Carroll               1,111,000*   1,204,000* 1,131,000*
        Springfield             622,000      666,000    560,000
        Carey/Riegel            257,000      231,000    220,000
<FN>
*  All ham products were produced on 2 shifts during 1994, 1993 and 1992.
** Closed September 1, 1993
</TABLE>

<TABLE>
<CAPTION>
                                   Actual Weekly Production
                                   On a One-Shift Basis
            Location             1994        1993      1992
                                        (tons)
        <S>                      <C>       <C>       <C>
        Denison                  40,000    37,000    39,000
        Crete                    47,000    45,000    47,000
        Monmouth                 28,000    25,000       -0-*
<FN>
*The Company did not own the Monmouth facility in 1992.
</TABLE>

  MARKETING

    The Company's pork marketing operations include meat processing, primarily
pork, and marketing.  Products marketed include fresh pork, fabricated pork,
smoked meats, ham, bacon, fresh sausage, dry sausage, hot dogs, and packing
house by-products.  These products are marketed under Farmland, Maple River,
Marco Polo, Carando, Regal, and other brand names.  Product distribution is
through national and regional retail food chains, food service accounts,
distributors and international marketing activities.

    Pork marketing is a highly competitive industry with many suppliers of live
hogs, fresh pork and processed pork products.  Other meat products such as
beef, poultry and fish also compete directly with pork products.  Competitive
methods in this segment include price, product quality, product differentiation

and customer service.


BEEF PROCESSING AND MARKETING

  PRODUCTION

    The Company's beef processing and marketing operations are conducted
through two ventures.  National Beef Packing Company, L.P., formed in April
1993, is located in Liberal, Kansas and is 58%-owned by Farmland.  Hyplains
Beef, L.C., formed in July 1992, is located in Dodge City, Kansas and is
50%-owned by Farmland.  These facilities function as beef abattoirs and have
capabilities for processing fresh beef into primal cuts for additional
processing into fabricated or boxed beef.  During the year ended August 31,
1994, the two plants operated at 97% of capacity and slaughtered 1,708,00
cattle. 

  MARKETING

    Products in the Company's beef processing and marketing operations include
fresh beef, boxed beef and packing house by-products.  Product distribution is
through national and regional retail and food service customers under Farmland
Black Angus Beef and other brand names.  There is also a limited amount of
international product distribution.

    Beef marketing is a highly competitive industry with many suppliers of live
cattle, fresh beef and processed beef.  Other meat products such as pork,
poultry and fish also compete directly with beef products.  Competitive methods
in this industry include price, product quality and customer service.


GRAIN MARKETING

    Effective June 30, 1992, the Company acquired substantially all the
business and assets of Union Equity Co-Operative Exchange ("Union Equity") and
conducts the grain marketing and storage operations, previously conducted by
Union Equity, using the Union Equity name.

    The Company markets wheat, milo, corn, soybeans, barley and oats, with
wheat constituting the majority of the marketing business.  The Company
purchases grain from members, associate members and nonmembers located in the
midwestern part of the United States.  Once the grain is purchased, the Company
assumes all risks related to selling such grain.  Since grain is a commodity,
pricing of grain in the United States is principally conducted through bids
based on the commodity futures markets.

    In 1994, approximately 37% of grain revenues have been from export sales. 
The five largest purchasers in terms of total revenues from grain operations
were Mexico (6%), Jordan (5%), Egypt (4%), Israel (4%) and South Africa (2%). 
In 1993 and 1992, export sales or sales to domestic customers for export
accounted for approximately 60% and 55%, respectively, of consolidated grain
revenues.  A majority of the grain export sales are under price subsidies or
credit arrangements guaranteed by the United States Government, primarily
through programs administered by the United States Department of Agriculture
("USDA").  Export-related sales are subject to international political
upheavals and changes in other countries' trade policies which are not within
the control of the United States or the Company.  Foreign sales of grain are
required to be paid in U.S. Dollars.

  TRADIGRAIN

    In December 1993, the Company acquired all the common stock of seven
international grain trading companies (collectively referred to as
"Tradigrain") formerly owned by B.P. Nutrition B.V.  Tradigrain imports,
exports and ships all major grains from the major producing countries to final
consumers which are either governmental entities, private companies or other
major grain companies.

    Tradigrain's purchases of grain are made on a cash basis against
presentation of documents.  Its sales of grain are mostly done against
confirmed Letters of Credit at sight or on 180/360 days deferred basis.  The
volume of grain traded by Tradigrain varies from seven to ten million metric
tons per year and represents total sales of between U.S. $800 million to U.S.
$1.2 billion per year.

  PROPERTY

<TABLE>
    The Company owns or leases thirty-one (31) inland elevators, and one (1)
export elevator with a total licensed capacity of approximately 177,157,000
bushels of grain.  The location, type, number and aggregate licensed capacity
in bushels of the elevators at August 31, 1994 are as follows:
<CAPTION>
                                                   Aggregate
      Location                 Type     Number      Capacity
      <S>                      <C>        <C>     <C>
      Amarillo, Texas          Inland      1       3,226,000
      Black, Texas             Inland      1       1,418,000
      Commerce City, Colorado  Inland      1       3,234,000
      Darrouzett, Texas        Inland      1       1,277,000
      Enid, Oklahoma           Inland      4      50,300,000
      Fairfax, Kansas          Inland      1      10,047,000
      Galveston, Texas         Export      1       3,253,000
      Hutchinson, Kansas       Inland      3      25,268,000
      Idaho and Utah           Inland     11       9,825,000
      Lincoln, Nebraska        Inland      1       5,099,000
      Omaha, Nebraska          Inland      1       4,266,000
      Saginaw, Texas           Inland      2      37,274,000
      Stratford, Texas         Inland      1         112,000
      Topeka, Kansas           Inland      1      12,055,000
      Wichita, Kansas          Inland      1      10,503,000
      </TABLE>

    Storage of grain has declined because of changes in the U.S. Government's
farm policies.  As a result, several of the above elevators are substantially
under-utilized.  The Commerce City, Colorado elevator is leased to another
operator.  Seven of the above elevators are closed, including two at Enid,
Oklahoma, two at Hutchinson, Kansas, one at Saginaw, Texas and the elevators at
Stratford, Texas and Wichita, Kansas.  The aggregate licensed bushel capacity
of the closed elevators is 61,446,000 bushels.  


               PATRONAGE REFUNDS AND DISTRIBUTION OF NET INCOME

    For purposes of this section, annual income for 1994 means income before
income taxes determined in accordance with federal income tax regulations.  For
1995 and after, annual income means income before income taxes determined in
accordance with generally accepted accounting principles.  For this purpose,
the term "member," means any member, associate member or any other person with
which Farmland is a party to a currently effective patronage refund agreement.

    Farmland operates on a cooperative basis.  In accordance with its bylaws,
Farmland returns the member-sourced portion of its annual income to its
members.  Each member's portion of the annual patronage refund is determined by
the quantity or value of business transacted by the member with Farmland and
Farmland's income from such transactions.  Such returns are referred to as
patronage refunds.  

    Generally, a portion of the patronage refund is returned in cash and for
the balance of the patronage refund (the "invested portion") the members
receive, Farmland common stock, associate member common stock or capital
credits (the equity type received is determined by the membership status).  The
invested portion of the patronage refund is determined annually by Farmland's
Board of Directors.  The annual patronage refund is returned to members as soon
as practical after the end of each fiscal year.  The Internal Revenue Code
allows a cooperative to deduct from its taxable income the total amount of the
patronage refunds returned, provided that not less than 20% of the total
patronage refund returned is cash.  The Bylaws of Farmland provide that its
Board of Directors has complete discretion with respect to the handling and
ultimate disposition of any member-sourced losses.

<TABLE>
    For the years ended 1994, 1993 and 1992, Farmland returned the following
patronage refunds.
<CAPTION>
              Cash Portion         Invested Portion       Total Patronage
           of Patronage Refunds    of Patronage Refunds     Refunds    
                            (Amounts in thousands)
  <S>      <C>                     <C>                  <C>
  1994     $    26,552             $   44,032           $    70,584
  1993     $       -0-             $      -0-           $       -0-
  1992     $    17,449             $      -0-           $    17,449
</TABLE>

    See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a discussion of the reasons for changes in the
Company's income for 1994, 1993 and 1992.

    Income or loss from transactions with patrons not eligible to receive
patronage refunds and extraneous income or loss (income from sources unrelated
to the type of transactions conducted by the cooperative with its members) is
subject to income taxes computed on the same basis as such tax is computed on
the income or loss of other corporations.


                            EQUITY REDEMPTION PLANS

    The Equity Redemption Plans described below (the "Plans") may be changed at
any time or from time to time at the sole and absolute discretion of the Board
of Directors.  The Plans are also not binding upon the Board of Directors or
the Company and the Board of Directors reserves the right to redeem, or to not
redeem, any equities of the Company without regard to whether such action or
inaction is in compliance with the Plans.  Equity holders should therefore not
rely to their detriment on the current terms of the Plans because they are
subject to change without advance notice and may be deviated from in the sole
and absolute discretion of the Board of Directors.  The factors which may be
considered by the Board of Directors in determining when, and under what
circumstances, the Company may redeem equities include, but are not limited to,
the terms of the Company's base capital plan, income and other tax
considerations, the Company's results of operations, financial position, cash
flow, capital requirements, long-term financial planning needs and other
relevant considerations.  By retaining discretion to determine the amount,
timing and ordering of any equity redemptions, the Board believes that it can
continue to assure that the best interests of the Company and thus of its
members will be protected.


BASE CAPITAL PLAN

    For the purposes of acquiring and maintaining adequate capital to finance
the business of the Company, the Board of Directors has established a base
capital plan ("Plan").  The Plan provides a mechanism for determining the
Company's total capital requirements and each member's or patron's share
thereof (the base capital requirement).  As part of the Plan, the Board of
Directors may, in its discretion, provide for redemption of Farmland common
stock or associate member common stock held by members or associate members who
have an investment in Farmland common stock or associate member common stock
which exceeds the members' or associate members' base capital requirement.  The
Plan may provide a mechanism under which the cash portion of the patronage
refund payable to members or patrons will depend upon the degree to which such
members or associate members meet their base capital requirements.

ESTATE SETTLEMENT PLAN

    The "Estate Settlement Plan" is subject to paragraph one above under the
heading, "Equity Redemption Plans."

    The estate settlement plan provides that in the event of the death of an
individual (a natural person) equity holder, the equity holdings of the
deceased will be redeemed at par value with the exception of purchased equity
holdings owned by the decreased for less than five years.  This provision is
subject to a limitation of $1.0 million in any one fiscal year without further
authorization by the Board of Directors.


SPECIAL REDEMPTION PLAN

    The "Special Redemption Plan" is subject to paragraph one above under the
heading "Equity Redemption Plans."

  Provisions of the special redemption plan are as follows:

  1.    No special redemption will be made if the redemption of equities may
        result in a violation of the lending covenants; and

  2.    The targeted amount for special redemptions is based on consolidated
        net income (member and nonmember) and the ratio of funded indebtedness
        to capitalization before the special redemption but after giving effect
        to the distribution of cash and the redemption of equities under the
        base capital plan.  The calculation for special redemption is as
        follows:

        Funded Indebtedness as           Total Special Redemption
           as a Percent of                  as a Percent of
            Capitalization               Consolidated Net Income

                    >   50 %                       None
                   48 - 50 %                       2.5 %
                   44 - 47 %                       5.0 %
                   40 - 43 %                       7.5 %
                    <   40 %                      10.0 %

  3.    The priority for redeeming equities under the Special Redemption
        Program will be as follows listed in order of first to be redeemed.

    a.  Capital Credits (Series of Ten) which, on or before August 31,
        1992, were issued to and which are currently held by, any dissolved
        cooperative for the benefit of its membership.  One-third of the
        total outstanding amount of such Capital Credits, Series of Ten to
        be redeemed pro rata to such holders following each of the next
        three fiscal year-ends.

    b.  Capital Credits (Series of Ten) outstanding ten years or longer --
        paid in order of lowest numbered series first.

    c.  Capital Credits held by individual livestock producers age 70 or
        older who have been held for five years or longer -- paid in
        descending order of age of the individual (oldest person first). 
        Holders of equities in Farmland Foods, Inc. will have their
        equities redeemed on the same basis as holders of Farmland equity. 
        Former Farmland Foods equity holders who accepted the exchange
        offer for Farmland Industries' equities in 1991 will be deemed to
        have met the five-year holding requirement for those equities
        involved in the exchange.

    d.  Capital Credits (Series of Ten) outstanding five years or longer --
        paid in order of lowest numbered series first.

    e.  Capital Credits held by individual livestock producers age 65 or
        older that have been held for five years or longer -- paid in
        descending order of age of the individual (oldest person first). 
        Holders of equities in Farmland Foods, Inc. will have their
        equities redeemed on the same basis as holders of Farmland equity. 
        Former Farmland Foods equity holders who accepted the exchange
        offer for Farmland Industries' equities in 1991 will be deemed to
        have met the five-year holding requirement for those equities
        involved in the exchange.

    f.  Any Capital Credits outstanding for twenty years or more -- paid in
        order of year issued, oldest first.  Holders of equities in
        Farmland Foods, Inc. will have their equities redeemed on the same
        basis as holders of Farmland equity.  Former Farmland Foods equity
        holders who accepted the exchange offer for Farmland Industries'
        equities in 1991 will be deemed to have met the five-year holding
        requirement for those equities involved in the exchange.  Nonmember
        capital will participate on the same bassi as capital credits in
        the redemption.

    g.  Capital Credits (Series of Ten) remaining balance -- paid in order
        of lowest numbered series first.

    h.  Minority held equities in Farmland Foods, Inc. remaining balance --
        paid in descending order of years outstanding, oldest first.

    i.  Any Capital Credits outstanding for ten years or more -- paid in
        order of year issued, oldest first.  Nonmember capital will
        participate on the same bassi as capital credits in the redemption.

    j.  Any Common Stock or Associate Member Common Stock outstanding for
        twenty years or more -- in order of year issued, oldest first.

    k.  Any Capital Credit outstanding for five years or more -- paid in
        order of year issued, oldest first.  Nonmember capital will
        participate on the same bassi as capital credits in the redemption.

    l.  Any Common Stock or Associate Member Common Stock outstanding for
        five years or more -- paid in order of year issued, oldest first.


                                 OTHER MATTERS

RESEARCH

    The Company operates a research and development farm near Bonner Springs,
Kansas where many aspects of animal nutrition are studied.  The research is
directed toward improving the nutrition and feeding practices of livestock and
pets.

    Research related to commercialization of a wheat processing plant to
produce wheat gluten as a replacement source for raw material used in certain
consumer products has been completed and technology for an economically viable
plant has been developed.  Farmland has formed Heartland Wheat Growers, L.P., a
joint venture with local cooperatives, and is currently building a wheat
processing plant in Russell, Kansas that will process approximately 4.25
million bushels of wheat a year.  See "Capital Expenditures."

    Expenditures related to Company-sponsored product and process improvements
amounted to $2,702,000, $3,303,000 and $3,338,000 for the years ended 1994,
1993 and 1992, respectively.


CAPITAL EXPENDITURES

    The Company plans capital expenditures of approximately $289.9 million
during its two fiscal years ending August 31, 1995 and 1996.

    Capital expenditures of approximately $111.8 million are planned for the
crop production business segment (excluding costs for construction of an
anhydrous ammonia plant in Trinidad which is being evaluated at this time).  A
new urea ammonium nitrate ("UAN") facility is planned at the Fort Dodge, Iowa
anhydrous ammonium plant.  The new facility is expected to cost approximately
$30.0 million of which $21.0 million are to be expended during this period. 
This facility will upgrade anhydrous ammonium to produce approximately 115,000
tons of UAN per year.  A UAN plant at the Lawrence, Kansas facility is being
expanded to increase production by approximately 128,000 tons per year.  An
estimated $2.5 million will be expended in fiscal 1995 to complete the project. 
Expenditures at the Dodge City, Kansas facility of approximately $6.0 million
are expected to increase anhydrous ammonia and UAN production capacity by
52,500 tons and 10,500 tons, respectively.  Capital expenditures of $66.4
million are planned for operating efficiency improvements, necessities and
replacements, and $15.9 million is for environmental and safety issues,
predominately at nitrogen fertilizer plants. 

    Capital expenditures in the feed business segment are estimated to be $23.4
million.  A feed mill in southeast New Mexico is being constructed at an
approximate cost of $1.3 million.  The remaining projected expenditures of
$22.1 million are for feed mill and livestock production efficiencies,
operating necessities and replacements.

    Capital expenditures in the petroleum business segment are expected to be
$87.4 million and include approximately $32.9 million to increase daily crude
oil processing capacity at the Coffeyville, Kansas refinery of which $27.9
million is to be expended during this period.  The remaining projected
expenditures of the petroleum business segment are as follows:  $23.6 million
for operating necessities; $20.7 million for increased operating efficiency;
and, $10.2 million for environmental and safety issues.

    Capital expenditures of approximately $32.6 million are planned in the pork
marketing business segment.  A waste water expansion project at the Crete,
Nebraska facility is expected to cost approximately $2.4 million.  A 10,000
square foot loading dock and storage facility will be constructed at the
Monmouth, Illinois plant for an estimated $1.5 million. The remaining
expenditures are mostly for operational improvements and replacements.

    Capital expenditures of approximately $7.3 million planned for the grain
business segment are mainly for expansion and replacements.

    Heartland Wheat Growers, L.P. (a partnership between the Company and local
cooperatives) located in Russell, Kansas, was formed for the purpose of
constructing and operating a wheat processing facility, to produce wheat
gluten, wheat starch and derivative products and to market and distribute such
products.  The Company has a seventy-nine percent (79%) interest in the
partnership.  The Company's planned investment to finance construction of the
wheat gluten plant amounts to approximately $25.5 million of which $21.5
million will be expended during the period.

    The Company intends to fund its capital program with cash from operations
or from its primary sources of debt capital.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources."


MATTERS INVOLVING THE ENVIRONMENT

    The Company's farm supply manufacturing and distribution operations, its
food processing and marketing operations and its grain marketing operations
continue to be affected to some extent by federal, state and local regulations
regarding the environment.  The Company recognizes liabilities related to
remediation of contaminated properties when the related costs are probable and
can be reasonably estimated.  Estimates of these costs are based upon currently
available facts, existing technology, undiscounted site specific costs, and
currently enacted laws and regulations.  In reporting environmental
liabilities, no offset is made for potential recoveries.  Such liabilities
include estimates of the Company's share of costs attributable to potentially
responsible parties ("PRPs") which are insolvent or otherwise unable to pay. 
All liabilities are monitored and adjusted regularly as new facts or changes in
law or technology occur. 

    The Company has been designated as a PRP under the Comprehensive
Environmental Response, Compensation and Liability Act, at 17 sites.  The
Company's responsibilities at nine sites appear to be de minimis.  The Company
is aware of probable obligations for environmental matters at 30 other sites. 
At certain of these sites no claim or assessment has been made.  In the opinion
of management, the probable and reasonably determinable costs related to PRP
and other sites are $7,164,000 and such amount has been accrued.

    The costs of resolving environmental matters are not quantifiable because
many such matters are in preliminary stages and the timing, extent and costs of
various actions which governmental authorities may require are unknown.  It is
possible that costs of such resolution may be greater than the liabilities
which, in the opinion of management, are probable and reasonably determinable
at August 31, 1994.  In the opinion of management, it is reasonably possible
for such costs to approximate $39,000,000 and to extend over 30 years.

    Under the Resource Conservation Recovery Act of 1976 ("RCRA"), the company
has four closure and five post-closure plans in place for six locations. 
Closure and post-closure plans are also in place for three landfills and two
injections wells as required by state regulations.  Operations are being
conducted at these locations and the Company does not plan to terminate such
operations in the foreseeable future.  Therefore, the Company has not accrued
these environmental exit costs.  The Company accrues these liabilities when
plans for termination of plant operations have been made.  Such closure and
post-closure care costs are estimated to be $5.4 million at August 31, 1994.  

    The Company has been notified by the Environmental Protection Agency
("EPA") of proposed civil penalties totaling approximately $1,715,000 for
alleged violations of environmental regulations at the Coffeyville refinery. 
The Company is negotiating with the EPA concerning these matters and believes
that such negotiations may result in compromise settlements.  Absent such
settlements, the Company may contest these matters.  Accordingly, no provision
has been made in the accompanying financial statements for these proposed
penalties.

    Protection of the environment requires the Company to incur expenditures
for equipment or processes, which may impact the Company's future net income. 
However, the Company does not anticipate that its competitive position will be
adversely affected by such expenditures or by laws and regulations enacted to
protect the environment.  Environmental expenditures are capitalized when such
costs provide future economic benefits.  In 1994, the Company had capital
expenditures of approximately $2,592,000 to prevent future discharges into the
environment.  The majority of such expenditures was for improvements at the
Coffeyville refinery.  Management believes the Company is currently in
substantial compliance with existing environmental rules and regulations.  


GOVERNMENT REGULATION

    The Company's business is conducted within a legal environment created by
numerous federal, state and local laws which have been enacted to protect the
public's interest by promoting fair trade practices, safety, health and
welfare.  The Company's operating procedures conform to the intent of these
laws and management believes that the Company is currently in compliance with
all such laws, the violation of which could have a material effect on the
Company.

    Certain policies may be implemented from time to time by the U.S.
Department of Agriculture, the Department of Energy, or by other governmental
agencies which may impact the demands of farmers and ranchers for the Company's
products or which may impact the methods by which certain of the Company's
operations are conducted.  Such policies may impact the Company's farm supply
and marketing operations.

    Management is not aware of any newly implemented or pending policies having
a significant impact or which may have a significant impact on operations of
the Company.


EMPLOYEE RELATIONS

    At August 31, 1994, the Company had approximately 11,000 employees. 
Approximately 41% of the Company's employees were represented by unions having
national affiliations.  The Company's relationship with employees is considered
to be generally satisfactory.  No labor strikes or work stoppages within the
last three fiscal years have had a materially adverse effect on the Company's
operating results.  Current labor contracts expire on various dates through
March 1997.  There are no wage re-openers in any of the collective bargaining
agreements.


RECENT ACCOUNTING PRONOUNCEMENTS

    See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." 



                               LEGAL PROCEEDINGS

    In the opinion of Robert B. Terry, Vice President and General Counsel of
Farmland, there is no litigation existing or pending against Farmland, or any
of its subsidiaries, which if determined adversely, would have a material
adverse effect on the financial position of the Company, and with respect to
income tax matters as explained in note 7 of the notes to consolidated
financial statements, he has no knowledge which would result in a different
conclusion than the opinion of special tax counsel to the Company which is
cited in note 7 of the notes to consolidated financial statements.

    The Company is involved in two environmental regulatory matters with the
government involving potential monetary sanctions as follows:

    1)  The Company is a party to an administrative enforcement action
        brought by the U.S. Environmental Protection Agency ("EPA") which
        alleges violations of the Emergency Planning and Community
        Right-to-Know Act and the release reporting requirements of the
        Comprehensive Environmental Response, Compensation, and Liability
        Act, as amended, at its Coffeyville, Kansas refinery.  This action
        involves alleged violations of release reporting requirements and
        seeks a civil fine in the amount of $350,000.

    2)  The Company is a party to an administrative enforcement action
        brought by the EPA which alleges violations of the Resource
        Conservation Recovery Act of 1976, as amended, at its Coffeyville,
        Kansas refinery.  In this action, the government has proposed a
        civil penalty in the amount of $1,365,000.


                                    EXPERTS

    The consolidated financial statements and schedules of Farmland and
subsidiaries as of August 31, 1994 and 1993 and for each of the years in the
three-year period ended August 31, 1994 included herein and elsewhere in the
Registration Statement, have been included herein and in the Registration
Statement in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.

    The report of KPMG Peat Marwick LLP covering the consolidated financial
statements contains an explanatory paragraph concerning income tax adjustments
proposed by the Internal Revenue Service on the gain on sale of and certain
distributions by Terra Resources, Inc. 


                       QUALIFIED INDEPENDENT UNDERWRITER

    Interstate/Johnson Lane Corporation, a member of the NASD, has participated
as a qualified independent underwriter in the "due diligence" review with
respect to the preparation of this Prospectus.  See "Plan of Distribution"
regarding the exception from pricing by the qualified independent underwriter.


              INDEX TO FARMLAND CONSOLIDATED FINANCIAL STATEMENTS




      Independent Auditors' Report  . . . . . . . . . . . . . . 49

      Consolidated Balance Sheets, August 31, 
      1994 and 1993   . . . . . . . . . . . . . . . . . . . . . 50

      Consolidated Statements of Operations for 
      each of the years in
      the three-year period ended August 31, 1994   . . . . . . 52

      Consolidated Statements of Cash Flows for 
      each of the years in
      the three-year period ended August 31, 1994   . . . . . . 53

      Consolidated Statements of Capital 
      Shares and Equities for
      each of the years in the three-year 
      period ended August 31, 1994  . . . . . . . . . . . . . . 55

      Notes to Consolidated Financial Statements  . . . . . . . 56



                         INDEPENDENT AUDITORS' REPORT

The Board of Directors
Farmland Industries, Inc.:

    We have audited the accompanying consolidated balance sheets of Farmland
Industries, Inc. and subsidiaries as of August 31, 1994 and 1993, and the
related consolidated statements of operations, cash flows and capital shares
and equities for each of the years in the three-year period ended August 31,
1994.  These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Farmland
Industries, Inc. and subsidiaries as of August 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended August 31, 1994, in conformity with generally accepted
accounting principles.

    As discussed in note 7 to the consolidated financial statements, the
Internal Revenue Service (IRS) has examined the Company's tax returns for the
years ended August 31, 1984 and 1983, and has proposed certain adjustments. 
Should the IRS ultimately prevail, the federal and state income taxes and
statutory interest thereon could be significant.  Farmland believes it has
meritorious positions with respect to such claims and, based upon the opinion
of special tax counsel, management believes it is more likely than not that the
courts will ultimately conclude that Farmland's treatment of such items was
substantially, if not entirely, correct.  The ultimate outcome of this matter
can not presently be determined.  Therefore, no provision for such income taxes
and interest has been made in the accompanying consolidated financial
statements.


                                   KPMG PEAT MARWICK LLP
Kansas City, Missouri
October 21, 1994  


                    FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                    ASSETS


<TABLE>
<CAPTION>
                                                           August 31          
                                                     1994               1993     
                                                     (Amounts in Thousands)
<S>                                            <C>                <C>
Current Assets:
      Cash and cash equivalents  . . . . . . .  $       44,084     $       28,373
      Accounts receivable - trade  . . . . . .         394,906            320,980
      Inventories (note 3)   . . . . . . . . .         538,314            496,690
      Other current assets   . . . . . . . . .         119,139             69,357

            Total Current Assets . . . . . . .  $    1,096,443     $      915,400


Investments and Long-Term Receivables (note 4)  $      189,601     $      183,312

Property, Plant and Equipment (notes 5 and 6):
Property, plant and equipment, at cost  . . .   $    1,202,159     $    1,154,343
Less accumulated depreciation and amortization         700,869            649,965

     Net Property, Plant and Equipment  . . .   $      501,290     $      504,378

Other Assets      . . . . . . . . . . . . . .   $      139,297     $      116,891

Total Assets      . . . . . . . . . . . . . .   $    1.926,631     $    1,719,981
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                           LIABILITIES AND EQUITIES
<TABLE>
<CAPTION>
                                                                August 31          
                                                         1994               1993     
                                                          (Amounts in Thousands)
 <S>                                                <C>                <C>
 Current Liabilities:
    Demand loan certificates   . . . . . . . . . .  $       23,158     $       29,860
    Short-term notes payable (note 6)  . . . . . .         279,137            256,655
    Current maturities of long-term debt (note 6)           27,840             31,947
    Accounts payable - trade   . . . . . . . . . .         246,181            217,982
    Other current liabilities (note 9)   . . . . .         229,423            118,437

                Total Current Liabilities  . . . .  $      805,739     $      654,881







 Long-Term Debt (excluding current maturities)
    (note 6)                    . . . . . . . . .   $      517,806     $      485,861

 Deferred Income Taxes (note 7)  . . . . . . . . . .$        6,340     $        2,169

 Minority Owners' Equity in Subsidiaries (note 8)  .$       11,733     $       15,363

 Capital Shares and Equities (note 9):
    Preferred shares, $25 par value--Authorized 
        8,000,000 shares,
        148,069 shares issued and outstanding 
        (148,325 shares in 1993)   .            .   $        3,702     $        3,708
    Common shares, $25 par value -- Authorized 
        50,000,000 shares,
        14,542,478 shares issued and outstanding
         (15,199,833 shares in 1993) . . . . . . . .       363,562            379,996
    Associate member common shares 
        (nonvoting), $25 par value --
        Authorized 2,000,000 shares, 
        370,707 shares issued and
        outstanding (327,828 shares in 1993) . . . .         9,268              8,196
    Earned surplus and other equities  . . . . . . . . . . 208,481            169,807

                Total Capital Shares and Equities  .$      585,013     $      561,707

 Contingent Liabilities and Commitments 
    (notes 4, 6, 7, 10 and 11)

 Total Liabilities and Equities  . . . . . . . . . .$    1,926,631     $    1,719,981
  <FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                      Year Ended August 31               
                                                              1994           1993          1992      
                                                                          (Amounts in Thousands)
<S>                                                       <C>            <C>            <C>
Sales             . . . . . . . . . . . . . . . . . . .   $ 6,677,933    $ 4,722,940    $ 3,429,307
Cost of sales     . . . . . . . . . . . . . . . . . . .     6,284,084      4,470,290      3,099,316

Gross income     . . . . . . . . . . . . . . . . . . .    $   393,849    $   252,650    $   329,991

Selling, general and administrative expenses  . . . . .   $   305,279    $   223,792    $   236,065

Other income (deductions):
      Interest expense   . . . . . . . . . . . . . . . .  $   (51,485)   $   (36,764)   $   (27,965)
      Interest income  . . . . . . . . . . . . . . . . .        6,170          4,189          2,667
      Equity in income (loss) of investees (note 4)  . .       10,878        (12,394)        (2,341)
      Provision for loss on disposition of assets
            (note 17)  . . . . . . . . . . . . . . . . .          -0-        (29,430)           -0-
      Other, net (note 16)   . . . . . . . . . . . . . .       20,111          9,536          4,217
                                                          $   (14,326)   $   (64,863)   $   (23,422)

Income (loss) before income taxes, minority
      owners' interest and extraordinary item  . . . . .  $    74,244    $   (36,005)   $    70,504

Income tax (expense) benefit (note 7) . . . . . . . . .        (4,890)         6,433         (9,458)
Minority owners' interest in loss (income)  
     of subsidiaries  . . . . . . . . . . . . . . . . .         4,522           (828)           -0-
Income (loss) before extraordinary item . . . . . . . .   $    73,876    $   (30,400)   $    61,046
Extraordinary item - Utilization of loss 
     carryforward (note 7)  . . . . . . . . . . . . . .           -0-            -0-          1,267
           Net income (loss)  . . . . . . . . . . . . .   $    73,876    $   (30,400)   $    62,313

Distribution of net income (note 9):
     Patronage refunds:
           Farm supply patrons  . . . . . . . . . . . .   $    59,685    $       -0-    $    16,229
           Pork marketing patrons . . . . . . . . . . .        10,927            -0-          1,245
           The Cooperative Finance 
                Association's patrons . . . . . . . . .           -0-          1,650          1,482
                                                          $    70,612    $     1,650    $    18,956
Earned surplus and other equities . . . . . . . . . . .         3,264        (32,050)        43,357
                                                          $    73,876    $   (30,400)   $    62,313
<FN>
See notes to consolidated financial statements
</TABLE>


                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                           Year Ended August 31               
                                                                1994                 1993             1992      
                                                                          (Amounts in Thousands)
 <S>                                                       <C>                <C>              <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss) . . . . . . . . . . . . . . . . . . .   $        73,876    $       (30,400)   $      62,313
 Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
      Depreciation and amortization  . . . . . . . . . .            62,960             57,730           50,784
      Provision for loss on disposition of assets  . . .               -0-             29,430              -0-
      (Gain) on disposition of fixed assets  . . . . . .            (1,794)              (385)          (1,181)
      Patronage refunds received in equities   . . . . .            (2,171)            (2,241)          (2,320)
      Proceeds from redemption of patronage equities   .               573              1,731            7,727
      Equity in (income) loss of investees   . . . . . .           (10,878)            12,394            2,341
      Deferred income tax (benefit) expense  . . . . . .            (5,034)            (3,463)           1,752
      Other        . . . . . . . . . . . . . . . . . . .               770              7,604            3,786
      Changes in assets and liabilities (exclusive
         of assets and liabilities of businesses acquired):
            Accounts receivable  . . . . . . . . . . . .           (12,079)           (92,024)           9,095
            Inventories  . . . . . . . . . . . . . . . .            (4,692)           (65,402)         (27,483)
            Other assets . . . . . . . . . . . . . . . .           (45,990)           (30,154)          11,490
            Accounts payable . . . . . . . . . . . . . .            17,884             19,630          (48,425)
            Other liabilities  . . . . . . . . . . . . .            32,617            (17,981)          10,722

 Net cash provided by (used in) operating activities . .   $       106,042    $      (113,531)   $      80,601

 CASH FLOWS FROM INVESTING ACTIVITIES:
 Advances to borrowers by finance companies  . . . . . .   $           -0-    $      (624,618)   $    (733,403)
 Collections from borrowers by finance companies . . . .               -0-            631,668          685,383
 Acquisition of businesses . . . . . . . . . . . . . . .           (35,790)           (10,500)             -0-
 Proceeds from disposal of investments and
      notes receivable   . . . . . . . . . . . . . . . .            34,577             12,115           71,582
 Acquisition of investments and notes receivable . . . .           (22,117)           (50,378)         (58,979)
 Capital expenditures  . . . . . . . . . . . . . . . . .           (69,776)           (98,238)         (79,954)
 Proceeds from sale of fixed assets  . . . . . . . . . .            14,785             10,900            8,191
 Distribution from joint venture, net  . . . . . . . . .               -0-                -0-           29,324
 Proceeds from sale of assets to
      joint venture partner  . . . . . . . . . . . . . .             2,310                -0-           62,104
 Proceeds from disposition of subsidiary (note 2)  . . .               -0-             87,227              -0-
 Other             . . . . . . . . . . . . . . . . . . .             5,547             (2,140)             -0-

 Net cash used in investing activities . . . . . . . . .   $       (70,464)   $       (43,964)    $    (15,752)

 CASH FLOWS FROM FINANCING ACTIVITIES:
 Net decrease of demand loan certificates  . . . . . . .   $        (6,702)   $       (13,224)    $    (13,712)
 Proceeds from bank loans and notes payable  . . . . . .           888,088            916,799          669,608
 Payments of bank loans and notes payable  . . . . . . .          (924,731)          (777,268)        (711,101)
 Proceeds from issuance of subordinated
       debt certificates   . . . . . . . . . . . . . . .            57,636             72,423           57,780
 Payments for redemption of subordinated
       debt certificates   . . . . . . . . . . . . . . .           (33,034)           (16,490)         (22,557)
 Payments for redemption of equities . . . . . . . . . .            (3,244)           (13,505)          (8,046)
 Payments of patronage refunds and dividends . . . . . .               -0-            (17,946)         (12,204)
 Other             . . . . . . . . . . . . . . . . . . .             2,120                340           (3,853)

 Net cash provided by (used in) financing activities . .   $       (19,867)   $       151,129     $   (44,085)

 Net increase (decrease) in cash and
      cash equivalents   . . . . . . . . . . . . . . . .   $        15,711    $        (6,366)    $     20,764
 Cash and cash equivalents at beginning of year  . . . .            28,373             34,739           13,975
 Cash and cash equivalents at end of year  . . . . . . .   $        44,084    $        28,373     $     34,739

 SUPPLEMENTAL SCHEDULE OF CASH PAID 
      FOR INTEREST AND INCOME TAXES:

 Interest          . . . . . . . . . . . . . . . . . . .   $        38,425    $        41,136     $     35,626

 Income taxes (net of refunds) . . . . . . . . . . . . .   $         9,746    $         1,479     $     12,181

 SUPPLEMENTAL SCHEDULE OF NONCASH 
      INVESTING AND FINANCING ACTIVITIES:

 Equities and minority owners' interest
      called for redemption  . . . . . . . . . . . . . .   $        12,935    $           -0-     $     13,365
 Transfer of assets in exchange for
      investment in joint ventures   . . . . . . . . . .   $           309    $           -0-     $     63,911
 Issuance of Farmland equities to minority owners'
      of Foods     . . . . . . . . . . . . . . . . . . .   $           -0-    $           -0-     $     16,680
 Appropriation of current year's net income
      as patronage refunds   . . . . . . . . . . . . . .   $        70,612    $           -0-     $     18,956
 Acquisition of businesses:
      Fair value of net assets acquired  . . . . . . . .   $        35,539    $         1,414     $     30,321
      Goodwill     . . . . . . . . . . . . . . . . . . .             1,094             16,086           20,976
      Minority owners' investment  . . . . . . . . . . .              (843)            (7,000)             -0-
                                                           $        35,790    $        10,500     $     51,297
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>



                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF CAPITAL SHARES AND EQUITIES

<TABLE>
<CAPTION>
                                                             Years Ended August 31, 1994, 1993 and 1992
                                                                                           Earned       Total
                                                                             Associate      Surplus     Capital
                                                                               Member        And        Shares
                                                 Preferred        Common       Common       Other        And
                                                  Shares          Shares       Shares      Equities    Equities
                                                                        (Amounts in Thousands)
 <S>                                            <C>          <C>          <C>         <C>            <C>
 BALANCE AT AUGUST 31, 1991  . . . . . . . . .  $     3,733  $    330,646 $    7,680  $     155,305  $    497,364
 Issue, redemption and cancellation of equities         (20)       44,297        (15)            13        44,275
 Appropriation of current year's net income  .          -0-          -0-         -0-         62,313        62,313
 Transfers to current liabilities  . . . . . .          -0-       (12,045)        (6)       (19,329)      (31,380)
 Transfers from minority owners' equity  . . .          -0-         5,570        -0-         10,072        15,642
 Dividends on preferred stock  . . . . . . . .          -0-          -0-         -0-             (5)           (5)
 Distribution to farm supply patrons in common
      stock, associate member common stock
      and other equities   . . . . . . . . . .          -0-        15,807        873        (16,760)          (80)
 Exchange of common stock, associate member
      common stock and other equities  . . . .          -0-        (7,892)      (356)         8,248           -0-

 BALANCE AT AUGUST 31, 1992  . . . . . . . . .  $     3,713  $    376,383 $    8,176  $     199,857  $    588,129
 Issue, redemption and cancellation of equities          (5)        6,740        (49)        (1,058)        5,628
 Appropriation of current year's net loss  . .          -0-          -0-         -0-        (30,400)      (30,400)
 Transfers to current liabilities  . . . . . .          -0-          -0-         -0-         (1,650)       (1,650)
 Exchange of common stock, associate member
      common stock and other equities  . . . .          -0-        (3,127)        69          3,058           -0-

 BALANCE AT AUGUST 31, 1993  . . . . . . . . .  $     3,708  $    379,996 $    8,196  $     169,807  $    561,707
 Issue, redemption and cancellation of equities          (6)         (364)        17         (3,475)       (3,828)
 Appropriation of current year's net income  .          -0-           -0-        -0-         73,876        73,876
 Patronage refund payable in cash transferred                                     
      to current liabilities   . . . . . . . .          -0-           -0-        -0-        (26,552)      (26,552)
 Base capital redemptions transferred
      to current liabilities   . . . . . . . .          -0-        (8,628)      (112)           -0-        (8,740)
 Other equity redemptions transferred
      to current liabilities   . . . . . . . .          -0-          -0-         -0-         (3,362)       (3,362)
 Transferred to liabilities  . . . . . . . . .          -0-          -0-         -0-         (8,084)       (8,084)
 Dividends on preferred stock  . . . . . . . .          -0-          -0-         -0-             (4)           (4)
 Exchange of common stock, associate member
      common stock and other equities  . . . .          -0-        (7,442)     1,167          6,275          -0-

 BALANCE AT AUGUST 31, 1994  . . . . . . . . .  $     3,702  $    363,562 $    9,268  $     208,481  $    585,013
  <FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Farmland Industries, Inc. ("Farmland"), a Kansas corporation,  is organized
and operated as a cooperative and its mission is to be a producer-driven and
profitable agricultural supply to consumer foods cooperative system.

    Principles of Consolidation -- The consolidated financial statements
include the accounts of Farmland and all its majority-owned subsidiaries (the
"Company").  All significant intercompany accounts and transactions have been
eliminated.  

    Cash and Cash Equivalents -- Investments with maturities of less than three
months are included in "Cash and cash equivalents."

    Investments -- Investments in companies 20% to 50% owned are accounted for
by the equity method.  Other investments are stated at cost.

    Accounts Receivable -- The Company uses the allowance method to account for
doubtful accounts and notes.  Uncollectible accounts and notes receivable from
members are written off against the Farmland common stock held by members
before such uncollectible accounts are charged to operations.

    Inventories -- Grain inventories are valued at market adjusted for net
unrealized gains or losses on open commodity contracts.  Crude oil, refined
petroleum products, cattle and beef inventories are valued at the lower of
last-in, first-out cost or market.  Other inventories are valued at the lower
of first-in, first-out cost or market.  Supplies are valued at cost.  When
practicable, the Company hedges certain inventories, advance sales and purchase
contracts with fixed prices and anticipated purchases of raw materials.

    Property, Plant and Equipment -- These assets are stated at cost and
depreciated principally on a straight-line basis over the estimated useful life
of the individual assets (3 to 40 years).  Leasehold improvements are amortized
on a straight-line basis over the terms of the individual leases (15 to 21
years).

    Goodwill -- The excess of cost over the fair market value of assets of
businesses purchased is amortized on a straight-line basis over a period of 15
to 25 years.

    Sales -- The Company's policy is to recognize sales at the time product is
shipped.  Net margins on international grain merchandised and sales commissions
on brokered agricultural chemicals, rather than the value of such products, are
included in net sales.

    Environmental Costs -- Liabilities related to remediation of contaminated
properties are recognized when the related costs are considered probable and
can be reasonably estimated.  Estimates of these costs are based upon currently
available facts, existing technology, undiscounted site specific costs, and
currently enacted laws and regulations.  In reporting environmental
liabilities, no offset is made for potential recoveries.  All liabilities are
monitored and adjusted regularly as new facts or changes in law or technology
occur.  Environmental expenditures are capitalized when such costs provide
future economic benefits.

    Research and Development Costs -- Total research and development costs for
the Company for the years ended August 31, 1994, 1993 and 1992 were $2,702,000,
$3,303,000 and $3,338,000, respectively.

    Federal Income Taxes -- Farmland and its cooperative subsidiaries are
subject to income taxes on all income not distributed to patrons as patronage
refunds.  Farmland and all its subsidiaries file consolidated federal and state
income tax returns.  Effective September 1, 1993, the Company adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes."  The
Company accounted for income taxes using the deferred method under APB Opinion
11 for the year ended August 31, 1993 and 1992.


(2) ACQUISITIONS AND DISPOSITIONS

    Effective June 30, 1992, Farmland acquired substantially all the business
and assets of Union Equity Co-Operative Exchange ("Union Equity") in exchange
for 2,051,880 shares of Farmland common stock with a par value of $51,297,000
and Farmland's assumption of substantially all of Union Equity's liabilities. 
The acquisition has been accounted for as a purchase and, accordingly, the
results of operations of Union Equity have been included in the Company's
consolidated financial statements from June 30, 1992.  The excess of the
purchase price over the fair value of the net identifiable assets acquired
($20,976,000) has been recorded as goodwill and is being amortized on a
straight-line basis over 25 years.

    During 1993, Farmland and partners organized NBPC.  Farmland retained a 58%
ownership interest in NBPC by investing $10,500,000 in cash.  On April 15,
1993, NBPC acquired the business of Idle Wild Foods, Inc. ("Idle Wild"), a beef
packing plant and feedlot located in Liberal, Kansas.  NBPC acquired the assets
by assuming liabilities of Idle Wild with a fair value of approximately
$130,605,000 (including bank loans which are nonrecourse to NBPC's partners). 
The acquisition has been accounted for as a purchase and, accordingly, the
results of operations of NBPC have been included in the Company's consolidated
financial statements from April 15, 1993.  The liabilities assumed over the
fair value of the net identifiable assets acquired has been recorded as
goodwill. 

    To establish The Cooperative Finance Association ("CFA") as an independent
finance association for its members, on August 30, 1993 CFA purchased
10,113,000 shares of its voting common stock from Farmland for a purchase price
comprised of $1,541,000 in cash, equities of Farmland (with a par value of
$2,406,000) held by CFA and a $6,166,000 subordinated promissory note payable
to Farmland bearing interest of 5.3%.  In addition, during 1993, CFA: 
1) repaid its operating loan from Farmland ($25,181,000); and, 2) purchased the
lending operations and assets of Farmland Financial Services Company for a cash
payment of $60,505,000 and a $2,128,000, 6% subordinated note payable to
Farmland.  Farmland repaid $87,227,000 of its borrowings from the National Bank
for Cooperatives with the proceeds received from CFA.  As a result of CFA's
stock purchase and amendments to CFA's bylaws, Farmland's voting control in CFA
decreased to 25%.  Accordingly, effective August 31, 1993, CFA is not included
in the consolidated balance sheet of the Company.

    The following unaudited financial information, for the years ended August
31, 1993 and 1992, presents pro forma results of operations of the Company as
if the disposition of CFA and the acquisitions of Union Equity and NBPC had
occurred at the beginning of each period presented.  The pro forma financial
information includes adjustments for amortization of goodwill, additional
depreciation expense and increased interest expense on debt assumed in the
acquisitions.  The pro forma financial information does not necessarily reflect
the results of operations that would have occurred had the Company been a
single entity which excluded CFA and included Union Equity and NBPC for the
full years 1993 and 1992.

<TABLE>
<CAPTION>
                                      August 31 (Unaudited)
                                      1993           1992   
                                     (Amounts in Thousands)
   <S>                            <C>               <C>
   Net sales                      $     5,357,867   $    5,441,303

   Income (loss) before 
     extraordinary item           $       (44,040)  $       47,225
   </TABLE>

    In October 1993, the Company acquired approximately 53% of the common stock
of National Carriers, Inc. ("NCI") and increased its ownership of NCI to 79% in
August 1994.  NCI is a trucking company located in Liberal, Kansas.  NCI
provides substantially all the trucking service needs of NBPC.  The purchase
price of NCI ($4,423,000) was paid in cash.

    In December 1993, the Company acquired all the common stock of seven
international grain trading companies (collectively referred to as
"Tradigrain").  The purchase price for Tradigrain ($31,367,000) was paid in
cash.

    The acquisitions of NCI and Tradigrain have been accounted for by the
purchase method of accounting and, accordingly, the operating results of each
enterprise have been included in the Company's consolidated financial
statements from the respective dates of acquisition.  The excess of the cash
paid over the fair value of the net assets acquired has been recorded as
goodwill.  The pro forma effects of acquisitions of NCI and Tradigrain on the
consolidated financial statements are not significant.

(3) INVENTORIES

<TABLE>
    Major components of inventories are as follows:
<CAPTION>
                                              August 31   
                                          1994       1993   
                                       (Amounts in Thousands)
   <S>                                  <C>          <C>
   Grain  . . . . . . . . . . . . . . . $   136,353  $   91,990
   Beef   . . . . . . . . . . . . . . .      24,267      27,754
   Materials  . . . . . . . . . . . . .      51,428      43,857
   Supplies . . . . . . . . . . . . . .      39,885      41,388
   Finished and in-process products . .     286,381     291,701
                                        $   538,314  $  496,690
</TABLE>

    The carrying values of crude oil and refined petroleum inventories stated
under the lower of last-in, first-out ("LIFO") cost or market at August 31,
1994 and 1993 were $86,179,000 and $84,088,000, respectively.  Had the lower of
first-in, first-out ("FIFO") cost or market been used to value these products,
the carrying values of inventories at August 31, 1994 and 1993 would have been
lower by $4,145,000 and $5,754,000, respectively.

    Net income for 1994, 1993 and 1992 was $1,609,000 lower, $4,119,000 higher
and $1,935,000 lower, respectively, as a result of using LIFO as compared with
FIFO, including a $3,164,000 recovery in 1994 of an $8,346,000 lower of cost or
market adjustment in 1993.  Liquidation of prior year inventory layers in 1992
reduced income before income taxes and patronage refunds by $3,302,000.

    The carrying values of beef inventories stated under LIFO at August 31,
1994 and 1993 were $24,267,000 and $27,754,000, respectively.  The LIFO method
of accounting for beef inventories had no effect on the carrying value of
inventories or on the results reported in 1994 and 1993, as market value of
these inventories was lower than LIFO or FIFO cost.  

(4) INVESTMENTS AND LONG-TERM RECEIVABLES

<TABLE>
    Investments and long-term receivables are as follows:
<CAPTION>
                                                                      August 31          
                                                               1994               1993     
                                                               (Amounts in Thousands)
      <S>         . . . . . . . . . . . . . . . . . .     <C>                <C>
      Investments accounted for by the equity method   .  $       52,478     $       37,456
      Notes receivable from ventures, 20% to 50% owned            48,955             60,204
      National Bank for Cooperatives   . . . . . . . . .          28,786             31,824
      Investments in and advances to other cooperatives           42,662             37,690
      Other investments and long-term receivables  . . .          16,720             16,138
                                                          $      189,601     $      183,312
  </TABLE>

   National Bank for Cooperatives ("CoBank") requires borrowers from the bank
to maintain an investment in stock of the bank.  The amount of investment
required is based on the average amount borrowed from CoBank during the
previous five years.  At August 31, 1994, Farmland's investment in CoBank
approximated its requirement.  This investment has been pledged to secure
borrowings from CoBank under the syndicated loan agreement.  

<TABLE>
   Summarized financial information of investees accounted for by the equity
method is as follows:
<CAPTION>
                                              August 31   
                                          1994       1993   
                                       (Amounts in Thousands)
   <S>                                  <C>          <C>
      Current Assets  . . . . . . . . . $   105,981  $   66,532
      Long-Term Assets  . . . . . . . .     252,704     223,937
         Total Assets . . . . . . . . . $   358,685  $  290,469

      Current Liabilities . . . . . . . $   111,077  $   79,224
      Long-Term Liabilities . . . . . .     144,255     141,991
         Total Liabilities  . . . . . . $   255,332  $  221,215

      Net Assets  . . . . . . . . . . . $   103,353  $   69,254
</TABLE>

<TABLE>
<CAPTION>
                                      Year Ended August 31    
                              1994          1993            1992   
                                    (Amounts in Thousands)
    <S>                    <C>           <C>           <C>
    Net sales              $    803,516  $   601,194   $    218,913
    Net income (loss)      $     24,285  $   (22,755)  $     (5,046)
    Farmland's equity 
     in net income (loss)  $     10,878  $   (12,394)  $     (2,341)
</TABLE>

    The Company's investments accounted for by the equity method consist
principally of 50% equity interests in Hyplains Beef, L.L.C. and in two
phosphate fertilizer manufacturing ventures (Farmland Hydro, L.P. and
SF Phosphates Limited Company).

    On November 15, 1991, Farmland and Norsk Hydro a.s. ("Hydro") formed a
joint venture company, Farmland Hydro, to manufacture phosphate fertilizer
products for distribution to international markets.  As part of the joint
venture agreement, Farmland sold a 50% interest in its Green Bay, Florida
phosphate fertilizer plant and certain phosphate rock reserves located in
Hardee County, Florida to Hydro for an amount approximately equal to Farmland's
carrying value of the assets.  Subsequently, Farmland and Hydro contributed the
assets to the joint venture.  Farmland operates the plant under a management
agreement with the joint venture and Hydro provides international marketing
services.  See note 15 of the notes to consolidated financial statements.

    Farmland and J. R. Simplot formed a joint venture (SF Phosphates, Limited
Company) to operate a phosphate mine located in Vernal, Utah, a fertilizer
plant located in Rock Springs, Wyoming, and a 96-mile pipeline that connects
the mine with the fertilizer plant.  The purchase of the mine, plant and
pipeline from Chevron Corporation was completed in April 1992.

    Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," was issued by the Financial
Accounting Standards Board ("FASB") in May 1993 and is effective for fiscal
years beginning after December 15, 1993 (the Company's 1995 fiscal year). 
Statement 115 expands the use of fair value accounting and the reporting for
certain investments in debt and equity securities.  In the opinion of
management, the adoption of Statement 115 will not have a significant impact on
the Company's consolidated financial statements.

(5) PROPERTY, PLANT AND EQUIPMENT

<TABLE>
    A summary of cost for property, plant and equipment is as follows:
<CAPTION>
                                                 August 31   
                                               1994       1993   
                                             (Amounts in Thousands)
   <S>                                  <C>           <C>
   Land and improvements  . . . . . . . $     13,614  $    11,825
   Site improvements  . . . . . . . . .       28,647       26,877
   Buildings  . . . . . . . . . . . . .      224,767      215,420
   Machinery and equipment  . . . . . .      716,683      678,784
   Automotive equipment . . . . . . . .       65,986       46,807
   Furniture and fixtures . . . . . . .       48,613       45,405
   Livestock  . . . . . . . . . . . . .        3,926        4,373
   Mining properties  . . . . . . . . .        3,119        3,119
   Leasehold improvements . . . . . . .       15,085       12,149
   Capital lease  . . . . . . . . . . .       50,956       52,342
   Construction in progress . . . . . .       30,763       57,242
          . . . . . . . . . . . . . . . $  1,202,159  $ 1,154,343
</TABLE>

    For the years ended August 31, 1994, 1993 and 1992, the Company capitalized
construction period interest of $357,000, $1,611,000 and $330,000,
respectively.


(6) BANK LOANS, SUBORDINATED DEBT CERTIFICATES AND NOTES PAYABLE
<TABLE>
    Bank loans, subordinated debt certificates and notes payable are as
follows:
<CAPTION>
                                                                 August 31          
                                                          1994               1993     
                                                          (Amounts in Thousands)
 <S>                                                 <C>                <C>
 National Bank for Cooperatives 
      --5.61% to 9.2%, maturing 1995 through 2001    $       74,278     $       66,098
 Other bank notes--5.74% to 7.75%, 
      maturing 1995 through 2001   . . . . . . . .          117,813            138,244
 Capital investment certificates
      --6% to 9.5%, maturing 1995 through 2014   .          210,054            192,857
 Subordinated monthly interest certificates
      --6.25% to 12%, maturing 1995 through 2014             70,057             62,913
 Industrial revenue bonds--5.75% to 8.0%, 
      maturing 1995 through 2007   . . . . . . . .           25,055             27,880
 Promissory notes--7% to 10%, 
      maturing 1995 through 2001   . . . . . . . .           18,684             13,805
 Other--5% to 13%  . . . . . . . . . . . . . . . .           29,705             16,011
                                                     $      545,646     $      517,808
 Less current maturities . . . . . . . . . . . . .           27,840             31,947
                                                     $      517,806     $      485,861
</TABLE>

    In 1994, Farmland entered into a $650,000,000 syndicated credit facility
provided by eight domestic and international banking institutions.  This
agreement provides short-term credit of up to $450,000,000 to finance seasonal
operations and inventory, and revolving term credit of up to $200,000,000.  At
August 31, 1994, short-term borrowings under this facility were $217,399,000,
revolving term borrowings were $95,000,000 and $62,600,000 was being utilized
to support letters of credit issued on behalf of Farmland by participating
banks.  

    Farmland pays commitment fees of 1/8 of 1% annually on the unused portion
of the short-term commitment and 1/4 of 1% annually on the unused portion of
the revolving term commitment.  In addition, Farmland must maintain
consolidated working capital of not less than $150,000,000, consolidated net
worth of not less than $475,000,000 and funded indebtedness and senior funded
indebtedness of not more than 52% and 43% of capitalization, respectively.  All
computations are based on consolidated financial data adjusted to exclude
nonrecourse subsidiaries (as defined in the credit agreement).  Computed in
accordance with the agreement, at August 31, 1994, working capital was
$207,383,000, net worth was $585,013,000 and funded indebtedness and senior
funded indebtedness were 47.03% and 23.34% of capitalization, respectively.

    Farmland and subsidiaries maintain other borrowing arrangements with banks
and financial institutions.  Under such agreements, at August 31, 1994,
$35,495,000 was borrowed from banks and letters of credit issued by banks
amounted to $2,200,000.  Financial covenants of these arrangements are not more
restrictive than the Company's syndicated credit facility.

    NBPC, 58%-owned by Farmland, maintains borrowing agreements with a bank
which provides financing support for its beef packing operations.  Borrowings
under this credit agreement are nonrecourse to Farmland or Farmland's other
affiliates.  At August 31, 1994, NBPC's available bank credit of $61,596,000
had been borrowed.  All assets of NBPC (carried at $150,409,000) are pledged to
support its borrowings.  At August 31, 1994, Farmland had issued letters of
credit in the amount of $15,000,000 to support NBPC's bank credit agreements.

    Tradigrain has borrowing agreements with various international banks which
provide financing and letters of credit to support current international grain
trading transactions.  Obligations of Tradigrain under these loan agreements
are nonrecourse to the Company.

    The subordinated debt certificates have been issued under several different
indentures.  Farmland may redeem subordinated certificates of investments and
capital investment certificates in advance of scheduled maturities.  Farmland
may redeem subordinated certificates of investments, capital investment
certificates and subordinated monthly interest certificates upon death of the
holder.  

    The outstanding subordinated debt certificates are subordinated to senior
indebtedness.  At August 31, 1994, senior indebtedness included $450,827,000
for money borrowed, and other instruments (principally long-term operating
leases) provide for aggregate payments over nine years of approximately
$126,505,000.

    Under industrial revenue bonds and other agreements, property, plant and
equipment with a carrying value of $29,267,000 have been pledged.

    Bank loans, subordinated debt certificates and notes payable mature during
the fiscal years ending August 31 in the following amounts:

                                     (Amounts in Thousands)
         1995 . . . . . . . . . . . . . . . $   27,840
         1996 . . . . . . . . . . . . . . .     44,884
         1997 . . .  . . . . . . . . . . .     182,996
         1998 . . . . . . . . . . . . . . .     54,057
         1999 . . . . . . . . . . . . . . .     32,921
         2000 and after . . .. . . . . . .     202,948
                                            $  545,646

(7) INCOME TAXES

    On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration and
production operations, and exited its oil and gas exploration and production
activities.  The gain from the sale of Terra amounted to $237,200,000 for tax
reporting purposes.  During 1983, and prior to the sale of the Terra stock,
Farmland received certain distributions from Terra totaling $24,800,000.  For
tax purposes, Farmland claimed intercorporate dividends-received deductions for
the entire amount of such distributions.

    On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
notice to Farmland asserting deficiencies in federal income taxes (exclusive of
statutory interest thereon) in the aggregate amount of $70,775,000.  The
asserted deficiencies relate primarily to the Company's tax treatment of the
sale of the Terra stock and the distributions received from Terra prior to the
sale.  The IRS asserts that Farmland incorrectly treated the Terra sale gain as
income against which certain patronage-sourced operating losses could be
offset, and that, as a nonexempt cooperative, Farmland was not entitled to an
intercorporate dividends-received deduction in respect of the 1983 distribution
by Terra.  It further asserts that Farmland incorrectly characterized gains for
tax purposes aggregating approximately $14,600,000, and a loss of approximately
$2,300,000, from the disposition of certain other assets.  On June 11, 1993,
Farmland filed a petition in the United States Tax Court contesting the
asserted deficiencies in their entirety.  Discovery and other pre-trial phases
of the litigation have since been ongoing.  The case is scheduled for trial on
March 6, 1995.

    If the IRS ultimately prevails on all of the adjustments asserted in the
statutory notice, Farmland would have additional federal and state income tax
liabilities aggregating approximately $85,800,000 plus accumulating statutory
interest thereon through October 31, 1994, of approximately $154,900,000
(before tax benefits of the interest deduction).  In addition, such adjustments
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $5,000,000 plus applicable statutory interest
thereon.

    No provision has been made in the consolidated financial statements for
federal or state income taxes (or interest thereon) in respect of the IRS
claims described above.  Farmland believes that it has meritorious positions
with respect to all of these claims and will continue to vigorously pursue
their favorable resolution through the pending litigation.

    In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
likely than not that the courts will ultimately conclude that (i) Farmland's
treatment of the Terra sale gain was substantially, if not entirely, correct;
and (ii) Farmland properly claimed a dividends-received deduction in respect of
the 1983 distributions which it received from Terra prior to the sale of the
Terra stock.  Counsel has further advised, however, that none of the issues
involved in these disputes is free from doubt, and that there can be no
assurance that the courts will ultimately rule in favor of Farmland on any of
these issues.

    Should the IRS ultimately prevail on all of its asserted claims, all
claimed federal and state income taxes as well as accrued interest would become
immediately due and payable, and would be charged to current operations.  In
such case, the Company would be required to renegotiate agreements with its
banks to maintain compliance with various requirements of such agreements,
including working capital and funded indebtedness provisions.  However, no
assurance can be given that such renegotiation would be successful. 
Alternatives could include other financing arrangements or the possible sale of
assets.

    The Company adopted FASB Statement 109 effective September 1, 1993.  The
cumulative effect of this change in accounting for income taxes was immaterial. 
Prior years' financial statements have not been restated to apply the
provisions of Statement 109.
<TABLE>
    Income tax expense (benefit) attributable to income from continuing
operations is comprised of the following:
<CAPTION>
                                         Year Ended August 31         
                                 1994              1993               1992   
                                        (Amounts in Thousands)
         <S>                 <C>               <C>                 <C>
         Federal:
            Current  . . . . $     10,076      $     (2,502)       $    6,600
            Deferred . . . .       (3,217)           (2,944)            1,490
                             $      6,859      $     (5,446)       $    8,090
         State:
            Current  . . . . $      1,965      $       (468)       $    1,106
            Deferred . . . .         (755)             (519)              262
                             $      1,210      $       (987)       $    1,368
         Foreign:
            Current  . . . . $     (2,117)     $       -0-         $      -0-
            Deferred . . . .       (1,062)             -0-                -0-
                             $     (3,179)     $       -0-         $      -0-
                             $      4,890      $     (6,433)       $    9,458
</TABLE>

<TABLE>
    Income tax expense (benefit) attributable to income from continuing
operations differs from the "expected" income tax expense (benefit) using
statutory rate of 35% (34% for 1993 and 1992), as follows:
<CAPTION>
                                                                         Year Ended August 31            
                                                                  1994           1993           1992    
 <S>                                                             <C>            <C>            <C>
 Computed "expected" income tax expense (benefit) 
      on income (loss) before income taxes   . . . . . . . . .   35.0  %       (34.0) %        34.0   %

 Increase (reduction) in income tax expense (benefit)
 attributable to:
      Patronage refunds  . . . . . . . . . . . . . . . . . . .  (33.3)          (4.0)          (9.2)
      Utilization of member-sourced losses   . . . . . . . . .    -0-             -0-         (11.4)
      Patronage-sourced items for 
            which no benefit is available  . . . . . . . . . .    -0-           26.5            -0-
      State income tax expense (benefit) net of
            federal income tax effect  . . . . . . . . . . . .    1.1           (2.2)           1.2
      Benefit associated with exempt income of
            foreign sales corporation  . . . . . . . . . . . .    -0-           (1.4)          (1.5)
      Other, net   . . . . . . . . . . . . . . . . . . . . . .    3.8           (2.7)            .3    
 Income tax expense (benefit)  . . . . . . . . . . . . . . . .    6.6  %       (17.8) %        13.4   %
</TABLE>

    The tax effect of temporary differences that give rise to significant
portions of deferred tax liabilities and deferred tax assets at August 31, 1994
is as follows:
                                          August 31, 1994
                                       (Amounts in Thousands)
   Deferred tax liabilities:
      Property, plant and equipment 
         principally due to 
         differences in depreciation  . . . $   20,242
      Prepaid pension cost  . . . . . . . .     21,124
      Other . . . . . . . . . . . . . . . .     14,021
         Total gross deferred 
         liabilities  . . . . . . . . . . . $   55,387

   Deferred tax assets:
      Safe harbor leases  . . . . . . . . . $    5,391
      Accrued expenses  . . . . . . . . . .     27,017
      Accounts receivable, principally due to
         allowance for doubtful accounts  .      4,394
      Other . . . . . . . . . . . . . . . .     12,245
         Total gross deferred assets  . . . $   49,047

   Net deferred tax liability . . . . . . . $    6,340

    A valuation allowance for deferred tax assets was not necessary at August
31, 1994.

    The significant components of deferred income tax benefit attributable to
income from continuing operations for the year ended August 31, 1994 are as
follows:

                                            August 31, 1994
                                     (Amounts in Thousands)
   Deferred tax benefit . . . . . . . . . . $   (8,044)

   Charge in lieu of taxes resulting 
      from initial recognition 
      of acquired tax benefits that 
      are allocated to reduce 
      goodwill related to the 
      acquired entity . . . . . . . . . . .      3,010
                                            $   (5,034)

    Deferred income taxes for the year ended August 31, 1993 and 1992 result
from timing differences in the recognition of income and expenses for financial
reporting and income tax reporting purposes.  The sources of these timing
differences and their tax effect are as follows:
<TABLE>
<CAPTION>
                                         Year Ended August 31
                                          1993          1992   
                                         (Amounts in Thousands)
   <S>                                  <C>           <C>
   Depreciation . . . . . . . . . . . . $    473      $   1,562
   Safe harbor lease rentals  . . . . .     (378)          (478)
   Provision for loss on proposed
      sale of assets  . . . . . . . . .    3,454)           -0-
   Unfunded pension expense . . . . . .     (355)          (129)
   Reinstatement of deferred income 
      taxes previously 
      offset by net operating 
      loss carryforward 
      for financial reporting 
      purposes  . . . . . . . . . . . .      -0-          1,294
   Other, net . . . . . . . . . . . . .      251           (497)
                                        $ (3,463)     $   1,752
</TABLE>

    At August 31, 1994, Farmland and its consolidated subsidiaries have
alternative minimum tax credit carryforwards of approximately $7,025,000.

    The tax benefit for the year ended August 31, 1993 results from the
carryback of nonpatronage-sourced losses to reduce the amount of federal and
state income taxes paid during prior years.

    During the year ended August 31, 1994, Farmland utilized nonmember-sourced
loss carryforwards amounting to $7,525,000 to reduce goodwill for financial
reporting purposes by $3,010,000. 

    During the year ended August 31, 1992, all of Foods' nonmember-sourced loss
carryforwards were utilized and deferred income taxes amounting to $1,294,000
were reinstated.  During the year ended August 31, 1992, Farmland utilized
nonmember-sourced loss carryforwards amounting to $3,168,000 to reduce income
tax expense for financial reporting purposes by $1,267,000.  Utilization of
these loss carryforwards has been presented as an extraordinary item in the
accompanying consolidated statement of operations for the year ended August 31,
1992.

    In connection with the acquisition of Union Equity, Farmland acquired
member-sourced and nonmember-sourced loss carryforwards from Union Equity
amounting to approximately $18,600,000 and $10,600,000, respectively.  For the
year ended August 31, 1992, Farmland was able to utilize member-sourced and
nonmember-sourced loss carryforwards amounting to $18,600,000 and $2,800,000,
respectively.  The benefit of the utilization of the nonmember-sourced loss
carryforward amounting to $1,134,000 was recorded as a reduction of goodwill. 
See note 2 of the notes to consolidated financial statements.


(8) MINORITY OWNERS' EQUITY IN SUBSIDIARIES
<TABLE>
    A summary of the equity of subsidiaries owned by others is as follows:
<CAPTION>
                                                  August 31   
                                               1994       1993  
                                          (Amounts in Thousands)
   <S>                                      <C>         <C>
   Farmland Foods, Inc.                     $    5,618  $   6,401
   National Beef Packing Company, 
      L.P. and G.P.                              2,925      7,865
   Heartland Wheat Growers, L.P. and G.P.        2,100       -0-
   Other subsidiaries                            1,090      1,097
                                            $   11,733  $  15,363
</TABLE>


(9) PREFERRED STOCK, EARNED SURPLUS AND OTHER EQUITIES

<TABLE>
    A summary of preferred stock is as follows:
<CAPTION>
                                                  August 31   
                                               1994       1993  
                                          (Amounts in Thousands)
  <S>                                         <C>        <C>
  Preferred shares, $25 par value - 
     Authorized 8,000,000 shares:
     6% - 608 shares issued and outstanding
       (624 shares in 1993)   . . . . . . . . $   15    $    15
     5-1/2% - 2,592 shares issued and 
       outstanding
       (2,832 shares in 1993)   . . . . . . .     65         71
     Series F - 144,869 shares 
       issued and outstanding
       (144,869 shares in 1993)   . . . . . .  3,622      3,622
                                              $3,702     $3,708
</TABLE>

    The 5-1/2% and 6% preferred stocks have preferential liquidation rights
over the Series F preferred stock.  Dividends on the 5-1/2% and 6% preferred
stock are cumulative if declared by the Farmland Board of Directors and only to
the extent earned each year.  Series F preferred stock is nondividend bearing. 
Upon liquidation, holders of all preferred stock are entitled to the par value
thereof and, with respect to the 5-1/2% and 6% preferred stock, any declared or
unpaid earned dividends.
<TABLE>
    A summary of earned surplus and other equities is as follows:
<CAPTION>
                                                  August 31   
                                               1994      1993   
                                          (Amounts in Thousands)
   <S>                                      <C>         <C>
   Earned surplus . . . . . . . . . . . . . $  130,250  $ 123,974
   Patronage refund payable in equities . .     44,032       -0-
   Nonmember capital  . . . . . . . . . . .        103        104
   Capital credits  . . . . . . . . . . . .     32,547     38,105
   Unallocated equity . . . . . . . . . . .      -0-        6,021
   Additional paid-in surplus . . . . . . .      1,603      1,603
   Currency translation adjustment  . . . .        (54)       -0-
                                            $  208,481  $ 169,807
</TABLE>

    In accordance with the bylaws of Farmland, the member-sourced portion of
its net income or loss and the resulting patronage refund payable to members
and patrons are determined annually.  The bylaws provide that the amount of the
patronage refund payable be reduced if immediately after the payment of such
patronage refund, the amount of earned surplus would be less than 30% of the
previous year-end balance of members' equity accounts (defined for this purpose
as the sum of common stock, associate member common stock, capital credits,
nonmember capital and patronage refunds payable in equities).  The reduction of
patronage refunds is limited to the lesser of 15% or the amount required to
increase the balance of the earned surplus account to the required 30%.  As of
August 31, 1994 and 1993, earned surplus exceeded the required amount by
approximately $2,329,000 and $3,874,000, respectively.  The patronage refund
payable for 1994 is $70,584,000.  The cash portion is $26,552,000 and is
included in "Other current liabilities" in the consolidated balance sheet at
August 31, 1994.  The balance ($44,032,000) of the patronage refund is payable
in equities of Farmland and is included in the consolidated balance sheet as
"Earned surplus and other equities."  No patronage refunds were paid by
Farmland for 1993.  The patronage refund for 1992 was $17,449,000, all of which
was paid in cash.

    Farmland maintains a base capital plan.  The plan's objectives are as
follows:  1) to achieve proportionality between the dollar amount of business a
member or associate member of Farmland ("Participant") transacts with Farmland
and the par value of Farmland equity which the Participant should hold
(hereinafter referred to as the Participants' "Base Capital Requirement"); and,
2) provide a method for the Board of Directors, in its discretion, to redeem
equities held by a Participant when the par value of the Participant's
investment exceeds the Participant's Base Capital Requirement.  This plan
provides that the relationship between the par value of a Participant's
investment in Farmland equity and the Participant's Base Capital Requirement
shall influence the cash portion of any patronage refund paid to the
Participant.

    The Base Capital Requirement shall be determined annually by the Farmland
Board of Directors at its sole discretion.  At August 31, 1994, common stock
and associate member common stock with a par value of $8,740,000 have been
approved for redemption by the Board of Directors under the base capital plan
and such amounts have been included in "Other current liabilities" in the
consolidated balance sheet at August 31, 1994.

    Farmland maintains an estate settlement plan for redemption of equities
held by estates of deceased individuals (except equities purchased and held
less than five years) and a special equity redemption plan to redeem equities
of holders who do not participate in the Farmland base capital plan.  Under
these plans,  the Board of Directors, in its discretion, may redeem equities
based on certain factors, including the financial position and consolidated net
income of the Company.  A priority for redeeming equities under these plans has
been established.  

    At August 31, 1994, certain equities of Farmland with a face amount of
$3,448,000 and capital equity fund certificates held by certain members of
Farmland Foods, Inc. in the amount of $747,000 have been approved by the Board
of Directors for redemption under the estate settlement and special equity
redemption plan.  Accordingly, such amounts have been included in "Other
current liabilities" in the consolidated balance sheet at August 31, 1994.

    Nonmember capital represents patronage refunds distributed in the form of
book credits.

    Capital credits are issued:  1) for payment of patronage refunds to patrons
who do not satisfy requirements for membership or associate membership; and,
2) upon conversion of common stock or associate member common stock held by
persons who do not meet qualifications for membership or associate membership
in Farmland.  

    Unallocated equity represents the cumulative difference between the amount
of member-sourced income for financial reporting and income tax reporting
purposes.  

    Additional paid-in surplus results from members donating Farmland equity to
Farmland.

    None of the aforementioned equities are held by or for the account of
Farmland or in any sinking or other special fund of Farmland and none have been
pledged by Farmland.


(10)    CONTINGENT LIABILITIES AND COMMITMENTS

    The Company leases various equipment and real properties under long-term
operating leases.  For the years ended August 31, 1994, 1993 and 1992, rental
expenses totaled $41,794,000, $41,104,000 and $43,300,000, respectively. 
Rental expense is reduced for mileage credits received on leased railroad cars
($1,866,000 in 1994, $1,939,000 in 1993 and $663,000 in 1992).

    The leases have various remaining terms ranging from one year to fifteen
years.  Some leases are renewable, at Farmland's option, for additional
periods.  The minimum amount Farmland must pay for these leases during the
fiscal years ending August 31 are as follows:

                                 (Amounts in Thousands)
               1995   . . . . . . . . .  $  49,883
               1996   . . . . . . . . .     40,275
               1997   . . . . . . . . .     36,154
               1998   . . . . . . . . .     29,440
               1999   . . . . . . . . .     22,209
               2000 and after   . . . .     69,008
                                         $ 246,969

    Farmland and its subsidiaries are involved in various lawsuits incidental
to the businesses.  In the opinion of management, the ultimate resolution of
these litigation issues will not have a material adverse effect on the
Company's consolidated financial statements.

    The Company has certain throughput agreements, take-or-pay agreements,
minimum quantity agreements, and minimum charge agreements for various raw
material supplies and services through 1996.  The Company's minimum obligations
under such agreements are $1,248,000 in 1995 and $924,000 in 1996.

    The Company has been designated by the Environmental Protection Agency as a
potentially responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), at various National
Priority List ("NPL") sites.  In addition, the Company is aware of possible
obligations associated with environmental matters at other sites, including
sites where no claim or assessment has been made.  The Company's probable and
reasonably determinable obligations for resolution of environmental matters at
NPL and other sites are estimated to be $7,164,000 and such amount has been
accrued.

    The ultimate costs of resolving environmental matters are not quantifiable
because many such matters are in preliminary stages and the timing and extent
of actions which governmental authorities may ultimately require are unknown. 
It is possible that the costs of such resolution may be greater than the
liabilities which, in the opinion of management, are probable and reasonably
determinable at August 31, 1994.  In the opinion of management, it is
reasonably possible for such costs to approximate $39,000,000 and to extend
over 30 years.

    CFA has loans receivable from customers engaged in pork production
operations and from cooperative associations which are guaranteed by Farmland. 
At August 31, 1994, such guarantees amounted to $5,868,000.  In addition,
Farmland has issued letters of credit to support borrowing arrangements of a
subsidiary as described in note 6.

    At August 31, 1994, the Company was committed to expenditures for
acquisition and completion of construction of plant and equipment aggregating
approximately $19,000,000.

(11)    EMPLOYEE BENEFIT PLANS

    The Farmland Industries, Inc. Employee Retirement Plan ("the Plan") is a
defined benefit plan covering substantially all employees of Farmland and its
subsidiaries who meet minimum age and length-of-service requirements.  Benefits
payable under the Plan are based on years of service and the employee's average
compensation during the highest four of the employee's last ten years of
employment.

    The assets of the Plan are maintained in a trust fund.  The majority of the
Plan's assets are invested in common stocks, corporate bonds, United States
Government securities and short-term investment funds.

    The Company's funding policy is to make the maximum annual contribution to
the Plan's trust fund that can be deducted for federal income tax purposes.  

    The Company charges pension cost as accrued based on actuarial valuation of
the Plan.

<TABLE>
    Components of the Company's pension cost are as follows:
<CAPTION>
                                                                               August 31            
                                                                  1994            1993            1992    
                                                                          (Amounts in Thousands)
      <S>                                                      <C>                 <C>         <C>
      Service cost - benefits earned during the period . . .   $     8,663     $     7,449     $     6,519
      Interest cost on projected benefit obligation  . . . .        15,292          12,134          11,332
      Actual return on Plan assets . . . . . . . . . . . . .       (10,949)        (15,842)        (20,591)
      Net amortization and deferral  . . . . . . . . . . . .        (7,860)           (374)          4,027
         Pension expense . . . . . . . . . . . . . . . . . .   $     5,146     $     3,367     $     1,287
</TABLE>

    The discount rate and the rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligations at August 31, 1994 were 8.0% and 4.5%, respectively (8.5% and 5% at
August 31, 1993, and 9% and 5% at August 31, 1992, respectively).  The expected
long-term rate of return on assets at August 31, 1994, 1993 and 1992 were 8.5%,
8.5% and 9%, respectively.  

<TABLE>
    The following table sets forth the Plan's funded status and amounts
recognized in the Company's consolidated balance sheet at August 31, 1994 and
1993.  Such prepaid pension cost is based on the Plan's funded status as of May
31, 1994 and 1993.
<CAPTION>
                                                                                       August 31          
                                                                                  1994               1993     
                                                                                    (Amounts in Thousands)
 <S>                                                                         <C>                <C>
 Actuarial present value of benefit obligations:
      Vested benefits  . . . . . . . . . . . . . . . . . . . . . . . . . .   $      148,648     $      123,061
      Nonvested benefits   . . . . . . . . . . . . . . . . . . . . . . . .            9,163              7,102
      Accumulated benefit obligation   . . . . . . . . . . . . . . . . . .   $      157,811     $      130,163
      Increase in benefits due to future compensation increases  . . . . .           53,533             51,633
      Projected benefit obligation   . . . . . . . . . . . . . . . . . . .   $      211,344     $      181,796
      Estimated fair value of Plan assets  . . . . . . . . . . . . . . . .          226,681            212,647
      Plan assets in excess of projected benefit obligation  . . . . . . .   $       15,337     $       30,851
      Unrecognized net loss from past experience different
            from that assumed and effects of changes
            in assumptions . . . . . . . . . . . . . . . . . . . . . . . .           37,332             21,754
      Unrecognized net transition asset being 
            recognized over 10 years . . . . . . . . . . . . . . . . . . .             (933)            (1,866)
      Unrecognized prior service cost  . . . . . . . . . . . . . . . . . .            1,308              2,590
 Prepaid pension cost at end of year . . . . . . . . . . . . . . . . . . .   $       53,044     $       53,329
</TABLE>

    The Company provides group life insurance benefits for retired employees
who were hired before January 1, 1988 and reach normal retirement age while
working for the Company.  Prior to 1994, the Company charged operations for the
amount of an annual insurance premium paid for group life insurance covering
both retired and active employees.  In 1994, the cost of providing group life
insurance for retired employees was not separable from the cost of providing
group life insurance for active employees.  For the years ended August 31, 1993
and 1992, such insurance premium were $1,178,000 and $783,000, respectively.

    In fiscal year 1994, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" and the effect was insignificant.

    Statement of Financial Accounting Standards No. 112, "Employer's Accounting
for Postemployment Benefits," was issued by the FASB in November 1992 and is
effective for fiscal years beginning after December 15, 1993 (the Company's
1995 fiscal year).  Statement 112 establishes standards of accounting and
reporting for the estimated cost of benefits provided to former or inactive
employees.  Management expects that the adoption of Statement 112 will not have
a significant impact on the Company's consolidated financial statements.


(12)    INDUSTRY SEGMENT INFORMATION

    The Company's business is conducted within three general operating areas: 
cooperative farm supply operations, cooperative marketing operations and other
operations.  As a farm supply cooperative, the Company engages in manufacturing
and wholesale distribution of input products of agricultural production.  The
Company's principal farm supply products are petroleum, crop production and
feed.

    Petroleum products include gasoline, distillate, diesel fuel, propane, lube
oils, grease and automotive parts and accessories.  Products in the crop
production area include nitrogen, phosphate and potash fertilizers, herbicides,
insecticides and other farm chemicals.  Feed products include a complete line
of formulated feeds.  Supply products are sold primarily at wholesale to local
farm cooperatives.

    Marketing operations include pork and beef processing, marketing and the
distribution of fresh meat products, ham, bacon, sausage, deli meats, Italian
specialty meats and boxed beef, and the marketing and storage of grain.

    Other operations include convenience fuel and food stores, farm supply
stores, finance company operations and services such as accounting, financial,
management, environmental and safety, and transportation.  See note 2 of the
notes to consolidated financial statements.

    The operating income (loss) of each industry segment includes the revenue
generated on transactions involving products within that industry segment less
identifiable and allocated expenses.  In computing operating income (loss) of
industry segments none of the following items has been added or deducted: 
interest expense, interest income, other income (deductions) or corporate
expenses (included in the statements of operations as selling, general and
administrative expenses), which cannot practicably be identified or allocated
by industry segment.  Operating income (loss) of industry segments for the
years ended August 31, 1993 and 1992 have been restated for comparative
purposes to exclude certain costs which were not identified to business
segments in 1994 but which were identified to business segments in 1993 and
1992.  Corporate assets include cash, investments in other cooperatives, the
corporate headquarters of Farmland and certain other assets.

<TABLE>
    Following is a summary of industry segment information as of and for the
years ended August 31, 1994, 1993 and 1992:
<CAPTION>
                                                                                              Unallocated
                                                             Cooperative                       Corporate
                         Cooperative Farm Supply             Marketing and                     Items and
                                  Crop                        Processing             Other    Inter-Segment
                    Petroleum   Production    Feed        Foods        Grain       Operations  Eliminations Consolidated
                                                         (Amounts in Thousands)
 <S>                <C>         <C>          <C>         <C>          <C>          <C>         <C>         <C>
 1994
 Sales to 
   unaffiliated 
   customers . . .  $  855,479  $ 1,163,357  $  527,864  $ 2,355,599  $ 1,627,156  $  148,478  $      -0-  $ 6,677,933
 Transfers 
   between 
   segments  . . .       4,843        9,513       2,072        3,007          -0-       -0-       (19,435)      -0-
 Total sales 
   and transfers .  $  860,322  $ 1,172,870  $  529,936  $ 2,358,606  $ 1,627,156  $  148,478  $  (19,435) $ 6,677,933
 Operating 
   income (loss) of
   industry 
   segments  . . .  $   27,172  $   126,047  $   17,019  $    20,634  $   (33,455) $   (2,368)             $   155,049
 Equity in 
   income (loss)
   of investees 
   (note 4)  . . .  $      (41) $    15,466  $      155  $    (4,404) $       -0-  $     (298)             $    10,878
 General corporate 
   expenses  . . .                                                                                             (66,479)
 Other corporate 
   income  . . . .                                                                                              26,281
 Interest expense                                                                                              (51,485)
 Minority interest                                                                                               4,522
 Income before income taxes and
   extraordinary item                                                                                      $    78,766
 Identifiable assets at
   August 31, 
   1994  . . . . .  $  306,366  $   357,178  $   92,767  $   395,159  $   341,367  $   62,301              $ 1,555,138
 Investment in and advances to
   investees . . .  $      746  $    76,439  $    1,761  $    13,927  $       -0-  $    8,560  $      -0-  $   101,433
 Corporate assets                                                                                              270,060
 Total assets  . .                                                                                         $ 1,926,631
 Provision for depreciation and
   amortization  .  $    9,911  $    14,700  $    3,815  $    16,776  $     4,011  $    7,982  $    5,765  $    62,960
 Capital expenditures 
   (including
   $16,888,000 of 
   capital assets
   of business 
   acquired) . . .  $   14,399  $    14,136  $    4,508  $    19,040  $     6,256  $   26,051  $    2,274  $    86,664


 1993
 Sales to 
   unaffiliated 
   customers . . .  $  887,389  $   884,811  $  479,205  $ 1,412,634  $   953,521  $  105,380  $      -0-  $ 4,722,940
 Transfers between 
   segments  . . .       5,591        7,970       2,330        3,496          -0-         -0-     (19,387)         -0-
 Total sales 
   and transfers .  $  892,980  $   892,781  $  481,535  $ 1,416,130  $   953,521  $  105,380  $  (19,387) $ 4,722,940
 Operating income 
   (loss) of
   industry 
   segments  . . .  $   (4,602) $    51,654  $   20,676  $    16,485  $       104  $    2,262              $    86,579
 Equity in income (loss)
   of investees 
   (note 4)  . . .  $        2  $    (8,223) $      (35) $    (3,306) $       -0-  $     (832)             $   (12,394)
 Provision for 
   loss on disposition
   of assets 
   (note 17) . . .     (20,022)      (6,155)                  (3,253)                                          (29,430)
 General corporate expenses                                                                                    (57,721)
 Other corporate income                                                                                         13,725
 Interest expense                                                                                              (36,764)
 Minority interest                                                                                                (828)
 (Loss) before income taxes and
   extraordinary item                                                                                      $   (36,833)
 Identifiable assets at
   August 31, 
   1993  . . . . .  $   308,731 $   324,956  $   94,948  $   391,152  $   254,734  $   35,986              $ 1,410,507
 Investment in 
   and advances to
   investees . . .  $      526  $    72,166  $    1,572  $    18,686           -   $    3,553  $    1,606  $    98,109
 Corporate assets                                                                                              211,365
 Total assets  . .                                                                                         $ 1,719,981
 Provision for 
   depreciation and
   amortization  .  $   13,546  $    13,843  $    4,487  $    10,807  $     2,637  $    3,369  $    9,041  $    57,730
 Capital expenditures 
   (including
   $48,362,000 
   of capital assets
   of business 
   acquired) . . .  $   35,629  $    17,972  $    6,590  $    73,561  $     1,894  $    3,613  $    7,341  $   146,600


 1992
 Sales to 
   unaffiliated 
   customers . . .  $  979,542  $   897,820  $  445,338  $   850,103  $   155,169  $  101,335  $      -0-  $ 3,429,307
 Transfers 
   between segments      5,727        9,744       2,531        4,064          -0-         -0-     (22,066)         -0-
 Total sales 
   and transfers .  $  985,269  $   907,564  $  447,869  $   854,167  $   155,169  $  101,335  $  (22,066) $ 3,429,307
 Operating 
   income (loss)
   of industry 
   segments  . . .  $    8,241  $   111,907  $   21,346  $    25,162  $      (726) $   (5,018)             $   160,912
 Equity in 
   loss of investees
   (note 4)  . . .  $      (31) $    (1,362) $       15                            $     (963)             $    (2,341)
 General corporate expenses                                                                                    (66,982)
 Other corporate income                                                                                          6,880
 Interest expense                                                                                              (27,965)
 Income before income taxes
   and extraordinary item                                                                                  $    70,504
 Identifiable assets at
   August 31, 
   1992  . . . . .  $  289,021  $   313,943  $   76,300  $   201,726  $   173,376  $  207,274              $ 1,261,640
 Investment in and advances 
   to investees  .  $      139  $    66,899  $    1,143  $     6,004  $     1,197  $    4,408              $    79,790
 Corporate assets                                                                                              184,962
 Total assets  . .                                                                                         $ 1,526,392
 Provision for 
   depreciation and 
   amortization  .  $   12,269  $    14,888  $    3,013  $     9,051  $       613  $    4,513  $    6,437  $    50,784
 Capital expenditures 
   (including 
   $47,977,000 of 
   capital assets 
   of business 
   acquired) . . .  $   25,089  $    17,119  $    5,115  $    14,862  $    48,440  $   11,141  $    6,165  $   127,931
</TABLE>


(13)    SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK

    Farmland extends credit to its customers on terms no more favorable than
standard terms of the industries it serves.  A substantial portion of
Farmland's receivables are concentrated in the agricultural industry. 
Collections on these receivables may be dependent upon economic returns from
farm crop and livestock production.  The Company's credit risks are continually
reviewed and management believes that adequate provisions have been made for
doubtful accounts.

    Farmland maintains investments in and advances to cooperatives, cooperative
banks and joint ventures from which it purchases products or services.  A
substantial portion of the business of these investees is dependent upon the
agribusiness economic sector.  See note 4 of the notes to consolidated
financial statements. 


(14)    DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

<TABLE>
    Estimates of fair values are subjective in nature and involve uncertainties
and matters of significant judgment and therefore cannot be determined with
precision.  Changes in assumptions could affect the estimates.  Except as
follows, the fair market value of the Company's financial instruments
approximates the carrying value:
<CAPTION>
                                                  August 31, 1994                     August 31, 1993   
                                              Carrying            Fair            Carrying            Fair
                                               Amount             Value            Amount             Value   
                                                                    (Amounts in Thousands)
 <S>                                         <C>               <C>               <C>               <C>
 FINANCIAL ASSETS:
      Investment and long-term receivables:
          Notes receivable from investees,
           20% to 50% owned  . . . . . . .   $    48,955       $    45,414       $    60,204       $    58,111
          National Bank for Cooperatives .        28,786              ****            31,824              ****
          Other cooperatives:
              Equities . . . . . . . . . .        28,132              ****            22,877              ****
              Notes receivable . . . . . .        14,530            13,385            14,813            13,408
 FINANCIAL LIABILITIES:
      Long-term debt:
          Subordinated certificates of investment,
          capital investment certificates and
          subordinated monthly
          interest certificates  . . . . .   $   280,111       $   284,523       $   255,770       $   287,168
</TABLE>

    The estimated fair value of notes receivable has been determined by
discounting future cash flows using a market interest rate.

    The estimated fair value of the subordinated debt certificates was
calculated using the discount rate for subordinated debt certificates with
similar maturities currently offered for sale.

****Investments in National Bank for Cooperatives and other cooperatives'
equities which have been purchased are carried at cost and securities received
as patronage refunds are carried at par value, less provisions for other than
temporary impairment.  The Company believes it is not practicable to estimate
the fair value of these securities because there is no established market for
these securities and it is inappropriate to estimate future cash flows which
are largely dependent on future patronage earnings of the cooperatives.


(15)    RELATED PARTY TRANSACTIONS

    Farmland Hydro, L.P., Hyplains Beef, L.C. (50%-owned investees) and
National Beef Packing Company, L.P. (a 58%-owned consolidated limited
partnership) have credit agreements with various banks.  Borrowings under these
agreements are nonrecourse to Farmland and its other affiliates.  Cash
distributions by these entities to their owners are restricted by these credit
agreements.  To support the efforts of these entities to meet compliance
provisions of their credit agreements, Farmland advances funds and provides
management and administrative services to these entities, in certain instances,
on terms less advantageous to Farmland than transactions conducted by Farmland
in the ordinary course of its business.  At August 31, 1994, Farmland's equity
investments in and advances to these entities amounted to $132,613,000.

(16)    OTHER INCOME 

    In June 1993, the Company filed a lawsuit against 43 insurance carriers and
other parties (the "Defendants") seeking declaratory judgments regarding
Defendants' insurance coverage obligations for environmental remediation costs.
In fiscal year 1994, the Company negotiated settlements with 20 insurance
companies and as part of the settlements, the Company provided Defendants with
releases of various possible environmental obligations.  As a result of these
settlements, the Company received cash payments of $13,566,000 in 1994 and has
included such amount in the caption "Other income" in the consolidated
statement of operations for the year then ended. 

(17)    PROVISION FOR LOSS ON DISPOSITION OF ASSETS

    At August 31, 1993, management was negotiating to sell the Company's
refinery at Coffeyville, Kansas.  Based on the progress of negotiation and the
transactions contemplated, operations for the year ended August 31, 1993
included a $20,022,000 provision for loss on the sale of the refinery. 
Accordingly, the net carrying value of property, plant and equipment has been
reduced by $20,022,000 in the consolidated balance sheets at August 31, 1993. 
 The transactions contemplated were subject to certain conditions, including
negotiation of final agreements.  During 1994, management determined that final
sale terms anticipated by the potential purchaser were not in the Company's
best interest.  Accordingly, negotiations were terminated and the sale was not
consummated.

    In 1993, the Company entered discussions with a potential purchaser of a
dragline.  Based on these discussions, the Company estimated a loss of
$6,155,000 from the sale.  Accordingly, at August 31, 1993, the carrying value
of the dragline was written down by $6,155,000 and a provision for this loss
was included in the Company's consolidated statement of operations for the year
then ended.  In 1994, this sale was consummated on terms substantially as
expected.

    At August 31, 1993, the carrying value of a pork processing plant at Iowa
Falls, Iowa was written down by $3,253,000 to an estimated disposal value.

                     SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected consolidated financial data as of the end of, and
for each of the years in the five-year period ended August 31, 1994 are derived
from the consolidated financial statements of the Company, which consolidated
financial statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants.  The consolidated financial statements as of
August 31, 1994 and 1993 and for each of the years in the three-year period
ended August 31, 1994, and the independent auditors' report thereon, are
included elsewhere herein.  The information set forth below should be read in
conjunction with information included elsewhere herein:   Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
consolidated financial statements and related notes, and the independent
auditors' report which contains an explanatory paragraph concerning income tax
adjustments proposed by the Internal Revenue Service on the gain on sale of and
certain distributions by Terra Resources, Inc.
<TABLE>
<CAPTION>
                                                                 Year Ended August 31                         
                                          1994           1993           1992           1991          1990     
                                                                 (Dollars in Thousands)
 <S>                                 <C>            <C>            <C>            <C>            <C>
 Summary of Operation:  (1)(2)(3)
 Net Sales . . . . . . . . . . . . .  $  6,677,933  $   4,722,940  $   3,429,307  $   3,638,072  $   3,377,603
 Interest Expense (net of
   interest capitalized)   . . . . .  $     51,485  $      36,764  $      27,965  $      36,951  $      30,090
 Income (Loss) Before 
   Income Taxes and
   extraordinary item    . . . . . .  $     78,766  $     (36,833) $      70,504  $      50,166  $      58,184
 Net income (Loss) . . . . . . . . .  $     73,876  $     (30,400) $      62,313  $      42,693  $      48,580

 Distribution of Net Income:
 Patronage Refunds:
   Equity Reinvestments  . . . . . .  $     44,032  $       1,155  $       1,038  $      17,837  $      24,403
 Cash or Equivalent  . . . . . . . .        26,580            495         17,918         12,571          8,800
 Earned Surplus and 
   Other Equities  . . . . . . . . .         3,264        (32,050)        43,357         12,285         15,377
                                      $     73,876  $     (30,400) $      62,313  $      42,693  $      48,580
 Ratio of Earnings (Loss) to
   Fixed Charges (4)   . . . . . . .           2.2         Note 4            2.5            1.9            2.2

 Balance Sheets:
 Working Capital . . . . . . . . . .  $    290,704  $     260,519  $     208,629  $     122,124  $     121,518
 Property, Plant and 
   Equipment, Net  . . . . . . . . .  $    501,290  $     504,378  $     446,002  $     490,712  $     469,710
 Total Assets  . . . . . . . . . . .  $  1,926,631  $   1,719,981$     1,526,392  $   1,369,231  $   1,352,889
 Long-Term Debt  . . . . . . . . . .  $    517,806  $     485,861  $     322,377  $     291,192  $     273,071
 Capital Shares and Equities . . . .  $    585,013  $     561,707  $     588,129  $     497,364  $     476,011
<FN>
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for details.
</TABLE>

(1) On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
    ("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration and
    production operations, and exited its oil and gas exploration and
    production activities.  The gain from the sale of Terra amounted to
    $237,200,000 for tax reporting purposes.  During 1983, and prior to the
    sale of the Terra stock, Farmland received certain distributions from Terra
    totaling $24,800,000.  For tax purposes, Farmland claimed intercorporate
    dividends-received deductions for the entire amount of such distributions.

    On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
    notice to Farmland asserting deficiencies in federal income taxes
    (exclusive of statutory interest thereon) in the aggregate amount of
    $70,775,000.  The asserted deficiencies relate primarily to the Company's
    tax treatment of the sale of the Terra stock and the distributions received
    from Terra prior to the sale.  The IRS asserts that Farmland incorrectly
    treated the Terra sale gain as income against which certain
    patronage-sourced operating losses could be offset, and that, as a
    nonexempt cooperative, Farmland was not entitled to an intercorporate
    dividends-received deduction in respect of the 1983 distribution by Terra. 
    It further asserts that Farmland incorrectly characterized gains for tax
    purposes aggregating approximately $14,600,000, and a loss of approximately
    $2,300,000, from the disposition of certain other assets.  On June 11,
    1993, Farmland filed a petition in the United States Tax Court contesting
    the asserted deficiencies in their entirety.  Discovery and other pre-trial
    phases of the litigation have since been ongoing.  The case is scheduled
    for trial on March 6, 1995.

    If the IRS ultimately prevails on all of the adjustments asserted in the
    statutory notice, Farmland would have additional federal and state income
    tax liabilities aggregating approximately $85,800,000 plus accumulating
    statutory interest thereon through October 31, 1994, of approximately
    $154,900,000 (before tax benefits of the interest deduction).  In addition,
    such adjustments would affect the computation of Farmland's taxable income
    for its 1989 tax year and, as a result, could increase Farmland's federal
    and state income taxes for that year by approximately $5,000,000 plus
    applicable statutory interest thereon.

    No provision has been made in the consolidated financial statements for
    federal or state income taxes (or interest thereon) in respect of the IRS
    claims described above.  Farmland believes that it has meritorious
    positions with respect to all of these claims and will continue to
    vigorously pursue their favorable resolution through the pending
    litigation.

    In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
    likely than not that the courts will ultimately conclude that (i)
    Farmland's treatment of the Terra sale gain was substantially, if not
    entirely, correct; and (ii) Farmland properly claimed a dividends-received
    deduction in respect of the 1983 distributions which it received from Terra
    prior to the sale of the Terra stock.  Counsel has further advised,
    however, that none of the issues involved in these disputes is free from
    doubt, and that there can be no assurance that the courts will ultimately
    rule in favor of Farmland on any of these issues.

    Should the IRS ultimately prevail on all of its asserted claims, all
    claimed federal and state income taxes as well as accrued interest would
    become immediately due and payable, and would be charged to current
    operations.  In such case, the Company would be required to renegotiate
    agreements with its banks to maintain compliance with various requirements
    of such agreements, including working capital and funded indebtedness
    provisions.  However, no assurance can be given that such renegotiation
    would be successful.  Alternatives could include other financing
    arrangements or the possible sale of assets.

(2) During the year ended August 31, 1991, the Company changed its method for
    inventory pricing of certain petroleum inventories from the first-in, first
    out (FIFO) method previously used to the last-in, first out (LIFO) method
    because the LIFO method better matches current costs with current revenues. 
    Pro forma effects of retroactive application of the LIFO method are not
    determinable.

(3) Acquisitions and Dispositions:

    (a) In October 1993, the Company acquired approximately 53% of the common
        stock of National Carriers, Inc. ("NCI") and increased its ownership of
        NCI to 79% in August 1994.  NCI is a trucking company located in
        Liberal, Kansas.  NCI provides substantially all the trucking service
        needs of NBPC.  The purchase price of NCI ($4,423,000) was paid in
        cash.  See note 2 of the notes to consolidated financial statements.

    (b) In December 1993, the Company acquired all the common stock of seven
        international grain trading companies (collectively referred to as
        "Tradigrain").  The purchase price for Tradigrain ($31,367,000) was
        paid in cash.  See note 2 of the notes to consolidated financial
        statements.

    (c) During 1993, Farmland obtained a 58% interest in National Beef Packing
        Company, L.P. ("NBPC"), a limited partnership.  Effective April 15,
        1993, NBPC acquired Idle Wild Food's beef packing plant and feedlot
        located in Liberal, Kansas.  See note 2 of the notes to consolidated
        financial statements.

    (d) On August 30, 1993, Farmland reduced its ownership interest in The
        Cooperative Finance Association, Inc. ("CFA") to 49%.  In addition, CFA
        purchased the assets and operations of Farmland Financial Services
        Company ("FFSC").  Effective December 1, 1993, CFA owners approved a
        recapitalization plan which limits the voting rights of any owner
        (including Farmland) to 25% or less regardless of the number of voting
        shares held.  Effective August 31, 1993, CFA is not included in the
        consolidated balance sheet of the Company and Farmland is no longer
        engaged in commercial lending operations.

    (e) Effective June 30, 1992, the Company acquired the grain marketing
        assets of Union Equity Co-Operative Exchange ("Union Equity").  See
        note 2 of the notes to consolidated financial statements.
    <TABLE>
    (f) The following unaudited financial information for the year ended August
        31, 1993 and 1992 presents pro forma results of operations of the
        Company as if the disposition of CFA and the acquisition of NBPC had
        occurred at the beginning each period presented.  The pro forma
        financial information includes adjustments for amortization of
        goodwill, additional depreciation expense, and increased interest
        expense on debt assumed in the acquisitions.  The pro forma financial
        information does not necessarily reflect the results of operations that
        would have occurred had the Company been a single entity which excluded
        CFA and included Union Equity and NBPC for the full years 1993 and
        1992.  See note 2 of the notes to consolidated financial statements.
      <CAPTION>
                                      August 31 (Unaudited)
                                         1993        1992   
                                      (Amounts in Thousands)
   <S>                              <C>             <C>
         Net sales  . . . . . . . . $    5,357,867  $  5,441,303

         Income (loss) before 
           extraordinary item . . . $      (44,040) $     47,225
   </TABLE>

(4)   In computing the ratio of earnings to fixed charges, income (loss)
      represents pretax income (loss) for the enterprise as a whole including
      100% of such income (loss) of minority-owned subsidiaries which have
      fixed charges, the registrant's share of 50%-owned persons and any
      distributed earnings (but not losses or undistributed earnings) of
      less-than-fifty percent-owned persons plus fixed charges.  Fixed charges
      consist of interest and finance charges on all indebtedness plus that
      portion of rentals considered to be the interest factor.  Income was
      inadequate to cover fixed charges for the year ended August 31, 1993. 
      The dollar amount of the coverage deficiency was $36,609,000.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                           OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

    The Company maintains two primary sources for debt capital:  a continuous
public offering of its debt securities and bank lines of credit.

    The Company's debt securities are offered through a wholly-owned
broker/dealer subsidiary on a best-efforts basis.  The types of securities
offered include certificates payable on demand and five- and ten-year
subordinated debt certificates.  The total amount of such debt outstanding and
the flow of funds to, or from, the Company as a result of this public offering
is influenced by the rate of interest which Farmland establishes for each type
of debt certificate offered and by options of Farmland to call for redemption
certain of its outstanding debt certificates.  During 1994, the outstanding
balance of demand loan and subordinated debt certificates increased $17.6
million.

    In 1994, Farmland entered into a $650,000,000 syndicated credit facility
provided by eight domestic and international banking institutions.  This
agreement provides short-term credit of up to $450,000,000 to finance seasonal
operations and inventory, and revolving term credit of up to $200,000,000.  In
addition, this credit facility supports letters of credit issued by
participating banks on behalf of Farmland.  At August 31, 1994, short-term
borrowings under this facility were $217,399,000, revolving term borrowings
were $95,000,000 and $62,600,000 was being utilized to support letters of
credit. 

    Farmland pays commitment fees of 1/8 of 1% annually on the unused portion
of the short-term commitment and 1/4 of 1% annually on the unused portion of
the revolving term commitment.  In addition, Farmland must maintain
consolidated working capital of not less than $150,000,000, consolidated net
worth of not less than $475,000,000 and funded indebtedness and senior funded
indebtedness of not more than 52% and 43% of capitalization, respectively.  All
computations are based on consolidated financial data adjusted to exclude
nonrecourse subsidiaries (as defined in the credit agreement).  Computed in
accordance with the agreement, at August 31, 1994, working capital was
$207,383,000, net worth was $585,013,000 and funded indebtedness and senior
funded indebtedness were 47.03% and 23.34% of capitalization, respectively.

    In addition to the syndicated credit facility, Farmland has credit
facilities with various commercial banks.  At August 31, 1994, Farmland's
available credit from commercial banks under committed and uncommitted
arrangements was $26.2 million and $37.2 million, respectively.  Borrowings
under these committed and uncommitted credit facilities were $26.2 million and
$25.0 million, respectively, at August 31, 1994.  In addition, $2.2 million was
used to support letters of credit issued by such banks on Farmland's behalf. 
Financial covenants of these arrangements are not more restrictive than
Farmland's syndicated credit facilities.

    In the opinion of management, these arrangements for debt capital are
adequate for the Company's present operating and capital plans.  However,
alternative financing arrangements are continuously evaluated.

    National Beef Packing Company ("NBPC"), 58%-owned by Farmland, maintains
borrowing agreements with a bank which provides financing support for its beef
packing operations.  Borrowings under this credit agreement are nonrecourse to
Farmland or Farmland's other affiliates.  At August 31, 1994, NBPC's available
bank credit of $61,596,000 had been borrowed.  All assets of NBPC (carried at
$150,409,000) are pledged to support its borrowings.  At August 31, 1994,
Farmland had issued letters of credit in the amount of $15,000,000 to support
NBPC's bank credit agreements.

    Tradigrain has borrowing agreements with various international banks which
provide financing and letters of credit to support current international grain
trading transactions.  Obligations of Tradigrain under these loan agreements
are nonrecourse to the Company.

    Leveraged leasing has been utilized to finance data processing equipment,
railcars, and a substantial portion of nitrogen fertilizer production
equipment.  Under the most restrictive covenants of its leases, the Company has
agreed to maintain working capital of at least $75 million, consolidated funded
indebtedness not greater than 65% of consolidated capitalization, and
consolidated senior funded indebtedness not greater than 50% of consolidated
capitalization.

    As a cooperative, a portion of Farmland's annual net income is distributed
to its members, associate members and patrons with which it is a party to a
currently effective patronage refund agreement.  For this purpose, annual net
income or loss shall be determined in accordance with income tax regulations in
1994 and in accordance with generally accepted accounting principles in 1995
and after.  Such income is identified to transactions with members eligible to
receive patronage refunds ("member-sourced income") or to transactions with
parties not entitled to receive patronage refunds ("nonmember-sourced income"). 
The annual nonmember-sourced income or loss is adjusted for the amount of
applicable income tax expense or benefit thereon and the amount remaining is
transferred to retained earnings.  The member-sourced income is distributed to
members as patronage refunds unless the earned surplus account, after such
distribution, would be lower than 30% of the sum of the prior year-end balance
of outstanding common stock, associate member stock, capital credits, nonmember
capital and patronage refunds for reinvestment.  In such cases, member-sourced
income shall be reduced by the lesser of 15% or an amount required to increase
the earned surplus account to the required 30%.  The amount by which the
member-sourced income is so reduced is treated as nonmember-sourced income. 
The member-sourced income remaining is distributed to members as patronage
refunds.  For the years ended August 31, 1994, 1993 and 1992, the earned
surplus account exceeded the required amount by $2.3 million, $3.8 million and
$49.5 million, respectively.  

    Generally, a portion of the patronage refund is distributed in cash and the
balance (the "invested portion") is distributed in common stock, associate
member common stock, or capital credits (depending on the membership status of
the recipient), or the Board of Directors may determine to distribute the
invested portion in any other form or forms of equities.  The invested portion
of the patronage refund is determined annually by the Board of Directors but
such invested portion shall not, for any year, exceed 80% of the total
patronage refunds.  The invested portion of the patronage refund is a source of
funds from operations which is retained for use in the business and increases
Farmland's equity base.  Common stock and associate member common stock
representing the invested portion of patronage refunds may be redeemed by cash
payments from Farmland to holders thereof who participate in Farmland's base
capital plan.  Capital credits and other equities of Farmland and Farmland
Foods, Inc. may be redeemed under other equity redemptions.  The base capital
plan and other equity redemption plans are explained under the heading "Equity
Redemption Plans."

    In 1994, operations generated a net cash inflow of $106.0 million.  Other
major cash sources include $34.6 million from dispositions of investments and
notes receivables, $17.6 million (net) from investors in demand loan and
subordinated debt certificates and $17.1 million from sales of property, plant
and equipment.

    The primary uses of cash include $69.8 million for capital additions or
improvements, $36.6 million (net) for repayment of bank loans and other notes
payable, $35.8 million for acquisition of businesses (Tradigrain and National
Carriers, Inc.) and $22.1 million for investments and notes receivables.

    On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration and
production operations, and exited its oil and gas exploration and production
activities.  The gain from the sale of Terra amounted to $237,200,000 for tax
reporting purposes.  During 1983, and prior to the sale of the Terra stock,
Farmland received certain distributions from Terra totaling $24,800,000.  For
tax purposes, Farmland claimed intercorporate dividends-received deductions for
the entire amount of such distributions.

    On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
notice to Farmland asserting deficiencies in federal income taxes (exclusive of
statutory interest thereon) in the aggregate amount of $70,775,000.  The
asserted deficiencies relate primarily to the Company's tax treatment of the
sale of the Terra stock and the distributions received from Terra prior to the
sale.  The IRS asserts that Farmland incorrectly treated the Terra sale gain as
income against which certain patronage-sourced operating losses could be
offset, and that, as a nonexempt cooperative, Farmland was not entitled to an
intercorporate dividends-received deduction in respect of the 1983 distribution
by Terra.  It further asserts that Farmland incorrectly characterized gains for
tax purposes aggregating approximately $14,600,000, and a loss of approximately
$2,300,000, from the disposition of certain other assets.  On June 11, 1993,
Farmland filed a petition in the United States Tax Court contesting the
asserted deficiencies in their entirety.  Discovery and other pre-trial phases
of the litigation have since been ongoing.  The case is scheduled for trial on
March 6, 1995.

    If the IRS ultimately prevails on all of the adjustments asserted in the
statutory notice, Farmland would have additional federal and state income tax
liabilities aggregating approximately $85,800,000 plus accumulating statutory
interest thereon through October 31, 1994, of approximately $154,900,000
(before tax benefits of the interest deduction).  In addition, such adjustments
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $5,000,000 plus applicable statutory interest
thereon.

    No provision has been made in the consolidated financial statements for
federal or state income taxes (or interest thereon) in respect of the IRS
claims described above.  Farmland believes that it has meritorious positions
with respect to all of these claims and will continue to vigorously pursue
their favorable resolution through the pending litigation.

    In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
likely than not that the courts will ultimately conclude that (i) Farmland's
treatment of the Terra sale gain was substantially, if not entirely, correct;
and (ii) Farmland properly claimed a dividends-received deduction in respect of
the 1983 distributions which it received from Terra prior to the sale of the
Terra stock.  Counsel has further advised, however, that none of the issues
involved in these disputes is free from doubt, and that there can be no
assurance that the courts will ultimately rule in favor of Farmland on any of
these issues.

    Should the IRS ultimately prevail on all of its asserted claims, all
claimed federal and state income taxes as well as accrued interest thereon
would become immediately due and payable, and would be charged to current
operations.  In such case, the Company would be required to renegotiate
agreements with its banks to maintain compliance with various requirements of
such agreements, including working capital and funded indebtedness provisions. 
However, no assurance can be given that such renegotiation would be successful. 
Alternatives could include other financing arrangements or the possible sale of
assets.


RESULTS OF OPERATIONS

    The Company's revenues depend to a large extent on conditions in
agriculture and may be volatile due to factors beyond the Company's control,
such as weather, crop failures, federal agricultural programs, production
efficiencies, and direct imports or exports.  In addition, global variables
which affect supply, demand and price of crude oil and refined fuels impact the
Company's petroleum operations.  Management cannot determine the extent to
which future operations of the Company may be impacted by these factors.  The
Company's cash flow and net income may continue to be volatile as conditions
affecting agriculture and markets for the Company's products change.

<TABLE>
    The increase (decrease) in sales and operating profit by business segment
in each of the years in the three-year period ended August 31, 1994, compared
with the prior year is presented in the table below.  Management's discussion
of business segment sales, operating profit or loss and other factors affecting
the Company's income before income taxes and extraordinary item during 1994,
1993 and 1992 follows the table.
<CAPTION>
                                                                               Income Before Income Taxes and
                                                Sales-Increase (Decrease)  Extraordinary Item-Increase (Decrease)
                                              1994       1993       1992        1994       1993      1992
                                            Compared    Compared   Compared   Compared   Compared  Compared
                                            with 1993  with 1992   with 1991  with 1993 with 1992  with 1991
                                                    (Amounts in Millions)                   (Amounts in Millions)
 <S>                                        <C>       <C>        <C>         <C>       <C>        <C>
 Sales and Operating Profit of 
   Business Segments:
       Petroleum . . . . . . . . . . . . .  $    (32) $     (92) $    (210)  $     32  $     (13) $     17
       Crop Production . . . . . . . . . .       278        (13)      (138)        74        (60)      (13)
       Feed  . . . . . . . . . . . . . . .        49         34        (21)        (4)        (1)       (3)
       Food Processing and  Marketing  . .       943        563         21          4         (8)       14
       Grain Marketing*  . . . . . . . . .       674        798        155        (34)         1        (1)
       Other . . . . . . . . . . . . . . .        43          4        (16)        (4)         7       (10)
                                            $  1,955  $   1,294  $    (209)  $     68  $     (74) $      4
</TABLE>
<TABLE>
<CAPTION>
 <S>                                                                         <C>       <C>        <C>
 Corporate Expenses and Other:
   General corporate expenses (increase) decrease  . . . . . . . . . . . .         (9)         9        13
   Other income and deductions (net) increase (decrease)   . . . . . . . .         14          7        (5)
   Interest expense (increase) decrease  . . . . . . . . . . . . . . . . .        (14)        (9)        9
   Equity in income (loss) of investees  . . . . . . . . . . . . . . . . .         23        (10)       (1)
   Minority owners' interest in loss
       (income) of subsidiaries  . . . . . . . . . . . . . . . . . . . . .          5         (1)      -0-
   Provision for (loss) on disposition of assets   . . . . . . . . . . . .         29        (29)      -0-
   Income before income taxes and extraordinary item   . . . . . . . . . .   $    116  $    (107) $     20
<FN>
* Grain marketing operations were acquired in 1992
</TABLE>

    In computing the operating profit (loss) of a business segment, none of the
following have been added or deducted: corporate, general and administrative
expenses which cannot practicably be identified or allocated to a business
segment, interest expense, equity in income (loss) of investees, and
miscellaneous income or deductions.


PETROLEUM

  SALES

    Sales of petroleum products reflect a decrease of $31.9 million in 1994
compared with 1993 primarily due to lower prices of refined fuels and propane. 
The effect of lower prices was to reduce reported sales by approximately
$62.4 million.  Part of this decrease was offset by the effect of a 6% increase
of refined fuels and propane unit sales.

    Sales of the petroleum segment decreased $92.2 million in 1993 compared
with 1992, primarily a result of 12% lower unit sales of refined fuels
(gasoline, diesel and distillates) and a 2% decline of the average selling
price.  Unit sales decreased principally because the Company sold its
investment in National Cooperative Refinery Association ("NCRA") in June 1992. 
The refined fuels unit sales decrease in 1993 reduced sales by approximately
$92.2 million compared with 1992 and lower prices of refined fuels reduced
sales by $17.7 million.  Sales of other products (principally asphalt and coke)
decreased $12.4 million.  Propane sales increased approximately $30.1 million
in 1993 due to 27% higher unit sales and 18% higher prices.

    In 1992, sales of petroleum products declined $209.7 million compared with
1991.  This decrease resulted primarily because unit sales of refined products
(gasoline, distillate and diesel) and the average price of these products were
lower in 1992 than 1991 by 19% and 16%, respectively.  The unit sales and price
declines reduced sales of these products by approximately $37.3 million and
$154.2 million, respectively.  In addition, propane prices in 1992 averaged
approximately 82% of the prior year's level, which reduced sales by
approximately $13.5 million.

  OPERATING PROFIT

    Results from petroleum operations increased $31.7 million primarily because
unit margins on diesel fuels with low levels of sulfur (required by the
Environmental Protection Agency for diesel fuel sold after September 30, 1993)
were higher than the corresponding period of the prior year.  These margins
were significantly higher immediately after the crossover to the low sulfur
level diesel.  In addition, margins on other refined fuels improved because the
cost per barrel of crude oil decreased and because production at the
Coffeyville, Kansas refinery was substantially higher than in the prior year.

    Operating profit of the petroleum segment decreased $12.8 million in 1993
compared with 1992.  The favorable effects of improved margins in propane and
lower marketing and administrative expenses were more than offset by the
unfavorable effects of lower income from distributing fuels produced by NCRA
and the write-down to market value of certain petroleum inventories.

    Operating profit of the petroleum segment was $8.2 million in 1992 compared
with a loss of $9.3 million loss in 1991.  Most of this improvement resulted
from elimination in 1992 of losses experienced in 1991 on petroleum futures
contracts.  The Company changed its hedging practice in March 1991.


CROP PRODUCTION

  SALES

    Crop production sales in 1994 increased $278.5 million compared with 1994
due to higher plant nutrient prices and unit sales.  The average price per ton
of nutrient increased approximately 13.3% and unit sales increased
approximately 1.1 million tons or 18%.

    Sales of the crop production segment decreased $13.0 million in 1993
compared with 1992.  Nitrogen fertilizer sales increased $54.1 million due to
8% higher unit sales and because the average selling price increased 3%. 
Phosphate fertilizer sales decreased $67.1 million.  This decrease is primarily
a result of the sale of the Green Bay, Florida phosphate plant to a 50%-owned
joint venture.  Subsequent to this sale (on November 15, 1991) export sales
from the Green Bay plant have not been reported in the Company's operations. 
In 1992, the Company's sales included export sales from the Green Bay plant of
$60.9 million.

    The crop production segment's sales declined $137.7 million in 1992
compared with 1991.  Substantially all of this decrease resulted from lower
unit sales and prices for phosphate fertilizers.  The Company reported 30%
lower phosphate unit sales in 1992 which reduced sales approximately $117.3
million.  This decrease resulted principally from the sale on November 15, 1991
of the Green Bay, Florida phosphate plant to a 50%-owned joint venture.  In
addition, sales of phosphate fertilizer decreased approximately $18.2 million,
because the average price was 7% lower.  Sales of turf and garden products were
approximately $2.9 million lower.

  OPERATING PROFIT

    Operating profits of the crop production business in 1994 increased $74.4
million compared with 1993.  This increase resulted from higher unit sales and
unit margins.  Unit margins in 1994 were approximately twice the level of 1993
which increased operating profit in this segment approximately $66.8 million. 
Unit sales increased over one million tons (18%) which increased operating
profit approximately $10.8 million.  In addition, included in the statement of
operations in the caption, "Equity in income (loss) of investees", is $15.3
million in 1994 representing the Company's share of net income from fertilizer
joint ventures.  This is an increase of $23.4 million compared with 1993. 
Demand for plant nutrients in 1994 was stronger than in 1993 due to an increase
in the number of acres under cultivation, principally corn acreage (corn
acreage harvested was relatively low in 1993 due to wet weather and the
resulting floods in the Company's trade territory).  In addition, demand for
plant nutrients was stimulated by favorable weather conditions during the fall
and spring application seasons.  The increased demand for plant nutrients
translated into higher unit sales and margins and contributed significantly to
the Company's increased net income in 1994.

    Operating profit of the crop production segment decreased $60.3 million in
1993 compared with 1992, primarily because of 29% higher natural gas cost (the
principal raw material consumed in producing nitrogen fertilizer) which was not
recovered through selling prices.  Fertilizer margins decreased approximately
$43.2 million because of higher gas cost.  In addition, phosphate fertilizer
margins decreased approximately $7.1 million because decreased phosphate
fertilizer selling prices more than offset decreased cost.  In addition, the
Company's share of the net loss of fertilizer ventures (included in the
Company's statement of operations in the caption, "Equity in loss of
investees"), was $8.2 million in 1993 compared with a loss of $1.3 million in
1992.

    The crop production segment's operating profit of $111.9 million decreased
$13.4 million in 1992 compared with 1991.  The decrease resulted primarily from
lower phosphate fertilizer selling prices and from realignment of the Company's
phosphate fertilizer production operations into two 50%-owned ventures.


FEED

  SALES

    Sales of feed products increased $48.7 million in 1994 compared with 1993.
Unit sales of formula feed and feed ingredients each increased approximately
10% which generated a $39.6 million increase in sales.  The balance of the
sales increase resulted primarily from higher feed ingredient prices.

    Sales of the feed segment increased $33.9 million in 1993 compared with
1992, primarily because of higher unit sales.  Formula feed unit sales
increased approximately 9% which increased sales $20.3 million.  Feed
ingredients unit sales increased approximately 12% which increased sales by
$18.0 million.  In addition, sales of animal health products increased $2.5
million.  Lower formula feed selling prices partly offset the effect of higher
unit sales.

    The feed segment's sales for 1992 decreased $20.9 million compared with
1991, principally because feed ingredients unit sales decreased 22%.  Unit
sales of feed ingredients decreased because sales efforts were directed from
products with near break-even margins to products with higher margins.  Feed
ingredient sales decreased approximately $41.7 million because of the unit
sales decline.  Feed ingredient prices increased an average of 8% which
increased sales by approximately $11.2 million and formula feed sales increased
$6.8 million, principally due to higher unit sales.

  OPERATING PROFIT

    Operating profit of the feed business segment decreased $3.7 million in
1994 compared with 1993.  Gross margins decreased approximately $.5 million
reflecting lower margins on feed ingredients and pet food of $.8 million and
$.4 million, respectively, partly offset by $.7 million higher margins on
animal health products.  In addition, sales marketing and feed administration
expenses increased $3.2 million primarily due to higher commissions and other
variable compensation plans.

    Operating profit of the feed segment of $20.7 million in 1993 decreased
slightly compared with 1992.  The decrease was due to the impact of lower
selling prices.

    Operating profit of the feed segment for 1992 of $21.3 million decreased
$3.2 million compared with 1991.  The decrease resulted from $1.3 million lower
patronage refund income on purchases from other cooperatives and from $2.2
million higher expenses partly offset by $.4 million higher gross margins.

FOOD PROCESSING AND MARKETING

  SALES

    Sales of the food marketing and processing business increased $943.0
million in 1994 compared with 1993.  Sales of beef increased $735.5 million
principally because National Beef Packing Company, L.P. ("NBPC") has been
included in the Company's 1994 results for the full year.  NBPC was acquired in
April 1993.  Pork sales increased $207.5 million, due mostly to including
operations of the Monmouth, Illinois plant in the Company's results for a full
year in 1994.  This plant was acquired in February 1993.  In addition, sales of
specialty meats of the Carando division increased $13.0 million.

    Food marketing sales increased $562.5 million in 1993 compared with 1992,
primarily due to business acquisitions.  In April 1993, the Company and
partners organized National Beef Packing Company, L.P. ("NBPC").  Farmland
obtained a 58% ownership interest in NBPC which acquired a beef packing plant
and feedlot located in Liberal, Kansas.  As a result of this acquisition, the
Company's sales included beef sales of $442.1 million in 1993.  In February
1993, Foods, a 99%-owned subsidiary, purchased a pork processing plant located
at Monmouth, Illinois.  As a result of this acquisition, sales of pork products
increased approximately $90.0 million.  Sales of fabricated pork products at
the Company's other plants increased $17.0 million and sales of specialty meats
of the Carando division increased $8.3 million.

    Sales of the food marketing segment in 1992 increased $21.1 million
compared with 1991.  Sales of specialty meats increased $50.3 million primarily
because these products were not included in sales for 1991 prior to April 1,
when the Company acquired three specialty meats plants.  Fresh and processed
pork sales were lower than in 1991 because the effect of lower wholesale prices
was greater than the effect of higher unit sales.

  OPERATING PROFIT

    Operating profit in the Food Marketing and Processing business segment of
$20.6 million in 1994 reflects an increase of $4.1 million compared with 1993. 
The increase includes $13.0 million higher operating profit of the pork
business partly offset by an $8.9 million decrease of operating profit of the
beef business.  Operating profit from pork marketing and processing operations
increased primarily due to higher volume and higher margins on fresh pork,
branded pork, hams and specialty meats of the Carando division.  Operating
profit of the beef business decreased owing to weak consumer demands for beef
and industry price competition.

    Operating profit of the food marketing segment decreased $8.7 million in
1993 compared with 1992.  The decrease is primarily due to 4.6% higher live hog
cost.  Margins on fabricated products and hams increased $3.6 million and $4.4
million, respectively, and margins on beef products (not included in the
Company's operations in 1992) were $4.2 million.  These increases resulted from
acquisitions which increased sales as discussed above.  However, these
increases were more than offset by the effects of 4.6% higher cost of live hogs
which could not be fully recovered through increased wholesale prices of fresh
and processed pork products and by higher selling and administrative expenses.

    Operating profits of the food marketing segment for 1992 increased $13.8
million compared with 1991.  The improvement includes higher gross margins of
approximately $26.8 million, partially offset by approximately $13.4 million
higher selling, general and administrative expenses.  The gross margin increase
includes $9.9 million higher margins on specialty meats attributable to
ownership of specialty meats plants during all of 1992, compared with only five
months of 1991.  Additional improvements of gross margins resulted from a more
favorable spread between the costs of live hogs and wholesale pork prices, from
higher unit sales, and from a shift of sales to value-added products with
higher unit margins.  Selling, general and administrative expenses of this
segment increased, primarily due to expenses incurred in connection with the
specialty meats plants which were operated by the Company for only five months
in the prior year.


GRAIN MARKETING

  SALES AND OPERATING PROFIT

    Grain sales increased $673.6 million in 1994 compared with 1993 primarily
due to the acquisition of Wells-Bowman Trading Company and from operating
elevators in Utah and Idaho which were leased to the Company in 1994.

    The grain marketing business had an operating loss of $33.5 million in 1994
compared with near break-even operations in 1993.  The operating loss in 1994
includes an operating loss of $14.4 million in the international operations of
Tradigrain and an operating loss of $19.1 million in the Company's Union Equity
division.  The loss in 1994 resulted primarily from negative unit margins on
international grain transactions and higher domestic operating expenses.

    Grain operations which were acquired in July 1992, reported sales for the
full year in 1993 of $953.5 million.  Sales for the two months ended August 31,
1992 were $155.2 million.

    In 1993, operating profit of the grain business was $.1 million compared
with a loss of $.7 million for  the two months ended August 31, 1992.  In 1993,
grain marketing operations were relocated to Kansas City from Enid, Oklahoma,
an export elevator at Houston, Texas was sold and certain duplicative
administrative assets costs were eliminated.  As a result, cost reductions were
realized in 1993.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses ("SG & A") increased $81.5
million in 1994 compared with 1993.  However, as a percent of sales, these
expenses were slightly lower in 1994 than in 1993.  Approximately $17.6 million
of the increase resulted from acquisition of Tradigrain and National Carriers,
Inc. and from including NBPC in the Company's financial statements for the full
year in 1994.  Approximately $29.0 million of the increase was in pork
marketing and processing and resulted primarily from including the Monmouth,
Illinois pork plant in the Company's operations for a full year, and from
higher sales of pork.  Farm supply businesses and the grain marketing business
had higher SG & A of $13.1 million and $3.4 million, respectively.  The balance
of the SG & A increase was primarily variable compensation plans.

    These expenses decreased $12.3 million in 1993 compared with 1992 primarily
due to SG & A directly connected to business segments.  Corporate, general and
administrative expenses, not identified to business segments (see note 12 of
the notes to consolidated financial statements), decreased $6.3 million in 1993
compared with 1992.

    In 1992, corporate general and administrative expenses not identified to
business segments decreased $5.2 million compared with 1991.  This decrease was
mostly lower retirement plan costs, reduced corporate advertising and reduced
coverage and cost of liability insurance.  


OTHER INCOME (DEDUCTIONS)

  INTEREST EXPENSE

    Interest expense reflects an increase of $14.7 million in 1994 compared
with 1993.  The increase is primarily attributable to including the interest
costs of NBPC's beef operations in the Company's financial statements for a
full year in 1994, the acquisition of National Carriers, Inc. and Tradigrain in
May 1994 and by higher interest rates.

    Interest expense increased $8.8 million in 1993 compared with 1992 due to
an increase of the average level of borrowings, partly offset by lower interest
rates.  Interest expense decreased $8.9 million in 1992 compared with 1991. 
The decrease results from lower borrowings and lower interest rates.  

  PROVISION FOR LOSS ON DISPOSITION OF ASSETS

    At August 31, 1993, management was negotiating to sell the Company's
refinery at Coffeyville, Kansas.  Based on the progress of negotiation and the
transactions contemplated, operations for the year ended August 31, 1993
included a $20,022,000 provision for loss on the sale of the refinery. 
Accordingly, the net carrying value of property, plant and equipment has been
reduced by $20,022,000 in the consolidated balance sheets at August 31, 1993. 
 The transactions contemplated were subject to certain conditions, including
negotiation of final agreements.  During 1994, management determined that final
sale terms anticipated by the potential purchaser were not in the Company's
best interest.  Accordingly, negotiations were terminated and the sale was not
consummated.

    In 1993, the Company entered discussions with a potential purchaser of a
dragline.  Based on these discussions, the Company estimated a loss of
$6,155,000 from the sale.  Accordingly, at August 31, 1993, the carrying value
of the dragline was written down by $6,155,000 and a provision for this loss
was included in the Company's consolidated statement of operations for the year
then ended.  In 1994, this sale was consummated on terms substantially as
expected.

    At August 31, 1993, the carrying value of a pork processing plant at Iowa
Falls, Iowa was written down by $3,253,000 to an estimated disposal value.

  OTHER, NET

    In June 1993, the Company filed a lawsuit against 43 insurance carriers and
other parties (the "Defendants") seeking declaratory judgments regarding
Defendants' insurance coverage obligations for environmental remediation costs. 
In fiscal year 1994, the Company negotiated settlements with 20 insurance
companies and as part of the settlements, the Company provided Defendants with
releases of various possible environmental obligations.  As a result of these
settlements, the Company received cash payments of $13,566,000 in 1994 and has
included such amount in the caption "Other income" in the consolidated
statement of operations for the year then ended. 


RECENT ACCOUNTING PRONOUNCEMENTS

    Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," was issued by the Financial
Accounting Standards Board ("FASB") in May 1993 and is effective for fiscal
years beginning after December 15, 1993 (the Company's 1995 fiscal year). 
Statement 115 expands the use of fair value accounting and the reporting for
certain investments in debt and equity securities.  Management expects the
adoption of Statement 115 will not have a significant impact on the Company's
consolidated financial statements.

    Statement of Financial Accounting Standards No. 112, "Employer's Accounting
for Postemployment Benefits," was issued by the FASB in November 1992 and is
effective for fiscal years beginning after December 15, 1993 (the Company's
1995 fiscal year).  Statement 112 establishes standards of accounting and
reporting for the estimated cost of benefits provided to former or inactive
employees.  Management expects that the adoption of Statement 112 will not have
a significant impact on the Company's consolidated financial statements.
 
 
                                  MANAGEMENT

    The directors of Farmland are as follows:
<TABLE>
<CAPTION>
                                                       Total
                                         Expiration  Years of
                  Age as of   Positions  of Present Service as
                  August 31,  Held With   Term as     Board
         Name        1994     Farmland    Director    Member           Business Experience During Last Five Years

<S>                   <C>     <C>            <C>        <C>     <C>

Albert J. Shivley     51      Chairman of    1995       10      General Manager--American Pride Co-op Association,
                               the Board                        Brighton, Colorado, a local cooperative association of
                                                                farmers and ranchers.
H. D. Cleberg         55       President     1997        4      Mr. Cleberg has been with Farmland since 1968.  He was
                               and Chief                        named as president-elect in February 1991 and became
                               Executive                        President in April 1991.  From September 1990 to January
                                Officer                         1991 he served as Senior Vice President and Chief
                                                                Operating Officer, Agricultural Group.  From April 1989 to
                                                                August 1990 he served as Executive Vice President,
                                                                Operations.  

Otis H. Molz          63         Vice        1997       11      Producer--Deerfield, Kansas.  Mr. Molz has served as
                               Chairman and                     Chairman of the Board of the National Bank for
                                  Vice                          Cooperatives since January 1993.  He served as Chairman of
                                President                       the Board of Directors of Farmland Industries, Inc. from
                                                                December 1991 to December 1992.  He served as First Vice
                                                                President of the National Bank for Cooperatives from
                                                                January 1990 to January of 1993.  He was Second Vice
                                                                Chairman from January 1, 1989 to January 1, 1990. 
Lyman Adams, Jr.      43                     1995        2      General Manager--Cooperative Grain and Supply, Hillsboro,
                                                                Kansas, a local cooperative association of farmers and
                                                                ranchers.
                         
Ronald J. Amundson    50                     1997        6      General Manager--Central Iowa Cooperative, Jewell, Iowa, a
                                                                local cooperative association of farmers and ranchers.

Baxter Ankerstjerne   58                     1996        4      Producer--Peterson, Iowa.  Since December 1988 Mr.
                                                                Ankerstjerne has served as Chairman of the Board of
                                                                Directors of Farmers Cooperative, Association, Marathon,
                                                                Iowa, a local cooperative association of farmers and
                                                                ranchers.

Jody Bezner           53                     1997        3      Producer--Texline, Texas.
Richard L. Detten     60                     1996        7      Producer--Ponca City, Oklahoma.

Steven Erdman         44                     1995        2      Producer--Bayard, Nebraska

Warren Gerdes         46                     1995        1      General Manager--Farmers Cooperative Elevator Company,
                                                                Buffalo Lake, Minnesota, a local cooperative association
                                                                of farmers and ranchers.
Ben Griffith          45                     1995        5      General Manager--Central Cooperatives, Inc., Pleasant
                                                                Hill, Missouri, a local cooperative association of farmers
                                                                and ranchers.

Gail D. Hall          52                     1997        6      General Manager--Lexington Cooperative Oil Company,
                                                                Lexington, Nebraska, a local cooperative association of
                                                                farmers and ranchers.
Jerome Heuertz        53                     1997        *      General Manager--Farm Service Cooperative, Council Bluffs,
                                                                Iowa, a local cooperative association of farmers and
                                                                ranchers.

Barry Jensen          49                     1996        4      Producer--White River, South Dakota.  Since May 1989 Mr.
                                                                Jensen has served as President of Farmers Co-op Oil
                                                                Association, Winner, South Dakota, a local cooperative
                                                                association of farmers and ranchers.

Greg Pfenning         45                     1997        2      Producer--Hobart, Oklahoma.  Director of Hobart &
                                                                Roosevelt Cooperative, a local cooperative association of
                                                                farmers and ranchers.
Vonn Richardson       61                     1996        7      Producer--Plains, Kansas.  President of The Plains Equity
                                                                Exchange and Cooperative Union, Plains, Kansas, a local
                                                                cooperative association of farmers and ranchers.

Monte Romohr          41                     1996        4      Producer--Gresham, Nebraska.  In March 1988, Mr. Romohr
                                                                became President of Farmers Co-op Business Association,
                                                                Shelby, Nebraska, a local cooperative association of
                                                                farmers and ranchers. 
Joe Royster           42                     1996        1      General Manager--Dacoma Farmers Cooperative, Inc., Dacoma,
                                                                Oklahoma, a local cooperative association of farmers and
                                                                ranchers. 

Paul Ruedinger        64                     1995       11      Producer--Van Dyne, Wisconsin.  

Raymond J. Schmitz    63                     1996        7      Producer--Baileyville, Kansas

Theodore J. Wehrbein  49                     1995        8      Producer--Plattsmouth, Nebraska.  Past Director of Nehawka
                                                                Farmers Cooperative Company, Nehawka, Nebraska, a local
                                                                cooperative association of farmers and ranchers.
Robert Zinkula        64                     1996        4      Producer--Mount Vernon, Iowa.  Secretary and Treasurer of
                                                                Linn Cooperative Oil Company, Marion, Iowa, a local
                                                                cooperative association of farmers and ranchers.
<FN>
*Mr. Heuertz was elected to the Farmland Industries, Inc. Board of Directors in
December 1994.
</TABLE>

    Directors are elected for a term of three years by the shareholders of
Farmland at its annual meeting.  The expiration dates for such three-year terms
are sequenced so that about one-third of Farmland's Board of Directors is
elected each year.  H. D. Cleberg is serving as director-at-large; the
remaining twenty-one directors were elected from nine geographically defined
districts in Farmland's territory.  The executive committee consists of Ronald
Amundson, Ben Griffith, Otis Molz, Monte Romohr, Albert Shivley and
H. D. Cleberg.  With the exception of H.D. Cleberg, President and Chief
Executive Officer, members of the executive committee serve as chairman of
standing committees of the Board of Directors as follows:  Ronald Amundson,
corporate responsibility committee; Ben Griffith, audit committee; Otis Molz,
compensation committee; Monte Romohr, finance committee; and Albert Shivley,
nominating committee.

    The executive officers of Farmland are:

<TABLE>
<CAPTION>
           Age as of
          August 31,
Name       1994         Principal Occupation and Other Positions
<S>         <C>       <C>
J. F.       51        Executive Vice President and Chief
Berardi                 Financial Officer - Mr. Berardi joined
                        Farmland March 1, 1992 to serve in his
                        present position.  Mr. Berardi served as
                        Executive Vice President and Treasurer of
                        Harcourt Brace Jovanovich, Inc., a
                        diversified Fortune 200 company, and was
                        a member of its Board of Directors from
                        1988 until 1990.  From 1986 to 1989
                        Mr. Berardi served as Senior Vice
                        President and Chief Financial Officer of
                        Harcourt Brace Jovanovich, Inc.

H. D.       55        President and Chief Executive Officer - Mr.
Cleberg                 Cleberg has been with Farmland since
                        1968.  He was appointed to his present
                        position effective April 1991.  From
                        September 1990 to March 1991 he served as
                        Senior Vice President and Chief Operating
                        Officer.  From April 1989 to August 1990
                        he served as Executive Vice President,
                        Operations.  From October 1987 to March
                        1989 he served as Vice President and
                        General Manager, Fertilizer and Ag
                        Chemicals Operations, and from July 1986
                        to September 1987 he served as President,
                        Farmland Foods.  Prior to July 1986 he
                        held several executive management
                        positions, most recently Vice President,
                        Field Services and Operations Support.

S. P.       51        Executive Vice President, Farmland and
Dees                    Director General of Farmland Industrias,
                        S.A. de C.V. - Mr. Dees was appointed to
                        his present position in September 1993. 
                        From October 1990 to September 1993 he
                        served as Executive Vice President,
                        Administrative Group and General Counsel. 
                        Mr. Dees joined Farmland in October 1984,
                        serving as Vice President and General
                        Counsel, Law and Administration until
                        September 1990.  He was a partner in the
                        law firm of Stinson, Mag and Fizzell,
                        Kansas City, Missouri, from 1971 until
                        his employment by Farmland.

G. E.       50        Senior Vice President, Agricultural
Evans                   Production Marketing/Processing -
                        Mr. Evans has been with Farmland since
                        1971.  He was appointed to his present
                        position in January 1992.  From April
                        1991 to January 1992 he served as Senior
                        Vice President, Agricultural Inputs.  He
                        served as Executive Vice President,
                        Agricultural Marketing from October 1990
                        to March 1991.  He served as Executive
                        Vice President, Operations from January
                        1990 to September 1990.  He served as
                        Vice President, Farmland Industries and
                        President, Farmland Foods from October
                        1987 to December 1989.  He served as Vice
                        President and General Manager, Feed
                        Operations from June 1986 to September
                        1987, and from May 1983 to June 1986 he
                        served as Vice President, Feed
                        Operations.

R. W.       51        Executive Vice President, Agricultural
Honse                   Inputs Operations - Mr. Honse has been
                        with Farmland since September 1983.  He
                        was appointed to his present position in
                        January 1992, and served as Executive
                        Vice President, Agricultural Operations
                        from October 1990 to January 1992.  From
                        April 1989 to September 1990, he served
                        as Vice President and General Manager,
                        Crop Production Operations.  From July
                        1986 to March 1989 he served as General
                        Manager of the Florida phosphate
                        fertilizer complex.

B. L.       53        Vice President and Corporate Secretary -
Sanders                 Dr. Sanders has been with Farmland since
                        1968.  He was appointed to his present
                        position in September 1991.  From April
                        1990 to September 1991 he served as Vice
                        President, Strategic Planning and
                        Development.  From October 1987 to March
                        1990 he served as Vice President,
                        Planning.  From July 1986 to September
                        1987 he served as Director, Management
                        Information Services.  From July 1984 to
                        June 1986 he served as Executive
                        Director, Corporate Strategy and Research
                        and from 1968 to June 1984, as Executive
                        Director, Economic and Market Research.

</TABLE>


                            EXECUTIVE COMPENSATION

    The following table sets forth the annual compensation awarded to, earned
by, or paid to the Chief Executive Officer and the Company's next four most
highly compensated executive officers for services rendered to the Company in
all capacities during 1994, 1993 and 1992.

<TABLE>
<CAPTION>
                                                                        Annual Compensation                   
                                                                                Employee
                                         Year                                   Variable          Other
 Name and                               Ending                                Compensation       Annual
 Principal Position                   August 31             Salary               Plan          Compensation
 <S>                                    <C>               <C>                 <C>             <C>
 H. D. Cleberg,    . . . . . . . . . .  1994              $     439,728       $    338,481
 President and     . . . . . . . . . .  1993              $     433,506
 Chief Executive Officer                1992              $     408,972       $    185,745

 G. E. Evans,      . . . . . . . . . .  1994              $     278,304       $    217,761
 Senior Vice President                  1993              $     278,304
 Agricultural Production                1992              $     255,900       $    114,257
 Marketing/Processing

 R. W. Honse,      . . . . . . . . . .  1994              $     251,532       $    205,206
 Executive Vice President               1993              $     231,964
 Agricultural Inputs Operations         1992              $     204,686       $     94,433
                                         
 J. F. Berardi,    . . . . . . . . . .  1994              $     216,252       $    146,576
 Executive Vice President               1993              $     206,016
 and Chief Financial Officer            1992              $     100,008       $     28,075

 S. P. Dees,       . .  . . . . . .     1994              $     205,066       $    119,093   $     124,138(a)
 Executive Vice Preside                 1993              $     205,366
 Farmland and Director                  1992              $     195,738       $    51,521
 General of Farmland
 Industrias, S.A. de C.V.
<FN>
(a)   Mr. Dees received a differential remuneration and reimbursements for
      taxes in connection with foreign assignments.
</TABLE>

    An Annual Employee Variable Compensation Plan, a Long-Term Management
Incentive Plan, and an Executive Deferred Compensation Plan have been
established by the Company to meet the competitive salary programs of other
companies, and to provide a method of compensation which is based on the
Company's performance.

    Under the Company's Annual Employee Variable Compensation Plan, all regular
salaried employees total compensation is based on a combination of base and
variable pay.  The variable compensation payment is dependent upon the
employee's position, the performance of the Company for the fiscal year or
other performance criteria of the individual's operating unit.  Variable
compensation is awarded only in years that the Company achieves a performance
level, approved each year by the Board of Directors.  The Company intends for
its total cash compensation (base plus variable) to be competitive, recognizing
that in the event the Company fails to achieve a predetermined threshold level
of performance, the base pay alone will place the employees well under market
rates.  This system of variable compensation allows the company to keep its
fixed costs (base salaries) lower, and only increase payroll costs consistent
with the Company's ability to pay.  Amounts accrued under this plan for the
years ended August 31, 1994, 1993 and 1992 amounted to $17,779,000, $-0- and
$10,033,000, respectively.  Distributions under this plan are made annually
after the close of each fiscal year.

    Under the Long-Term Management Incentive Plan, the Company's executive
management employees are paid cash bonus amounts determined by a formula which
takes into account the level of management and the average annual net income of
the Company over a three-year period.  The current Long-Term Management
Incentive Plan is effective September 1, 1994 through August 31, 1996.  For the
year ended August 31, 1994, the Company accrued $1,607,000 under this plan. 
The Company's performance did not reach a level where incentive was earned
under the Long-Term Management Incentive Plan that covered the three-year
period ended August 31, 1993.  As a result, operations in 1993 were credited by
$2,463,000 to reverse provisions for management incentive awards previously
charged against operations in 1992 and 1991 ($1,171,000 and $1,292,000,
respectively).

    The Company's Executive Deferred Compensation Plan permits executive
employees to defer part of their salary and/or part or all of their bonus
compensation.  The amount to be deferred and the period for deferral is
specified by an election made semi-annually.  Payments of deferred amounts
shall begin at the earlier of the end of the specified deferral period,
retirement, disability or death.  The employee's deferred account balance is
credited annually with interest at the highest rate of interest paid by the
Company on any subordinated debt certificate sold during the year.  Payment of
an employee's account balance shall, at the employee's election, be a lump sum
or in ten annual installments.  Amounts deferred pursuant to the plan for the
accounts of the named individuals during the fiscal years 1994, 1993 and 1992
are included in the cash compensation table.

    The Company established the Farmland Industries, Inc. Employee Retirement
Plan ("Plan") in 1986 for all employees whose customary employment is at the
rate of at least 1000 hours per year.  Participation in the Plan is optional
prior to age 34, but mandatory thereafter.  Approximately 6,560 active and
6,540 inactive employees were participants in the Plan on August 31, 1994.  The
Plan is funded by employer and employee contributions to provide lifetime
retirement income at normal retirement age 65, or a reduced income beginning as
early as age 55.  The Plan also contains provisions for death and disability
benefits.  The Plan has been determined qualified under the Internal Revenue
Code.  The Plan is administered by a committee appointed by the Board of
Directors of Farmland, and all funds of the Plan are held by a bank trustee in
accordance with the terms of the trust agreement.  It is the present intent to
continue this plan indefinitely.  The Company's funding policy is to make the
maximum annual contributions to the Plan's trust fund that can be deducted for
federal income tax purposes.  Company contributions made to the Plan for the
year ended August 31, 1994 were $2,885,000.  No contributions were made to the
Plan in 1993 and 1992.  

    Payments to participants in the Plan are based upon length of participation
and compensation (limited to $150,000 annually for any employee) reported to
the Plan for the four highest of the last ten years of employment.  See note 11
of the notes to consolidated financial statements.  

    In 1982, the Tax Equity and Fiscal Responsibility Act (TEFRA) imposed a
maximum retirement benefit which may be paid by a qualified retirement plan. 
At the present time, that limit is $118,000.


    The following table sets forth the estimated annual benefits payable at age
65 for members of the Retirement Plan, which benefits are not reduced by virtue
of Social Security payments:

<TABLE>
<CAPTION>
   Remuneration                                Years of Service                
     Salaries             15             20                   25         30     
   <S>               <C>             <C>             <C>            <C>
   $     100,000. .  $     26,250    $    35,000     $    43,750    $    52,500
         125,000. .        32,812         43,750          54,687         65,625
         150,000. .        39,375         52,500          65,625         78,750
         175,000. .        45,937         61,250          76,562         91,875
         200,000. .        52,500         70,000          87,500        105,000
         225,000. .        59,062         78,750          98,437        118,125*
         250,000. .        65,625         87,500         109,375        131,250*
         275,000. .        72,187         96,250         120,312*       144,375*
         300,000. .        78,750        105,000         131,250*       157,500*
  <FN>                      
*Exceeds the actual amount which can be paid pursuant to the present
limitations of TEFRA.
</TABLE>

    Subject to the $150,000 maximum limit on annual compensation which may be
covered by a qualified pension plan, amounts included in the cash compensation
table do not vary substantially from the compensation covered by the pension
plan. 

    The following table sets forth the credited years of service for the
executive officers of the Company at August 31, 1994.

                Name              Years of Creditable Service

             H. D. Cleberg  . . . . . . . . . . 29
             G. E. Evans  . . . . . . . . . . . 20
             R. W. Honse  . . . . . . . . . . . 20
             J. F. Berardi  . . . . . . . . . .  1
             S. P. Dees   . . . . . . . . . . .  9


    The Company established the Farmland Industries, Inc. Supplemental
Executive Retirement Plan ("SERP") effective January 1, 1994.  The SERP is
intended to supplement the retirement income of executive participants in the
Farmland Industries, Inc. Employee Retirement Plan whose retirement benefit
would otherwise be reduced because of the limitation of the Internal Revenue
Code on the amount of salary which can be included in the computation of
retirement income ($150,000) or the amount of retirement benefit which may be
paid by a qualified retirement plan ($118,000).

    The Company's Board of Directors has appointed an Administrative Committee
to administer the SERP.  To fund the SERP, the Company purchased cash value
life insurance polices on the lives of plan participants.  The Company owns
these insurance policies and has the sole right to name policy beneficiaries. 
The total SERP premiums for all participants for the eight months ended August
31, 1994 was $621,012 of which $383,736 was charged to operations.

    The Company's obligation to pay supplemental retirement benefits under the
SERP is limited to the aggregate cash value of the life insurance policies
designated by the Administrative Committee as policies of the SERP.  If the
benefits under the plan for a year would exceed the total cash value of the
policies, each participant's payment will be reduced.

                             CERTAIN TRANSACTIONS

    The Company transacts business in the ordinary course with its directors
and with its local cooperative members with which the directors are associated
on terms no more favorable than those available to its other local cooperative
members.                            PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

    The expenses (excluding commissions) to be incurred in connection with  the
issuance and distribution of the securities to be offered are estimated as
follows and will be borne by the Company:

                                               Estimated
       Item                                     Expense   

   Federal and state registration fees  . . .  $   106,000
   State taxes and fees . . . . . . . . . . .        8,000
   Printing and engraving . . . . . . . . . .      211,000
   Accounting and legal . . . . . . . . . . .       54,000
   Trustee fee  . . . . . . . . . . . . . . .       13,000
   Advertising and administration . . . . . .      973,000
                                               $ 1,365,000

ITEM 14.    INDEMNIFICATION OF DIRECTORS AND OFFICERS

    Section 6002(b) of Chapter 17 of the Kansas Statutes (1987), permits the
following provision to be included in the articles of incorporation of the
Company:  a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders, policyholders or members for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (A) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, policyholders or members, (B) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(C) under the provision of K.S.A. 17-6424 and amendments thereto or (D) for any
transaction from which the director derived an improper personal benefit.  No
such provision shall eliminate or limit the liability of a director for any act
or omission occurring prior to the date when such provision becomes effective. 
All references in this subsection to a director shall be deemed also to refer
to a member of the governing body of a corporation which is not authorized to
issue capital stock.  Section 6002(c) provides that "It shall not be necessary
to set forth in the articles of incorporation any of the powers conferred on
corporations by this act."

    Farmland Industries, Inc.'s Board of Directors, and shareholders at their
regularly scheduled meeting on September 15, 1987 and December 4, 1987,
respectively, adopted the following resolution:

        RESOLVED, That the Board of Directors hereby approves and
    recommends for adoption by the members, the amendment of Article VII of
    the Association by the addition thereto of a new section to read as
    follows:

                         ARTICLE VII - INDEMNIFICATION

        Section 1.  Indemnification.  The Association may agree to the
    terms and conditions upon which any director, officer, employee or
    agent accepts his office or position and in its bylaws, by contract or
    in any other manner may agree to indemnify and protect any director,
    officer, employee or agent of the Association, or any person who serves
    at the request of the Association as a director, officer, employee or
    agent of another corporation, partnership, joint venture, trust or
    other enterprise, to the fullest extent permitted by the laws of the
    State of Kansas.

        Section 2.  Limitation of Liability.  Without limiting the
    generality of the foregoing provisions of this ARTICLE VII, to the
    fullest extent permitted or authorized by the laws of the State of
    Kansas, including without limitation the provisions of subsection
    (b)(8) of Kan. Stat. Ann. Sec. 17-6002 (1981) as now in effect and as
    it may from time to time hereafter be amended, no person who is
    currently or shall hereinafter become a director of the Association
    shall have personal liability to the Association for monetary damages
    for breach of fiduciary duty as a director for any act or omission
    occurring subsequent to the date this provision becomes effective.  If
    the Kansas General Corporation Code is amended after approval of this
    provision by the shareholders of the Association, to authorize
    corporate action further limiting or eliminating the personal liability
    of directors, then the liability of a director of the Association shall
    be limited or eliminated to the fullest extent permitted by the Kansas
    General Corporation Code, as so amended.


ITEM 15.    RECENT SALES OF UNREGISTERED SECURITIES

   Unregistered equities issued by Farmland during each of the years in the
three-year period ended August 31, 1994 were as follows:

<TABLE>
<CAPTION>
                                                           Associate Member
                           Common Stock                     Common Stock
                         Nondividend Bearing)            (Nondividend Bearing)         Capital
      Year Ended            Par Value $25                    Par Value $25             Credits
       August 31        Shares             Amount        Shares          Amount         Amount    
          <S>          <C>        <C>                   <C>        <C>              <C>
          1994         32,202     $       805,050       83,273     $    2,081,825   $     7,740,453
          1993         46,993     $     1,174,825       11,348     $      283,700   $     1,947,119
          1992         50,614     $     1,265,350       25,829     $      645,725   $    12,967,039
</TABLE>

   Farmland issues common stock, associate member common stock and capital
credits:  1) to satisfy one of the requirements of eligible persons for
membership in the cooperative; 2) as the form of payment of the portion of
patronage refunds not paid with cash; and, 3) upon conversion (to common stock,
associate member common stock or capital credits) by holders of other types of
these equities.  Such conversions result from a change of membership status.

   See "The Company - Membership."

   In addition, in 1992, capital credits, exceeding the amount registered by
$4,610,653 were issued in accordance with provisions of an exchange offer to
other owners of Farmland Foods, Inc.

   Registration of such common stock, associate member common stock and capital
credits issued to qualify eligible persons for membership in the cooperative
and for payment of patronage refunds is not required under the Securities Act
of 1933 (the "Act") under the provisions of Section 2(3) thereof, as there is
"no sale" or "offer to sell" a security for value as those terms are used in
Section 2(3).

   An exemption from registration under the Act of common stock, associate
member common stock and capital credits issued upon conversion of other types
of these equities is claimed under Section 3(a) 9 thereof for an exchange of
securities by an issuer with its own security holders exclusively where no
commission or other remuneration is paid or given directly or indirectly for
soliciting such exchange.


ITEM 16.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

The following exhibits and financial statement schedules are filed as a part of
this Registration Statement.

Exhibit No.                      Exhibit

      UNDERWRITING AGREEMENT:

  1.A Underwriting Agreement between Farmland Industries, Inc. and Farmland
      Securities Company, dated December 6, 1989.  

      1.A(1)   Amendment, dated December 5, 1994, to the agreement, dated
               December 6, 1989 between Farmland Industries, Inc. and Farmland
               Securities Company.  

  1.B Sales Agency Agreement between Farmland Industries, Inc. and American
      Heartland  Investment, Inc., dated December 29, 1993.

      ARTICLES OF INCORPORATION AND BYLAWS:

  3.A Articles of Incorporation and Bylaws of Farmland Industries, Inc.
      effective December 1, 1993.  (Incorporated by Reference - Form 10-K,
      filed November 29, 1994)

      INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES:

  4.(i)A  Trust Indenture dated November 20, 1981, as amended January 4, 1982,
          including specimen of Demand Loan Certificates.  (Incorporated by
          Reference - Form S-1, No.2-75071, effective January 7, 1982)

  4.(i)B  Trust Indenture dated November 8, 1984, as amended January 3, 1985,
          including specimen of 10-year Subordinated Capital Investment
          Certificates.  (Incorporated by Reference - Form S-1, No. 2-94400,
          effective December 31, 1984)

      4.(i)B(1)    Amendment Number 2, dated December 3, 1991, to Trust
                   Indenture dated November 8, 1984 as amended January 3, 1985
                   covering Farmland Industries, Inc.'s 10-Year Subordinated
                   Capital Investment Certificates.  (Incorporated by
                   Reference - Form SE, dated December 3, 1991)

  4.(i)C  Trust Indenture dated November 8, 1984, as amended January 3, 1985,
          including specimen of 5-year Subordinated Capital Investment
          Certificates.  (Incorporated by Reference - Form S-1, No. 2-94400,
          effective December 31, 1984)

      4.(i)C(1)    Amendment Number 2, dated December 3, 1991, to Trust
                   Indenture dated November 8, 1984 as amended January 3, 1985
                   covering Farmland Industries, Inc.'s 5-Year Subordinated
                   Capital Investment Certificates.  (Incorporated by
                   Reference - Form SE, dated December 3, 1991)

  4.(i)D  Trust Indenture dated November 8, 1984, as amended January 3, 1985
          and November 20, 1985, including specimen of 10-year Subordinated
          Monthly Income Capital Investment Certificates.  (Incorporated by
          Reference - Form S-1, No. 2-94400, effective December 31, 1984)

  4.(i)E  Trust Indenture dated November 11, 1985 including specimen of the
          5-year Subordinated Monthly Income Capital Investment Certificates. 
          (Incorporated by Reference - Form S-1, No. 33-1970, effective
          December 31, 1985) 

      INSTRUMENTS DEFINING RIGHTS OF OWNERS OF INDEBTEDNESS NOT REGISTERED:

  4.(ii)A Trust Indenture dated November 8, 1984, as amended January 3, 1985,
          including specimen of 20-year Subordinated Capital Investment
          Certificates.  (Incorporated by Reference - Form S-1, No. 2-94400,
          effective December 31, 1984)

      4.(ii)A(1)   Amendment Number 2, dated December 3, 1991, to Trust
                   Indenture dated November 8, 1984 as amended January 3, 1985
                   covering Farmland Industries, Inc.'s 20-Year Subordinated
                   Capital Investment Certificates.  (Incorporated by
                   Reference - Form SE, dated December 3, 1991)

  4.(ii)B Credit Agreement among Farmland Industries, Inc., as Borrower, ABN
          Amro Bank N.V., The Bank of Nova Scotia, Boatmen's First National
          Bank of Kansas City, The Chase Manhattan Bank, N.A., Commerce Bank
          of Kansas City, N.A., NBD Bank, N.A., as Banks and The National Bank
          for Cooperatives, Cooperatieve Centrale Raiffeisen-Boerenleenbank
          B.A. "Rabobank Nederland", New York Branch, as Banks and as Co-
          Agents, dated May 19, 1994, (the "Syndicated Credit Facility"). 
          (Incorporated by Reference - Form 10-Q filed July 14, 1994)

      4.(ii)B(1)   List identifying contents of all omitted schedules
                   referenced in and not filed with, the Syndicated Credit
                   Facility, dated May 19, 1994.  (Incorporated by Reference -
                   Form 10-Q, filed July 14, 1994)

  5.  Opinion re Legality

      MATERIAL CONTRACTS:

          LEASE CONTRACTS:

 10.(i)A  The First National Bank of Chicago, not individually but solely as
          Trustee for AT&T Commercial Finance Corporation, The Boatmen's
          National Bank of St. Louis, Firstier Bank, N.A. and Norwest Bank
          Minnesota, National Association and Farmland Industries, Inc.
          consummated a leveraged lease in the amount of $73,153,000 dated
          September 6, 1991. (Incorporated by Reference - Form SE, filed
          December 3, 1991)

 10.(i)B  The First National Bank of Commerce as Trustee for General Electric
          Credit Corporation as Beneficiary and Farmland Industries, Inc.
          consummated a leveraged lease in the amount of $51,909,257.90 dated
          March 17, 1977.  (Incorporated by Reference - Form S-1, No.2-60372,
          effective December 22, 1977)

      MANAGEMENT REMUNERATIVE PLANS:

 10.(ii)(A)(1)     Annual Employee Variable Compensation Plan (September 1,
                   1994 - August 31, 1995).  (Incorporated by Reference - Form
                   10-K, filed November 29, 1994)

 10.(ii)(A)(2)     Farmland Industries, Inc. Management Long-Term Incentive
                   Plan (Effective September 1993) (Incorporated by Reference
                   - Form 10-K, filed November 29, 1993).

 12.  Computation of Ratios

 21.  Subsidiaries of the Registrant

      CONSENTS OF EXPERTS AND COUNSEL:

 23.A Independent Auditors' Consent and Report on Schedules

 23.B Consent of Legal Counsel

 23.C Consent of Special Tax Counsel

 23.D Consent of Qualified Independent Underwriter

 24   Power of Attorney  (Incorporated by Reference - Form 10-K, filed
      November 29, 1994)

 25.A Statement of Eligibility of Trustee and Qualification of UMB Bank,
      National Association Trustee, Form T-1.

 25.B Statement of Eligibility of Trustee and Qualification of Commerce Bank
      of Kansas City, National Association as Trustee, Form T-1.


                                                       EXHIBIT 5


Farmland Industries, Inc.
3315 North Oak Trafficway
Kansas City, Missouri 64116

Gentlemen:

    I have reviewed your Demand Loan Certificates bearing the Certificate
Interest Rate; your 10-year Subordinated Capital Investment Certificates and
your 5-year Subordinated Capital Investment Certificates each bearing the
Certificate Interest Rate; your 10-year Subordinated Monthly Income Capital
Investment Certificates and your 5-year Subordinated Monthly Income Capital
Investment Certificates each bearing the Certificate Interest Rate.  It is my
opinion that all such Demand Loan Certificates, Subordinated Capital Investment
Certificates and Subordinated Monthly Income Capital Investment Certificates,
and the issuance thereof, have been duly authorized; that said Demand Loan
Certificates are covered by that certain Trust Indenture dated November 20,
1981, between your Association and UMB Bank, National Association, as successor
trustee to Commerce Bank of Kansas City, National Association; that said
10-year and 5-year Subordinated Capital Investment Certificates bearing the
Certificate Interest Rate are covered by those certain Trust Indentures dated
November 8, 1984, between your Association and Commerce Bank of Kansas City,
National Association; that said 10-year Subordinated Monthly Income Capital
Investment Certificates bearing interest at the Certificate Interest Rate are
covered by that certain Trust Indenture dated November 8, 1984, between your
Association and Commerce Bank of Kansas City, National Association, and that
said 5-year Subordinated Monthly Income Capital Investment Certificates bearing
interest at the Certificate Interest Rate are covered by that certain Trust
Indenture dated November 11, 1985 between your Association and Commerce Bank of
Kansas City, National Association.  That said Certificates, when issued and
sold in accordance with Registration Statement No.________, presently to be
filed with the Securities and Exchange Commission, Washington, D.C., and
registered in accordance with the laws of the States in which the Certificates
are and will be sold, will constitute valid and binding obligations according
to their tenor and effect.

                              Respectfully submitted,

                              ROBERT B. TERRY
                              
                              Robert B. Terry
                              Vice President,
                              and General Counsel
December 12, 1994


                                                                  EXHIBIT 12


                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

              COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES


                       FIVE YEARS ENDED AUGUST 31, 1994
<TABLE>
<CAPTION>
                                                                        For the Year Ended August 31          
                                                   1994         1993         1992         1991        1990    
                                                                        (Amounts in Thousands)
 <S>                                            <C>          <C>          <C>         <C>          <C>
 Income (Loss) before Extraordinary Item . . .  $    73,876  $   (30,400) $    61,046 $     42,693 $    48,580

 Income Tax Expense (Benefit)  . . . . . . . .  $     4,890  $    (6,433) $     9,458        7,473       9,604

 Minority Interest in Income of
   Subsidiary that has Fixed Charges   . . . .          333          865         -0-          -0-          -0-

 Minority Interest in Loss of
   Subsidiary  . . . . . . . . . . . . . . . .       (4,855)         (37)        -0-          -0-          -0-

 Equity Interest in Loss (Earnings) of 
   Less-than-fifty Percent Owned
   Investees   . . . . . . . . . . . . . . . .          603        1,007        2,341          856         113

 Total Fixed Charges 
   (excluding interest capitalized)  . . . . .       64,383       55,268       47,719       54,443      47,000

 Earnings  . . . . . . . . . . . . . . . . . .  $   139,230  $    20,270  $   120,564 $    105,465 $   105,297

 Fixed Charges:
   Interest (including amounts
       capitalized)  . . . . . . . . . . . . .  $    51,842  $    43,873  $    34,426 $     42,481 $    37,226
   Estimated Interest Component 
       of Rentals  . . . . . . . . . . . . . .       12,898       13,006       13,293       12,290      11,652

       Total Fixed Charges . . . . . . . . . .  $    64,740  $    56,879  $    47,719 $     54,771 $    48,878

 Ratio of Earnings to Fixed Charges  . . . . .          2.2          0.4          2.5          1.9         2.2

 Earnings Inadequate to Cover
   Fixed Charges   . . . . . . . . . . . . . .               $    36,609
</TABLE>

                                                 EXHIBIT 21

                        SUBSIDIARIES OF THE REGISTRANT

Farmland Foods, Inc., a 99%-owned subsidiary, was incorporated under the laws
of the State of Kansas.  Farmland Foods, Inc. has been included in the
consolidated financial statements filed in this registration.

Farmland Insurance Agency, a wholly-owned subsidiary, was incorporated under
the laws of the State of Missouri.  Farmland Insurance Agency has been included
in the consolidated financial statements filed in this registration.

Farmers Chemical Company, a wholly-owned subsidiary, was incorporated under the
laws of the State of Kansas.  Farmers Chemical Company has been included in the
consolidated financial statements filed in this registration.

Farmland Securities Company, a wholly-owned subsidiary, was incorporated under
the laws of the State of Delaware.  Farmland Securities Company has been
included in the consolidated financial statements filed in this registration.

Cooperative Service Company, a wholly-owned subsidiary, was incorporated under
the laws of the State of Nebraska.  Cooperative Service Company has been
included in the consolidated financial statements filed in this registration.

Double Circle Farm Supply Company, a wholly-owned subsidiary, was incorporated
under the laws of the State of Nevada.  Double Circle Farm Supply Company has
been included in the consolidated financial statements filed in this
registration.

National Beef Packing Company, L.P., a 58%-owned subsidiary, was formed under
the laws of the State of Delaware.  National Beef Packing Company has been
included in the consolidated financial statements filed in this registration.

NBPCo, L.L.C., a wholly-owned subsidiary, was formed under the laws of the
State of Kansas.  NBPCo has been included in the consolidated financial
statements filed in this registration.

Farmland Financial Services Company, a wholly-owned subsidiary, was
incorporated under the laws of the State of Kansas.  Farmland Financial
Services Company has been included in the consolidated financial statements
filed in this registration.

Farmland Transportation, Inc., a wholly-owned subsidiary, was incorporated
under the laws of the State of Missouri.  Farmland Transportation, Inc. has
been included in the consolidated financial statements filed in this
registration.

Environmental and Safety Services, Inc., a wholly-owned subsidiary, was
incorporated under the laws of the State of Missouri.  Environmental and Safety
Services, Inc. has been filed in the consolidated financial statements included
in this registration.

Penterra, Inc., a 81%-owned subsidiary, was incorporated under the laws of the
State of Kansas.  Penterra, Inc. has been included in the consolidated
financial statements filed in this registration.

Farmland Industries, Ltd., a wholly-owned subsidiary, was incorporated under
the laws of the United States Virgin Islands.  Farmland Industries, Ltd. has
been included in the consolidated financial statements filed in this
registration.

Heartland Data Services, Inc., a wholly-owned subsidiary, was incorporated
under the laws of the State of Kansas.  Heartland Data Services, Inc. has been
included in the consolidated financial statements filed in this registration.

Yuma Feeder Pig, Inc., a 72%-owned subsidiary, was incorporated under the laws
of the state of Colorado.  Yuma Feeder Pig, Inc. has been included in the
consolidated financial statements filed in this registration.

Equity Country, Inc., a wholly-owned subsidiary, was incorporated under the
laws of the State of Delaware.  Equity Country, Inc. has been included in the
consolidated financial statements filed in this registration.

Equity Export Oil and Gas Company, Inc., a wholly-owned subsidiary, was
incorporated under the laws of the State of Oklahoma.  Equity Export Oil and
Gas Company, Inc. has been included in the consolidated financial statements
filed in this registration.

Ceres Realty Corporation, a wholly-owned subsidiary, was incorporated under the
laws of the State of Missouri.  Ceres Realty Corporation has been included in
the consolidated financial statements filed in this registration.

Heartland Wheat Growers, L.P., a 79%-owned subsidiary, was formed under the
laws of the State of Kansas.  Heartland Wheat Growers has been included in the
consolidated financial statements filed in this registration.

Heartland Wheat Growers, Inc., a 79%-owned subsidiary, was incorporated under
the laws of the State of Kansas.  Heartland Wheat Growers has been included in
the consolidated financial statements filed in this registration.

Farmland Industrias S.A. de C.V., a wholly-owned subsidiary, was formed under
the laws of Mexico.  Farmland Industrias has been included in the consolidated
financial statements filed in this registration.

National Carriers, Inc., a 79%-owned subsidiary, was incorporated under the
laws of the State of Kansas.  National Carriers has been included in the
consolidated financial statements filed in this registration.

Supreme Land, Inc., a wholly-owned subsidiary, was incorporated under the laws
of the State of Kansas.  Supreme Land has been included in the consolidated
financial statements filed in this registration.

Tradigrain, Inc., a wholly-owned subsidiary, was incorporated under the laws of
the State of Tennessee.  Tradigrain, Inc. has been included in the consolidated
financial statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of
Switzerland.  Tradigrain S.A. of Switzerland has been included in the
consolidated financial statements filed in this registration.

Tradigrain Shipping S.A., a wholly-owned subsidiary, was formed under the laws
of Switzerland.  Tradigrain Shipping S.A. has been included in the consolidated
financial statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of
France.  Tradigrain S.A. of France has been included in the consolidated
financial statements filed in this registration.

Tradigrain GmbH, a wholly-owned subsidiary, was formed under the laws of
Germany.  Tradigrain GmbH has been included in the consolidated financial
statements filed in this registration.

Tradigrain LTD., a wholly-owned subsidiary, was formed under the laws of Great
Britain.  Tradigrain LTD. has been included in the consolidated financial
statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of
Argentina.  Tradigrain S.A. of Argentina has been included in the consolidated
financial statements filed in this registration.

                                                                EXHIBIT 23.A



             INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES



The Board of Directors
Farmland Industries, Inc.:

    The audits referred to in our report dated October 21, 1994 included the
related financial statement schedules as of August 31, 1994, and for each of
the years in the three-year period ended August 31, 1994, included in the
Registration Statement in the accompanying index.  These financial statement
schedules are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.  In our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.

    Our report dated October 21, 1994 contains an explanatory paragraph
concerning income tax adjustments proposed by the Internal Revenue Service on
the gain on sale of and certain distributions by Terra Resources, Inc.

    We consent to the use of our reports included herein and to the references
to our firm under the headings "Selected Consolidated Financial Data", and
"Experts" in the Prospectus.


                                        KPMG PEAT MARWICK LLP

Kansas City, Missouri
December 12, 1994


                                                               EXHIBIT 23.B

                           CONSENT OF LEGAL COUNSEL


Farmland Industries, Inc.:


    The undersigned consents to the use herein of his opinion, dated December
12, 1994, relating to the legality of Subordinated Capital Investment
Certificates, Subordinated Monthly Income Capital Investment Certificates, and
Demand Loan Certificates being registered, and of all other statements and
opinions attributed to him appearing in this Registration Statement No. .


                                        ROBERT B. TERRY

                                        Robert B. Terry
                                        Vice President,
                                        and General Counsel

Kansas City, Missouri
December 12, 1994


                                                               EXHIBIT 23.C


                        CONSENT OF SPECIAL TAX COUNSEL


Farmland Industries, Inc.:


We consent to the references to our firm in the Prospectus filed as part of
this Registration Statement.


                                        BRYAN CAVE


December 12, 1994                                           

                                                                EXHIBIT 23.D



                 CONSENT OF QUALIFIED INDEPENDENT UNDERWRITER


Farmland Industries, Inc.:


We consent to the references to our firm under the caption "Qualified
Independent Underwriter" in the Prospectus.

                               JAMES H. GLEN, JR.

                              James H. Glen, Jr.
                              INTERSTATE/JOHNSON LANE CORPORATION

December 12, 1994


(B) FINANCIAL STATEMENT SCHEDULES

        Farmland Industries, Inc. and Subsidiaries for each of the years in the
    three-year period ended August 31, 1994:
                                                            Page

        II--Amounts Receivable from Related Parties         S-14

        V--Property, Plant and Equipment                    S-15

        VI--Accumulated Depreciation and Amortization of 
           Property, Plant and Equipment                    S-18

        IX--Short-term Borrowings                           S-21

        X--Supplementary Income Statement Information       S-21


    All other schedules are omitted as the required information is inapplicable
or the information is presented in the consolidated financial statements or
related notes.

                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

             SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES

              FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
                                                                   
                              Balance at                      Deductions           Balance at
                             the Beginning                Amounts      Amounts       the End
   Name of Debtor            of the Period  Additions    Collected   Written Off  of the Period
                                                      (Amounts in Thousands)
 <S>                         <C>            <C>         <C>          <C>          <C>
 AUGUST 31, 1994
   S.F. Industries (a) . .   $         450  $    2,000  $     2,450  $       -0-  $        -0-
   Hyplains Beef (b)   . .   $       6,126  $   17,744  $       -0-  $       -0-  $     23,870

 AUGUST 31, 1993
   S.F. Industries   . . .   $         950  $      -0-  $       500  $       -0-  $        450
   Hyplains Beef   . . . .   $       4,348  $    1,778  $       -0-  $       -0-  $      6,126

 AUGUST 31, 1992
   S.F. Industries   . . .   $         -0-  $    3,950  $     3,000  $       -0-  $        950
   Hyplains Beef   . . . .   $         -0-  $    4,348  $       -0-  $       -0-  $      4,348
<FN>
(a)      Farmland has a $5,000,000 commitment to S.F. Industries, L.L.C. to
         fund working capital requirements, interest on the working capital
         loan, calculated at the LIBOR rate plus .50% is payable on the last
         day of September, December, March and June.

(b)      Farmland purchases cattle for the day-to-day operations of its 50%
         owned venture, Hyplains Beef L.C.  This receivable is non-interest
         bearing.
</TABLE>


                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                   SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1994
<TABLE>
<CAPTION>
                                                                          Other
                                    Balance                              Charges     Balance
                                 September 1,  Additions   Retirements    Add/      August 31,
      Classification                 1993       at Cost     or Sales     (Deduct)      1994     
                                                   (Amounts in Thousands)
<S>                             <C>            <C>         <C>          <C>          <C>
Land and Land Improvements  . . $      11,825  $    2,214  $        16  $      (409) $     13,614
Site Improvements . . . . . . .        26,877       1,524          129          375        28,647
Buildings         . . . . . . .       215,420       7,814        1,523        3,056       224,767
Machinery and Equipment . . . .       678,784      61,997       12,976      (11,122)      716,683
Automotive Equipment  . . . . .        46,807       8,349        8,617       19,447        65,986
Furniture and Fixtures  . . . .        45,405       7,982        4,236         (538)       48,613
Livestock         . . . . . . .         4,373       1,968        1,639         (776)        3,926
Mining Properties . . . . . . .         3,119         -0-          -0-          -0-         3,119
Leasehold Improvements  . . . .        12,149       2,716          -0-          220        15,085
Capital Lease     . . . . . . .        52,342       1,691        2,955         (122)       50,956
Construction and Acquisitions
     in Progress (a)  . . . . .        57,242     (26,479)       -0-            -0-        30,763
      Total Property, Plant
           and Equipment  . . . $   1,154,343  $   69,776 $     32,091  $    10,131  $  1,202,159
<FN>


(a) Construction and acquisitions in progress reflects the net change for the
period after transfers to other classifications.
</TABLE>


                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                   SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1993
<TABLE>
<CAPTION>
                                                                                        Other
                                                Balance                                Charges       Balance
                                             September 1,    Additions  Retirements      Add/      August 31,
      Classification                             1992         at Cost     or Sales     (Deduct)       1993     
                                                               (Amounts in Thousands)
 <S>                                         <C>            <C>         <C>          <C>          <C>
 Land and Land Improvements  . . . . . . .   $      11,437  $      880  $     1,043  $       551  $     11,825
 Site Improvements . . . . . . . . . . . .          15,308      10,087           96        1,578        26,877
 Buildings         . . . . . . . . . . . .         193,215      34,531        9,806       (2,520)      215,420
 Machinery and Equipment . . . . . . . . .         593,014      77,998       11,409       19,181       678,784
 Automotive Equipment  . . . . . . . . . .          46,324       6,459        2,032       (3,944)       46,807
 Furniture and Fixtures  . . . . . . . . .          37,850       7,251        1,491        1,795        45,405
 Livestock         . . . . . . . . . . . .             -0-         -0-          -0-        4,373         4,373
 Mining Properties . . . . . . . . . . . .          26,569         217          -0-      (23,667)        3,119
 Leasehold Improvements  . . . . . . . . .          10,215       5,745          158       (3,653)       12,149
 Fertilizer Properties . . . . . . . . . .          48,695         -0-          -0-      (48,695)          -0-
 Capital Lease     . . . . . . . . . . . .             -0-         -0-          -0-       52,342        52,342
 Construction and Acquisitions
      in Progress(a)   . . . . . . . . . .          53,812       3,432          -0-           (2)       57,242

      Total Property, Plant 
            and Equipment  . . . . . . . .   $   1,036,439  $  146,600  $    26,035  $    (2,661) $   1,154,343
 <FN>
 (a)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
</TABLE>
 
 
                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                   SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1992
<TABLE>
<CAPTION>
                                                                                        Other
                                               Balance                                 Charges     Balance
                                             September 1,   Additions    Retirements     Add/      August 31,
      Classification                             1991         at Cost     or Sales     (Deduct)       1992     
                                                                      (Amounts in Thousands)
 <S>                                         <C>            <C>         <C>          <C>          <C>
 Land and Land Improvements  . . . . . . .   $      12,560  $    2,618  $     3,534  $      (207) $     11,437
 Site Improvements . . . . . . . . . . . .          19,751         425        6,146        1,278        15,308
 Buildings         . . . . . . . . . . . .         154,062      50,132       10,217         (762)      193,215
 Machinery and Equipment . . . . . . . . .         711,751      35,653      151,368       (3,022)      593,014
 Automotive Equipment  . . . . . . . . . .          44,328       8,071        5,852         (223)       46,324
 Furniture and Fixtures  . . . . . . . . .          37,166       5,462        5,264          486        37,850
 Mining Properties . . . . . . . . . . . .          82,672         -0-       54,826       (1,277)       26,569
 Leasehold Improvements  . . . . . . . . .           9,465         749          -0-            1        10,215
 Fertilizer Properties . . . . . . . . . .          49,544         -0-          849          -0-        48,695
 Construction and Acquisitions
      in Progress(a)   . . . . . . . . . .          35,207      24,821        4,574       (1,642)       53,812

      Total Property, Plant 
            and Equipment  . . . . . . . .   $   1,156,506  $  127,931  $   242,630  $    (5,368) $  1,036,439
<FN>
(a)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
</TABLE>


                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES


SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND
EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1994
<TABLE>
<CAPTION>                                                    Additions
                                                            Charged to                    Other
                                              Balance       Profit and    Retirements,   Charges     Balance
                                             September 1,    Loss of      Renewals and      Add/     August 31,
      Classification                             1993        Income       Replacements    (Deduct)     1994
                                                                      (Amounts in Thousands)
 <S>                                         <C>            <C>         <C>          <C>           <C>
 Land Improvements . . . . . . . . . . . .   $         154  $        1  $       -0-  $       -0-   $       155
 Site Improvements . . . . . . . . . . . .          12,707       1,337           91           (7)       13,946
 Buildings         . . . . . . . . . . . .          76,426       8,950          820        2,740        87,296
 Machinery and Equipment . . . . . . . . .         453,705      28,449        4,472       (2,215)      475,467
 Automotive Equipment  . . . . . . . . . .          36,062       4,356        3,623        9,626        46,421
 Furniture and Fixtures  . . . . . . . . .          27,855       7,361        3,227          162        32,151
 Livestock         . . . . . . . . . . . .           1,768       1,396        1,013         (362)        1,789
 Mining Properties . . . . . . . . . . . .             192          19          -0-          -0-           211
 Leasehold Improvements  . . . . . . . . .           3,847       1,323          -0-          213         5,383
 Capital Lease     . . . . . . . . . . . .          37,249       3,350        2,429         (120)       38,050
 Construction and Acquisitions
      in Progress (a)  . . . . . . . . . .             -0-         -0-          -0-          -0-          -0-

      Totals       . . . . . . . . . . . .   $     649,965  $   56,542  $    15,675  $    10,037   $   700,869
<FN>
(a)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
</TABLE>

   NOTE:  The following percentages are used for computing depreciation:

                 Land Improvements  . . . 6 to 10%
                 Site Improvements  . . . 3 to 30%
                 Buildings  . . . . . . . 2 to 10%
                 Machinery and Equipment  3 to 20%
                 Automotive Equipment .  10 to 33%
                 Furniture and Fixtures  10 to 20%
                 Livestock  . . . . . .  25 to 50%
                 Mining Properties  . . . 4 to 21%
                 Leasehold Improvements .  4 to 6%
                 Capital Lease  . . . . .  6 to 7%



                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

 SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND
EQUIPMENT


                      FOR THE YEAR ENDED AUGUST 31, 1993
<TABLE>
<CAPTION>                                                   Additions
                                                            Charged to                  Other
                                                Balance     Profit and   Retirements,   Charges     Balance
                                             September 1,    Loss of     Renewals and     Add/     August 31,
      Classification                             1992         Income    Replacements     (Deduct)     1993     
                                                                    (Amounts in Thousands)
 <S>                                         <C>            <C>         <C>          <C>          <C>
 Land Improvements . . . . . . . . . . . .   $         153  $        1  $       -0-  $       -0-  $         154
 Site Improvements . . . . . . . . . . . .          10,377       2,439           94          (15)        12,707
 Buildings         . . . . . . . . . . . .          69,907       7,832          875         (438)        76,426
 Machinery and Equipment(a)  . . . . . . .         418,331      28,720       10,499       17,153        453,705
 Automotive Equipment  . . . . . . . . . .          32,827       4,366        1,474          343         36,062
 Furniture and Fixtures  . . . . . . . . .          21,537       6,398        1,333        1,253         27,855
 Livestock         . . . . . . . . . . . .                                                 1,768          1,768
 Mining Property . . . . . . . . . . . . .                                                   192            192
 Leasehold Improvements  . . . . . . . . .           3,211         872           11         (225)         3,847
 Fertilizer Properties . . . . . . . . . .          34,094       3,199           78      (37,215)           -0-
 Capital Lease     . . . . . . . . . . . .                                                37,249         37,249
 Construction and Acquisitions
      in Progress (b)  . . . . . . . . . .             -0-         -0-          -0-          -0-            -0-


      Totals       . . . . . . . . . . . .   $     590,437  $   53,827  $    14,364  $    20,065  $     649,965
  <FN>
(a)   Based on negotiations with potential purchasers, the carrying values of
      the Coffeyville, Kansas refinery and a dragline were reduced by adjusting
      accumulated depreciation by $17,622,000 and $6,155,000, respectively.

(b)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
</TABLE>

   NOTE:  The following percentages are used for computing depreciation:

                 Land Improvements  . . . 6 to 10%
                 Site Improvements  . . . 3 to 30%
                 Buildings  . . . . . . . 2 to 10%
                 Machinery and Equipment  3 to 20%
                 Automotive Equipment .  10 to 33%
                 Furniture and Fixtures  10 to 20%
                 Livestock  . . . . . .  25 to 50%
                 Mining Properties  . . . 4 to 21%
                 Leasehold Improvements .  4 to 6%
                 Fertilizer Properties  .  6 to 7%
                 Capital Lease  . . . . .  6 to 7%
                 
                 
                 
                 FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES


SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND
EQUIPMENT


                      FOR THE YEAR ENDED AUGUST 31, 1992
<TABLE>
<CAPTION>                                                  Additions
                                                            Charged to                  Other
                                               Balance     Profit and   Retirements,   Charges     Balance
                                             September 1,   Loss of     Renewals and     Add/     August 31,
      Classification                             1991       Income      Replacements   (Deduct)      1992     
                                                                     (Amounts in Thousands)
 <S>                                         <C>            <C>         <C>           <C>          <C>
 Land Improvements . . . . . . . . . . . .   $         153  $        1  $       -0-   $       (1)  $        153
 Site Improvements . . . . . . . . . . . .          13,666         676        3,968            3         10,377
 Buildings         . . . . . . . . . . . .          72,369       5,810        8,261          (11)        69,907
 Machinery and Equipment . . . . . . . . .         488,684      29,592       98,262       (1,683)       418,331
 Automotive Equipment  . . . . . . . . . .          32,293       3,149        2,626           11         32,827
 Furniture and Fixtures  . . . . . . . . .          22,075       3,738        5,486        1,210         21,537
 Leasehold Improvements  . . . . . . . . .           2,375         836          -0-          -0-          3,211
 Fertilizer Properties . . . . . . . . . .          34,066       3,591        3,563          -0-         34,094
 Construction and Acquisitions in 
      Progress(a)    . . . . . . . . . . .             113         -0-          -0-         (113)           -0-


      Totals       . . . . . . . . . . . .   $     665,794  $   47,393  $    122,166   $    (584)  $    590,437
<FN>
(a)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
</TABLE>

   NOTE:  The following percentages are used for computing depreciation:

                 Land Improvements  . . . 6 to 10%
                 Site Improvements  . . . 3 to 30%
                 Buildings  . . . . . . . 2 to 10%
                 Machinery and Equipment  3 to 20%
                 Automotive Equipment .  10 to 33%
                 Furniture and Fixtures  10 to 20%
                 Leasehold Improvements .  4 to 6%
                 Fertilizer Properties  .  6 to 7%



                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                      SCHEDULE IX--SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
                                                                                                      Weighted
                                                                            Maximum      Average      Average
                                                                             Amount       Amount      Interest
                                                Balance     Weighted      Outstanding  Outstanding     Rate
      Category of Aggregate                     End of      Average          During       During     During the
      Short-Term Borrowings                     Period    Interest Rate    the Period   the Period   Period (1)
                                                                      (Amounts in Thousands)
 <S>                                         <C>               <C>      <C>          <C>              <C>
 August 31, 1994:
 Demand Loan Certificates  . . . . . . . .   $      23,158     4.3%     $     39,873 $      28,299    3.9%
 Bank Debt         . . . . . . . . . . . .   $     281,886     5.2%     $    417,446 $     302,500    4.2%

 August 31, 1993:
 Demand Loan Certificates  . . . . . . . .   $      29,860     3.8%     $     46,403 $      35,002    4.3%
 Bank Debt         . . . . . . . . . . . .   $     268,783     4.1%     $    370,726 $     348,230    4.2%

 August 31, 1992:
 Demand Loan Certificates  . . . . . . . .   $      43,084     5.5%     $     58,684 $      50,516    6.3%
 Bank Debt         . . . . . . . . . . . .   $     200,072     4.5%     $    200,822 $     174,397    5.3%
  <FN>
   (1)The weighted average interest rate was calculated by dividing an interest
   amount on short-term borrowings by the average daily balance of short-term
   borrowings during the period.
</TABLE>


            SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
                               Charged to Costs and Expenses
                                For the Year Ended August 31
                                 1994       1993       1992  
                                   (Amounts in Thousands)
   <S>                         <C>          <C>         <C>
   1. Maintenance and repairs  $   58,730   $   61,273  $   50,252

<FN>
   NOTE: All other items required by Schedule X are excluded as such items are
         less than one (1) percent of total sales for each of the years
         presented.
</TABLE>


ITEM 17.    UNDERTAKINGS

    The undersigned registrant hereby undertakes:

    (a) To file, during any period in which offers or sales are being made, a
        post-effective amendment to this registration statement:

        (i) To include any prospectus required by section 10(a)(3) of the
            Securities Act of 1933;

        (ii)    To reflect in the prospectus any facts or events arising after
                the effective date of the registration statement (or the most
                recent post-effective amendment thereof) which, individually or
                in the aggregate, represent a fundamental change in the
                information set forth in the registration statement;

        (iii)   To include any material information with respect to the plan of
                distribution not previously disclosed in the registration
                statement or any material change to such information in the
                registration statement;

    (b) That, for the purpose of determining any liability under the Securities
        Act of 1933, each such post-effective amendment shall be deemed to be a
        new registration statement relating to the securities offered therein,
        and the offering of such securities at that time shall be deemed to be
        the initial bona fide offering thereof.

    (c) To remove from registration by means of a post-effective amendment any
        of the securities being registered which remain unsold at the
        termination of the offering.

    (d) Insofar as indemnification for liabilities arising under the Securities
        Act of 1933 may be permitted to directors, officers and controlling
        persons of the registrant pursuant to the foregoing provisions, or
        otherwise, the registrant has been advised that in the opinion of the
        Securities and Exchange Commission such indemnification is against
        public policy as expressed in the Act, and is, therefore,
        unenforceable.  In the event that a claim for indemnification against
        such liabilities (other than the payment by the registrant of expenses
        incurred or paid by a director, officer or controlling person in
        connection with the securities being registered), the registrant will,
        unless in the opinion of its counsel the matter has been settled by
        controlling precedent, submit to a court of appropriate jurisdiction
        the question whether such indemnification by it is against public
        policy as expressed in the Act and will be governed by the final
        adjudication of such issue.

                                  SIGNATURES

    PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FARMLAND
INDUSTRIES, INC. HAS DULY CAUSED THIS FORM S-1 TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY OF KANSAS CITY, STATE OF
MISSOURI ON DECEMBER 12, 1994.

                              FARMLAND INDUSTRIES, INC.


                              BY         H. D. CLEBERG          
                                         H. D. Cleberg
                             President and Chief Executive Officer


                              BY        JOHN F. BERARDI
                                        John F. Berardi
                                  Executive Vice President and
                                    Chief Financial Officer

    PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED FOR THE FOLLOWING PERSONS ON THE DATE
INDICATED PURSUANT TO VALID POWER OF ATTORNEY EXECUTED ON OCTOBER 19, 1994. 

           Signature               Title             Date


       ALBERT J. SHIVLEY         Chairman of       December 12, 1994
       Albert J. Shivley         Board
                                 Director


          OTIS H. MOLZ           Vice Chairman of  December 12, 1994
          Otis H. Molz            Board
                                  Director


          LYMAN ADAMS             Director         December 12, 1994
          Lyman Adams


       RONALD J. AMUNDSON         Director         December 12, 1994
       Ronald J. Amundson


      BAXTER ANKERSTJERNE         Director         December 12, 1994
      Baxter Ankerstjerne


          JODY BEZNER             Director         December 12, 1994
          Jody Bezner


       RICHARD L. DETTEN          Director         December 12, 1994
       Richard L. Detten


         STEVEN ERDMAN            Director         December 12, 1994
         Steven Erdman


         WARREN GERDES            Director         December 12, 1994
         Warren Gerdes


          BEN GRIFFITH            Director         December 12, 1994
          Ben Griffith


          GAIL D. HALL            Director         December 12, 1994
          Gail D. Hall


                                  Director         December 12, 1994
         Jerome Heuertz


          BARRY JENSEN            Director         December 12, 1994
          Barry Jensen


         GREG PFENNING            Director         December 12, 1994
         Greg Pfenning


        VONN RICHARDSON           Director         December 12, 1994
        Vonn Richardson

    
          MONTE ROMOHR            Director         December 12, 1994
          Monte Romohr


                                  Director         December 12, 1994
          Joe Royster


         PAUL RUEDINGER           Director         December 12, 1994
         Paul Ruedinger


       RAYMOND J. SCHMITZ         Director         December 12, 1994
       Raymond J. Schmitz


      THEODORE J. WEHRBEIN        Director         December 12, 1994
      Theodore J. Wehrbein


         ROBERT ZINKULA           Director         December 12, 1994
         Robert Zinkula
[{"type": "S-1", "sequence": "1", "description": "S-1 DATED 12/30/94", "secsgml_size_bytes": 404780}]
{"company-data": {"conformed-name": "FARMLAND INDUSTRIES INC", "cik": "0000034616", "assigned-sic": "2011", "irs-number": "440209330", "state-of-incorporation": "KS", "fiscal-year-end": "0831"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "033-56821", "film-number": "94564319"}, "business-address": {"street1": "3315 N OAK TRAFFICWAY", "city": "KANSAS CITY", "state": "MO", "zip": "64116", "phone": "8164596000"}, "former-company": {"former-conformed-name": "CONSUMERS COOPERATIVE ASSOCIATION", "date-changed": "19681201"}}
Registration Statement No.

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM S-1
                             REGISTRATION STATEMENT
                           THE SECURITIES ACT OF 1933
                            FARMLAND INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

    Kansas                                         44-0209330
(State or other jurisdiction of                (I.R.S. Employer
incorporation or organization)              Identification No.)

                                   2011
            (Primary Standard Industrial Classification Code Number)
            3315 N. Oak Trafficway, Kansas City, Missouri 64116-0005

                                  816-459-6000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

                                  J. F. Berardi
                            Executive Vice President
                             Chief Financial Officer
                            Farmland Industries, Inc.
            3315 N. Oak Trafficway, Kansas City, Missouri 64116-0005
                                  816-459-6201

(Name, Address, including zip code, and telephone number, including area code,
of agent for service)

Approximate date of commencement of proposed sale to the public:    
                        DECEMBER 30, 1994

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. ( X )

                 CALCULATION OF REGISTRATION FEE
PROPOSED        PROPOSED MAXIMUM
                                            Amount            Maximum             Aggregate           Amount of
    Title of Each Class of                  Being          Offering Price        Offering or        Registration
    Security Being Registered             Registered          Per Unit         Exchange Price            Fee
Demand Loan Certificates            $     13,600,000          100%        $      13,600,000    $   4,690
    Subordinated Capital
     Investment Certificates
         -Ten Year                      $     44,100,000          100%        $      44,100,000    $  15,207
         -Five Year                     $     44,000,000          100%        $      44,000,000    $  15,172
    Subordinated Monthly Income
    Capital Investment Certificates
         -Ten Year                      $     26,700,000          100%        $      26,700,000    $   9,207
         -Five Year                     $     13,100,000          100%        $      13,100,000    $   4,517
    Total                                                                     $     141,500,000    $  48,793
Pursuant to Rule 429, the combined prospectus filed as a part of this
Registration Statement relates as well to Registrant's Form S-1 Registration
Statement No. 33-49253 and No. 33-51319.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

                                    PART I
                           FARMLAND INDUSTRIES, INC.
        CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K

            ITEM NUMBER AND CAPTION                 LOCATION IN PROSPECTUS

1. Forepart of registration statement and    Cover of Registration Statement
   outside front cover page of Prospectus    Cross Reference Sheet
                                             Front Page of Prospectus

2. Inside front and outside back             Available Information
   cover pages of Prospectus                 Reports to Security Holders

3. Summary Information, Risk Factors         Prospectus Summary
   and Ratio of Earnings to Fixed Charges    Risk Factors
4. Use of Proceeds                           Use of Proceeds

5. Determination of Offering Price           Not Applicable

6. Dilution                                  Not Applicable
7. Selling Security Holders                  Not Applicable

8. Plan of Distribution                      Plan of Distribution

9. Description of Securities 
    to be Registered                         Description of the Ten-Year
                                               Subordinated Capital Investment
                                               Certificates
                                             Description of the Five-Year
                                               Subordinated Capital Investment
                                               Certificates

                                             Description of the Ten-Year
                                               Subordinated Monthly Income 
                                               Capital
                                               Investment Certificates

                                             Description of the Five-Year
                                               Subordinated Monthly Income 
                                               Capital
                                               Investment Certificates

                                             Description of the Demand Loan
                                               Certificates

10.Interest of Named Experts and Counsel     Interest of Named Experts 
                                               and Counsel

11.Information with Respect to the 
    Registrant

   (a)   1.   General Development of 
               Business                      The Company
                                             Business - General
         2.   Financial Information About    Note 12 of Notes to Consolidated
              Industry Segments                Financial Statements

         3.   Description of Business        Business

   (b)   Description of Properties           Business

   (c)   Legal Proceedings                   Legal Proceedings

   (d)   Market Price of and Dividends 
          on the                             Not Applicable
         Registrant's Common Equity and 
         Related 
         Stockholder Matters

   (e)   Financial Statements                Index to Farmland Consolidated
                                              Financial Statements

   (f)   Selected Financial Data             Selected Consolidated Financial
                                              Data
   (g)   Supplementary Financial 
          Information                        Not Applicable

   (h)   Management's Discussion 
          and Analysis of                    Management's Discussion and
          Financial Condition and             Analysis of Financial  
          Results of Operations               Condition and Results
                                              of Operations

   (i)   Changes in and Disagreements with   Not Applicable
         Accountants on Accounting and 
         Financial Disclosure

   (j)   Directors and Executive Officers    Management

   (k)   Executive Compensation              Executive Compensation

   (l)   Security Ownership of Certain 
          Beneficial                         Not Applicable
          Owners and Management

   (m)   Certain Relationships and           Certain Transactions
         Related Transactions

12.Disclosure of Commission Position on      Not Applicable
   Indemnification for Securities Act 
   Liabilities
   

PROSPECTUS
                         FARMLAND INDUSTRIES, INC.
AMOUNTS OFFERED TO:
                                                                                                             
                                                                              THE GENERAL           EXISTING
                                                                                 PUBLIC         SECURITY HOLDERS
SUBORDINATED CAPITAL INVESTMENT CERTIFICATES
      TEN-YEAR                                                               $      40,000,000  $      20,000,000
      FIVE-YEAR                                                              $      45,000,000  $      25,000,000
SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT CERTIFICATES
      TEN-YEAR                                                               $      20,000,000  $      20,000,000
      FIVE-YEAR                                                              $      12,000,000  $      10,000,000
 DEMAND LOAN CERTIFICATES                                                    $      60,000,000  $             -0-
CERTAIN RISK FACTORS CONNECTED WITH THE PURCHASE OF THESE SECURITIES ARE
DISCUSSED ON PAGE 10.  IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON
THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE
TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.

    THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

    Farmland Industries, Inc. ("Farmland") is offering: (1) to the owners of
its Subordinated Capital Investment Certificates ("Certificates")  the right to
exchange (see "Exchange Offer")  such Certificates for an equivalent  principal
amount of any Subordinated Monthly Income Capital Investment  Certificate
($5,000 minimum) which, at the time of the exchange, is  being offered by this
Prospectus, and  (2) to the owners of its Subordinated Capital Investment
Certificates,  which have been held until eligible for redemption prior to
maturity at  the option of the owner, the right to exchange such certificates
for an  equivalent principal amount of any Subordinated Capital Investment
Certificate which, at the time of the exchange, is being offered by this
Prospectus.  This offer will expire at 12:00 P.M. Eastern Standard Time on
December 31, 1995, unless terminated prior to such date.

(Continued from preceding page)
Underwriting
                                                           Price to        Discounts          Proceeds to
                                                          Public(1)       Commissions(2)      Farmland(2)
Subordinated Capital Investment Certificates*
      --$100 minimum
            Ten-Year Total                           $         40,000,000                  $       40,000,000
            Five-Year Total                          $         45,000,000                  $       45,000,000
 Subordinated Monthly Income Capital
   Investment Certificates*
      --$5,000 minimum (additional units in 
      incremental amounts of $1,000 or more)
            Ten-Year Total                           $         20,000,000                  $       20,000,000
            Five-Year Total                          $         12,000,000                  $       12,000,000
 Demand Loan Certificates*
      --$100 minimum
            Total                                    $         60,000,000                  $       60,000,000
*See "Determination of the Certificate Interest Rate."
(1) Farmland's offering of debt certificates is being made in compliance with
    the terms of a partial exemption from the requirements of Schedule E of the
    Bylaws of the National Association of Securities Dealers, Inc. (NASD).  As
    a condition of this partial exemption, a minimum of 80 percent of the
    dollar amount of aggregate sales made in this offering must be to
    individuals or entities who are members of a defined group, the definition
    of which has been approved by the NASD.

(2) The debt certificates offered hereby for cash and for exchange are offered
    on a "best efforts" basis by Farmland Securities Company and American
    Heartland Investments, Inc. and may be offered by other broker-dealers
    selected by Farmland.  See "Plan of Distribution."  The offering is for an
    indeterminate period of time, not expected to be in excess of two years
    with no minimum amount of securities which must be sold.  The proceeds to
    Farmland are before deducting estimated commissions and expenses to be paid
    by Farmland of $5,272,000 and $1,365,000, respectively, assuming that all
    securities offered hereby are sold.

                             AVAILABLE INFORMATION

    Farmland is subject to certain of the informational requirements of the
Securities and Exchange Act of 1934, as amended, and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission").  Information filed by Farmland can be inspected and copied
at the offices of the Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C.; Room 1100, Federal Building, 26
Federal Plaza, New York, New York 10278; and Room 1228, Everett McKinley
Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604.  Copies
of such material may be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549.

                          REPORTS TO SECURITY HOLDERS

    Farmland intends to make available to holders of its Certificates, upon
written request from any such holder to the address stated on page 4, a copy of
the latest annual report containing the audited consolidated financial
statements of Farmland and its subsidiaries.

    NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF SO GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY FARMLAND.  THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES.  THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION.  NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY DISTRIBUTION OF THE SECURITIES UNDER THIS PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AT ANY TIME SUBSEQUENT TO THE RESPECTIVE DATES AT WHICH INFORMATION IS
GIVEN HEREIN OR THE DATE OF THIS PROSPECTUS.

                               TABLE OF CONTENTS

                                                                           Page

   PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
   RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
   DETERMINATION OF THE CERTIFICATE INTEREST RATE . . . . . . . . . . . . .  12
   USE OF PROCEEDS  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
   PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . .  13
   EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
   HOW TO ACCEPT EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . .  14
   HOW TO TRANSFER OWNERSHIP  . . . . . . . . . . . . . . . . . . . . . . .  15
   DESCRIPTION OF THE TEN-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES  15
   DESCRIPTION OF THE FIVE-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES 19
   DESCRIPTION OF THE TEN-YEAR SUBORDINATED MONTHLY INCOME CAPITAL
      INVESTMENT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . .  23
   DESCRIPTION OF THE FIVE-YEAR SUBORDINATED MONTHLY INCOME CAPITAL
      INVESTMENT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . .  26
   DESCRIPTION OF THE DEMAND LOAN CERTIFICATES  . . . . . . . . . . . . . .  29
   INTEREST OF NAMED EXPERTS AND COUNSEL  . . . . . . . . . . . . . . . . .  31
   THE COMPANY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
   BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
   PATRONAGE REFUNDS AND DISTRIBUTION OF NET INCOME . . . . . . . . . . . .  40
   EQUITY REDEMPTION PLANS  . . . . . . . . . . . . . . . . . . . . . . . .  41
   LEGAL PROCEEDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
   EXPERTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
   QUALIFIED INDEPENDENT UNDERWRITER  . . . . . . . . . . . . . . . . . . .  47
   INDEX TO FARMLAND CONSOLIDATED FINANCIAL STATEMENTS  . . . . . . . . . .  48
   SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . .  75
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .  78
   MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  87
   EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . .  91
   CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . .  93

                              PROSPECTUS SUMMARY

    The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and related notes appearing
elsewhere in this Prospectus.

                       FARMLAND INDUSTRIES, INC.
                       P. O. Box 7305
                       Kansas City, Missouri 64116
                       Telephone (816) 459-6000

Business  Farmland Industries, Inc. ("Farmland") is a regional farm supply and
          marketing cooperative.  Farmland is owned by its members and only its
          members are eligible to vote for directors or for the management or
          affairs of Farmland.  Members are entitled to receive patronage
          refunds distributed by Farmland from its member-sourced annual net
          income.  See "Business and Properties - Patronage Refunds and
          Distribution of Net Income." Farmland and subsidiaries (the
          "Company") conducts business primarily in two operating areas -
          cooperative farm supply operations and cooperative processing and
          marketing operations.

           Cooperative farm supply operations consists of three product
           divisions--petroleum, crop production and feed.  The Company
           distributes farm supply products at wholesale.  Approximately 65% of
           the Company's sales of farm supply products in 1994 were to farm
           cooperative associations (members and owners of Farmland).  These
           farm cooperatives  distribute products primarily to farmers and
           ranchers in states which comprise the corn belt and the wheat belt
           who utilize the products in the production of farm crops and
           livestock.

           Cooperative marketing operations include the storage and marketing
           of grain, processing pork and beef, and marketing fresh pork,
           processed pork, fresh beef and boxed beef.  In 1994, approximately
           61% of the hogs processed and 46% of the grain marketed were
           supplied to the Company by its members.  Cattle are purchased from
           producers in the proximity of beef plants at Liberal and Dodge City,
           Kansas.  

           A substantial portion of the Company's farm supply, pork and beef
           products are produced in facilities owned by the Company or operated
           by the Company under long-term lease arrangements.  No material part
           of the business of any segment of the Company is dependent on a
           single customer or a few customers.  The Company competes for market
           share with numerous participants (including other regional
           cooperatives) with various levels of vertical integration, product
           diversification, sizes and types of operations.
                                   THE OFFERING
OFFERED AT 100% OF
                                                                                AGGREGATE FACE AMOUNT
                                                                              FOR                    FOR
                                                                             CASH                  EXCHANGE
Description of Securities* (see pages 15 to 29):
      Subordinated Capital Investment Certificates - $100 Minimum
         Interest payable or compounded semiannually at the 
         Certificate Interest Rate
            10-year maturity                                              $     40,000,000      $       20,000,000
              5-year maturity                                             $     45,000,000      $       25,000,000
      Subordinated Monthly Income Capital Investment Certificates
      - $5,000 Minimum 
         Interest payable monthly at the Certificate Interest Rate (additional
         units may be purchased in increments of $1,000 or more)
            10-year maturity                                              $     20,000,000      $       20,000,000
              5-year maturity                                             $     12,000,000      $       10,000,000
      Demand Loan Certificates - $100 minimum                             $     60,000,000      $              -0-

*Subordinated Capital Investment Certificates and Subordinated
Monthly Income Capital Investment Certificates are referred 
to in this Prospectus as "Subordinated Debt Certificates."
PLAN OF DISTRIBUTION
    Offered on a best efforts basis by Farmland Securities Company ("FSC") and
    American Heartland Investments, Inc. ("AHI") and may be offered by selected
    broker-dealers.  See "Plan of Distribution."

UNDERWRITING DISCOUNTS AND COMMISSIONS
    Farmland will pay commissions to FSC not to exceed 4% of the sale price of
    Demand Loan Certificates and Subordinated Debt Certificates being offered. 
    Farmland will pay all expenses and liabilities incurred by FSC, limited to
    an amount not to exceed 3% of the aggregate sales price of Demand Loan and
    Subordinated Debt Certificates being offered.  Farmland will pay to AHI and
    to other selected broker-dealers for their services a sales commission of
    not more than 4% of the face amount of the Subordinated Debt Certificates
    and not more than 1/2 of 1% of the face amount of the Demand Loan
    Certificates which the broker-dealers sell.  See "Plan of Distribution."

PURPOSE OF THE EXCHANGE OFFER
    The purpose of the exchange offer is to extend the period of time for which
    Farmland may utilize funds borrowed from an investor in its securities.

METHOD OF TRANSACTING AN EXCHANGE
    The exchange offer may be accepted by delivering any of the Certificates,
    which are eligible for exchange, to Farmland Securities Company ("FSC")
    P.O. Box 7305, Kansas City, Missouri 64116.  The Certificates should be
    assigned to Farmland in the transfer section (on the reverse side of the
    Certificate) and endorsed by all persons whose names appear on the face of
    the Certificate.  For additional information regarding the exchange, see
    "How to Accept Exchange Offer," or call (816) 459-6360 or write to the
    above address for specific information.

USE OF PROCEEDS
    Any proceeds received will be used to fund portions of capital expenditures
    which are estimated to be approximately $289.9 million through August 31,
    1996, or to redeem any of the $43.3 million of outstanding Subordinated
    Debt Certificates, which mature at various times prior to August 31, 1996,
    or to redeem any outstanding Subordinated Debt Certificates prior to
    maturity at the request of owners to the extent provided in each
    Subordinated Debt Certificates respective trust indenture.  Any proceeds in
    excess of amounts required for these purposes would be used to reduce bank
    or other borrowings with rates of interest higher than the Certificate
    Interest Rate of the securities offered hereby.  If proceeds from sales of
    the securities offered hereby are less than amounts required for these
    purposes, additional funds may be obtained from operations or from bank
    borrowings.  Farmland has reserved the right to change the use of the
    proceeds from this offering.  See "Use of Proceeds," "Business - Other
    Matters - Capital Expenditures," and "Description of Subordinated Capital
    Investment Certificates," "Description of Subordinated Monthly Income
    Capital Investment Certificates" and "Description of Demand Loan
    Certificates."

SELLING PRICE
    100% of Face Amount.

PROVISIONS FOR REDEMPTION OR PREPAYMENT
    Owners of the Subordinated Debt Certificates may not liquidate their
    investments except under restricted conditions summarized below and as more
    fully stated in each of the Subordinated Debt Certificates respective trust
    indenture.

    A.  Farmland will not redeem any of the Subordinated Capital Investment
        Certificates prior to maturity except:

        (i) upon death of an owner; or,

        (ii)    after the date any Subordinated Capital Investment Certificate
                becomes eligible for redemption prior to maturity at the option
                of the owner, in additional amounts limited in any month to the
                greater of $500,000 or 1/2 of 1% of the balance outstanding
                under the Subordinated Capital Investment Certificates
                respective trust indenture at the end of the previous month,
                provided such balance outstanding is greater than $5,000,000. 
                If such balance outstanding is less than $5,000,000 there will
                be no limitation on early redemption of eligible Subordinated
                Capital Certificates outstanding under such trust indenture.

    B.  Farmland will not redeem the Subordinated Monthly Income Capital
        Investment Certificates prior to maturity except upon the death of an
        owner.

    Farmland has the right to call the Subordinated Capital Investment
    Certificates any time after two years from the date of issuance thereof. 
    See the subcaption, "Redemption" within the description of each type of
    certificate.

                           FARMLAND INDUSTRIES, INC.
                 SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
Year Ended August 31                  
                                                   1994         1993         1992         1991        1990    
                                                                        (Dollars in Thousands)
Summary of Operations(1)(2)(3):
   Sales           . . . . . . . . . . . . . .  $ 6,677,933  $ 4,722,940  $ 3,429,307  $ 3,638,072  $ 3,377,603
   Income (Loss) before Income Taxes and
      Extraordinary Item   . . . . . . . . . .  $    78,766  $   (36,833) $    70,504  $    50,166  $    58,184
   Net Income (Loss)   . . . . . . . . . . . .  $    73,876  $   (30,400) $    62,313  $    42,693  $    48,580 

 Ratio of Earnings to Fixed Charges (4)  . . .          2.2       Note 4          2.5          1.9          2.2

 Balance Sheets:
   Working Capital   . . . . . . . . . . . . .  $   290,704  $   260,519  $   208,629  $   122,124  $   121,518
   Property, Plant and Equipment, Net  . . . .  $   501,290  $   504,378  $   446,002  $   490,712  $   469,710
 Total Assets      . . . . . . . . . . . . . .  $ 1,926,631  $ 1,719,981  $ 1,526,392  $ 1,369,231  $ 1,352,889
 Long-Term Debt    . . . . . . . . . . . . . .  $   517,806  $   485,861  $   322,377  $   291,192  $   273,071
 Capital Shares and Equities . . . . . . . . .  $   585,013  $   561,707  $   588,129  $   497,364  $   476,011
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for details.
(1)   On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
      ("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration
      and production operations, and exited its oil and gas exploration and
      production activities.  The gain from the sale of Terra amounted to
      $237,200,000 for tax reporting purposes.  During 1983, and prior to the
      sale of the Terra stock, Farmland received certain distributions from
      Terra totaling $24,800,000.  For tax purposes, Farmland claimed
      intercorporate dividends-received deductions for the entire amount of
      such distributions.

   On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
   notice to Farmland asserting deficiencies in federal income taxes (exclusive
   of statutory interest thereon) in the aggregate amount of $70,775,000.  The
   asserted deficiencies relate primarily to the Company's tax treatment of the
   sale of the Terra stock and the distributions received from Terra prior to
   the sale.  The IRS asserts that Farmland incorrectly treated the Terra sale
   gain as income against which certain patronage-sourced operating losses
   could be offset, and that, as a nonexempt cooperative, Farmland was not
   entitled to an intercorporate dividends-received deduction in respect of the
   1983 distribution by Terra.  It further asserts that Farmland incorrectly
   characterized gains for tax purposes aggregating approximately $14,600,000,
   and a loss of approximately $2,300,000, from the disposition of certain
   other assets.  On June 11, 1993, Farmland filed a petition in the United
   States Tax Court contesting the asserted deficiencies in their entirety. 
   Discovery and other pre-trial phases of the litigation have since been
   ongoing.  The case is scheduled for trial on March 6, 1995.

   If the IRS ultimately prevails on all of the adjustments asserted in the
   statutory notice, Farmland would have additional federal and state income
   tax liabilities aggregating approximately $85,800,000 plus accumulating
   statutory interest thereon through October 31, 1994, of approximately
   $154,900,000 (before tax benefits of the interest deduction).  In addition,
   such adjustments would affect the computation of Farmland's taxable income
   for its 1989 tax year and, as a result, could increase Farmland's federal
   and state income taxes for that year by approximately $5,000,000 plus
   applicable statutory interest thereon.

   No provision has been made in the consolidated financial statements for
   federal or state income taxes (or interest thereon) in respect of the IRS
   claims described above.  Farmland believes that it has meritorious positions
   with respect to all of these claims and will continue to vigorously pursue
   their favorable resolution through the pending litigation.

   In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
   likely than not that the courts will ultimately conclude that (i) Farmland's
   treatment of the Terra sale gain was substantially, if not entirely,
   correct; and (ii) Farmland properly claimed a dividends-received deduction
   in respect of the 1983 distributions which it received from Terra prior to
   the sale of the Terra stock.  Counsel has further advised, however, that
   none of the issues involved in these disputes is free from doubt, and that
   there can be no assurance that the courts will ultimately rule in favor of
   Farmland on any of these issues.

   Should the IRS ultimately prevail on all of its asserted claims, all claimed
   federal and state income taxes as well as accrued interest would become
   immediately due and payable, and would be charged to current operations.  In
   such case, the Company would be required to renegotiate agreements with its
   banks to maintain compliance with various requirements of such agreements,
   including working capital and funded indebtedness provisions.  However, no
   assurance can be given that such renegotiation would be successful. 
   Alternatives could include other financing arrangements or the possible sale
   of assets.

(2)   During the year ended August 31, 1991, the Company changed its method for
      inventory pricing of certain petroleum inventories from the first-in,
      first out (FIFO) method previously used to the last-in, first out (LIFO)
      method because the LIFO method better matches current costs with current
      revenues.  Pro forma effects of retroactive application of the LIFO
      method are not determinable.

(3)   Acquisitions and Dispositions:

   (a)   In October 1993, the Company acquired approximately 53% of the common
         stock of National Carriers, Inc. ("NCI") and increased its ownership
         of NCI to 79% in August 1994.  NCI is a trucking company located in
         Liberal, Kansas.  NCI provides substantially all the trucking service
         needs of NBPC.  The purchase price of NCI ($4,423,000) was paid in
         cash.  See note 2 of the notes to consolidated financial statements.

   (b)   In December 1993, the Company acquired all the common stock of seven
         international grain trading companies (collectively referred to as
         "Tradigrain").  The purchase price for Tradigrain ($31,367,000) was
         paid in cash.  See note 2 of the notes to consolidated financial
         statements.

   (c)   During 1993, Farmland obtained a 58% interest in National Beef Packing
         Company, L.P. ("NBPC"), a limited partnership.  Effective April 15,
         1993, NBPC acquired Idle Wild Food's beef packing plant and feedlot
         located in Liberal, Kansas.  See note 2 of the notes to consolidated
         financial statements.

   (d)   On August 30, 1993, Farmland reduced its ownership interest in The
         Cooperative Finance Association, Inc. ("CFA") to 49%.  In addition,
         CFA purchased the assets and operations of Farmland Financial Services
         Company ("FFSC").  Effective December 1, 1993, CFA owners approved a
         recapitalization plan which limits the voting rights of any owner
         (including Farmland) to 25% or less regardless of the number of voting
         shares held.  Effective August 31, 1993, CFA is not included in the
         consolidated balance sheet of the Company and Farmland is no longer
         engaged in commercial lending operations.

   (e)   Effective June 30, 1992, the Company acquired the grain marketing
         assets of Union Equity Co-Operative Exchange ("Union Equity").  See
         note 2 of the notes to consolidated financial statements.

   (f)   The following unaudited financial information for the year ended
         August 31, 1993 and 1992 presents pro forma results of operations of
         the Company as if the disposition of CFA and the acquisition of NBPC
         had occurred at the beginning each period presented.  The pro forma
         financial information includes adjustments for amortization of
         goodwill, additional depreciation expense, and increased interest
         expense on debt assumed in the acquisitions.  The pro forma financial
         information does not necessarily reflect the results of operations
         that would have occurred had the Company been a single entity which
         excluded CFA and included Union Equity and NBPC for the full years
         1993 and 1992.  See note 2 of the notes to consolidated financial
         statements.
August 31 (Unaudited)
                                                                         1993                 1992     
                                                                           (Amounts in Thousands)
Net sales . . . . . . . . . . . . . . . . . . .   $       5,357,867       $    5,441,303

                 Income (loss) before extraordinary item . . . .   $         (44,040)        $     47,225
(4)   In computing the ratio of earnings to fixed charges, income (loss)
      represents pretax income (loss) for the enterprise as a whole including
      100% of such income (loss) of minority-owned subsidiaries which have
      fixed charges, the registrant's share of 50%-owned persons and any
      distributed earnings (but not losses or undistributed earnings) of
      less-than-fifty percent-owned persons plus fixed charges.  Fixed charges
      consist of interest and finance charges on all indebtedness plus that
      portion of rentals considered to be the interest factor.  Income was
      inadequate to cover fixed charges for the year ended August 31, 1993. 
      The dollar amount of the coverage deficiency was $36,609,000.

                                 RISK FACTORS

    Prospective investors in the Demand Loan Certificates and Subordinated Debt
Certificates offered hereby are advised to consider the following risk factors:

INCOME TAX MATTERS

    The Internal Revenue Services ("IRS") has asserted that Farmland
incorrectly treated as patronage-sourced income a gain for income tax purposes
of $237,200,000 which resulted from the sale of the stock of Terra Resources,
Inc. ("Terra") and that Farmland, as a nonexempt cooperative, was not entitled
to intercorporate dividends-received deductions with respect to distributions
of $24,800,000 received in 1983 from Terra.

    On March 24, 1993, the IRS issued a statutory notice to Farmland asserting
deficiencies in federal income taxes (exclusive of statutory interest thereon)
in the aggregate amount of $70,775,000.  The asserted deficiencies relate
primarily to the Company's tax treatment of the sale of the Terra stock and the
distributions received from Terra prior to the sale.  It further asserts that
Farmland incorrectly characterized gains for tax purposes aggregating
approximately $14,600,000, and a loss of approximately $2,300,000, from
dispositions of certain other assets.  On June 11, 1993, Farmland filed a
petition in the United States Tax Court contesting the asserted deficiencies in
their entirety.  Discovery and other pre-trial phases of the litigation have
since been ongoing.  The case is scheduled for trial on March 6, 1995.

    If the IRS ultimately prevails on all of the adjustments asserted in the
statutory notice, Farmland would have additional federal and state income tax
liabilities aggregating approximately $85,800,000 plus accumulating statutory
interest thereon through October 31, 1994, of approximately $154,900,000
(before tax benefits of the interest deduction).  In addition, such adjustments
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $5,000,000 plus applicable statutory interest
thereon.

    Should the IRS ultimately prevail on all of its asserted claims, all
claimed federal and state income taxes as well as accrued interest would become
immediately due and payable, and would be charged to current operations.  In
such case, the Company would be required to renegotiate agreements with its
banks to maintain compliance with various requirements of such agreements,
including working capital and funded indebtedness provisions.  However, no
assurance can be given that such renegotiation would be successful. 
Alternatives could include other financing arrangements or the possible sale of
assets.  See note 7 of the notes to consolidated financial statements.

GENERAL FACTORS AFFECTING THE COMPANY'S BUSINESS

    The Company's revenues depend, to a large extent, on conditions in
agriculture and may be volatile due to factors beyond the Company's control,
such as weather, crop failures, federal agricultural programs, production
efficiencies, and U.S. imports or exports.  In addition, various federal and
state regulations to protect the environment encourage farmers to reduce the
amount of fertilizer and other chemicals applications.  Federal agricultural
programs continue to encourage U.S. farmers to reduce planted acreage.  Global
variables which affect supply, demand and price of crude oil and refined fuels
impact the Company's petroleum operations.  Management cannot determine the
extent to which these factors may impact future operations of the Company.  The
Company's cash flow and net income may continue to be volatile as conditions
affecting agriculture and markets for the Company's products change.  See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

SOURCE OF FUNDS TO PAY INTEREST AND PRINCIPAL

    Farmland does not establish special cash reserves for payment of principal
or interest on its Demand Loan and Subordinated Debt Certificates.  In the
past, Farmland has relied on general corporate funds provided by operations,
sales of assets, and other borrowings (including the issuance of other Demand
Loan and Subordinated Debt Certificates) to fund such payments.  Farmland
intends to make interest payments on and to redeem Demand Loan and Subordinated
Debt Certificates in accordance with the respective trust indentures with cash
from operations, borrowings, and from issuance of other Demand Loan or
Subordinated Debt Certificates.

SUBORDINATION AND ADDITIONAL DEBT

    The Subordinated Debt Certificates offered by this Prospectus for sale and
for exchange are unsecured and subordinated to "senior indebtedness."    Such
"senior indebtedness" includes money borrowed from time to time from certain
financial institutions and amounts due and payable under any instrument which
provides that such amounts are to be "senior indebtedness."  At August 31,
1994, such money borrowed aggregated approximately $450,827,000.  In addition,
such other instruments (principally long-term leases) then in effect provided
for aggregate payments over nine years of approximately $126,505,000.  There is
no limitation on the amount of additional senior debt for which Farmland may
become liable, except that, in accordance with covenants in certain borrowing
and lease agreements, the total amount of funded debt and senior funded debt
outstanding may not exceed 52% and 43% of capitalization, respectively.  See
"Management Discussion and Analysis of Financial Condition and Results of
Operations" and the subcaption "Subordination" within the description of each
type of certificate.  The Demand Loan Certificates are unsecured general
obligations of Farmland Industries, Inc.

RESTRICTED REDEMPTION RIGHTS OF HOLDERS OF SUBORDINATED DEBT CERTIFICATES

    OWNERS OF THE SUBORDINATED DEBT CERTIFICATES MAY NOT LIQUIDATE THEIR
INVESTMENTS EXCEPT UNDER RESTRICTED CONDITIONS SUMMARIZED BELOW AND MORE FULLY
STATED IN EACH OF THE SUBORDINATED DEBT CERTIFICATES RESPECTIVE TRUST
INDENTURE.  THE RESTRICTED REDEMPTION RIGHTS OF HOLDERS OF THE SUBORDINATED
DEBT CERTIFICATES MAY BE UNSUITABLE TO THE INVESTMENT OBJECTIVES OF CERTAIN

PROSPECTIVE INVESTORS.

    Farmland will not redeem any of the Subordinated Capital Investment
Certificates prior to maturity except:
     (i)        upon death of an owner; or,
     (ii)       after the date any Subordinated Capital Investment Certificate
                becomes eligible for redemption prior to maturity at the option
                of the owner, in additional amounts limited in any month to the
                greater of $500,000 or 1/2 of 1% of the balance outstanding
                under the Subordinated Capital Investment Certificates'
                respective trust indenture at the end of the previous month,
                provided such balance outstanding is greater than $5,000,000. 
                If such balance outstanding is less than $5,000,000, there will
                be no limitation on early redemption of eligible Subordinated
                Capital Investment Certificates outstanding under such trust
                indenture.. 

    Farmland will not redeem the Subordinated Monthly Income Capital Investment
Certificates prior to maturity except upon the death of an owner.

    Farmland has the right to call the Subordinated Capital Investment
Certificates any time after two years from the date of issuance thereof.  See
the subcaption "Redemption" within the description of each type of certificate.

LACK OF AN ESTABLISHED MARKET FOR THE SECURITIES TO BE OFFERED

    There is no secondary market for Farmland's Subordinated Debt Certificates
or Demand Loan Certificates presently outstanding and there likely will be no
secondary market for these securities.

AFFILIATED UNDERWRITER

    Farmland Securities Company ("FSC") is a wholly-owned subsidiary of
Farmland.  FSC's business is limited to the offer and sale of securities issued
by Farmland.  This offering is being made in compliance with terms of a partial
exemption from requirements of Schedule E of the NASD Bylaws; no persons, other
than persons associated with Farmland or FSC, participated in determining the
price and other terms of the securities offered hereby.  See "Plan of
Distribution." 

POTENTIAL TAXABLE GAINS OR LOSSES FROM THE EXCHANGE

    An exchange of Certificates in a transaction permitted by this Prospectus
could result in a gain or a loss for purposes of determining taxable income of
holders of Certificates.  See "Exchange Offer."

                DETERMINATION OF THE CERTIFICATE INTEREST RATE

    The Certificate Interest Rate ("CIR") is the interest rate per annum on the
Certificates as determined by the President of Farmland, from time to time, at
his sole discretion after giving consideration to the current rates of interest
established by various money markets, and Farmland's need for funds.  Any
change in the CIR will not affect the CIR on any Subordinated Capital
Investment Certificates or Subordinated Monthly Income Capital Investment
Certificates for which the full purchase price was received prior to the
change.  With respect to the Demand Loan Certificates, the CIR is the interest
rate for Demand Loan Certificates as determined, from time to time, by the
President of Farmland, in his sole discretion.  Except as hereinafter provided,
each Demand Loan Certificate shall earn interest at the CIR in effect on the
date of issuance of such Demand Loan Certificate for a period of six (6) months
only:  provided, however, that if during such six (6) month period the CIR for
Demand Loan Certificates is increased to a rate higher than that currently in
effect for a Demand Loan Certificate, then each such Demand Loan Certificate
shall earn interest at the increased rate from the effective date of the
increase to the end of such Demand Loan Certificate's then current six (6)
month period.  Six (6) months from the date of issuance of each Demand Loan
Certificate and each six (6) month anniversary date thereafter, such Demand
Loan Certificate shall, if not redeemed, earn interest at the CIR for Demand
Loan Certificates in effect on such anniversary date, but only for a six (6)
month period from such anniversary date, subject to the escalation provisions
previously set forth.  A decrease in the CIR for Demand Loan Certificates will
have no effect on the CIR of any Demand Loan Certificate issued prior to the
decrease unless such decreased rate is in effect on the first day of the next
subsequent six (6) month period of such outstanding Demand Loan Certificate.

    On the date of this Prospectus, the CIR was 7.75% on Five-Year and 8.25% on
Ten-Year Subordinated Capital Investment Certificates; 7.75% on Five-Year, and
8.25% on Ten-Year Subordinated Monthly Income Capital Investment Certificates;
and 4.75% on Demand Loan Certificates.  Whenever the CIR is changed, this
Prospectus shall be amended to specify the interest rate in effect, after the
effective date of the change as specified in the amendment, on the Certificates
to be offered pursuant to such Prospectus.  Whenever the CIR is changed each
respective Demand Loan Certificate and Subordinated Debt Certificate owner is
notified in writing of the change as specified in the amendment.  Information
concerning the CIR can be obtained from the Prospectus or from Farmland
Securities Company, Post Office Box 7305, Kansas City, Missouri 64116
(telephone 1-800-821-8000, extension 6360).  See "Description of the Ten-Year
and Five-Year Subordinated Capital Investment Certificates," "Ten-Year and
Five-Year Subordinated Monthly Income Capital Investment Certificates" and
"Demand Loan Certificates."
 

                                USE OF PROCEEDS

    The offering is made on a best efforts basis with no established minimum
amount of Subordinated Debt and Demand Loan Certificates that must be sold.  No
assurance can be provided as to the amount of net proceeds the Company may
receive as a result of this offering.  Assuming that all of the Subordinated
Debt and Demand Loan Certificates offered hereby are sold, net proceeds to the
Company will be approximately $170,363,000 after deducting estimated
commissions and expenses.  Any proceeds to the Company from this offering may
be used: 1) to fund portions of the Company's capital expenditures which are
expected to be approximately $289.9 million through the two-year period ending
August 31, 1996; 2) to refinance approximately $43.3 million of Subordinated
Debt Certificates which mature at various times prior to August 31, 1996; 3) to
fund call options which, subject to provisions in each respective trust
indenture, may be exercised by Farmland; or 4) to redeem Subordinated Debt
Certificates prior to maturity at owners' requests, restricted to the limited
redemption rights of owners as described in each Subordinated Debt Certificates
respective trust indenture.  See "Other Matters - Capital Expenditures" and the
subcaption "Redemptions" within the description of each type of certificate.

    Any proceeds in excess of amounts required for the above purposes would be
applied to reduce bank or other borrowings being used to finance inventories,
operations or facilities provided that such borrowings have interest rates
higher than the CIR of the securities offered hereby.  To the extent that
proceeds from sales of the securities offered hereby are less than amounts
required for these purposes, such insufficient amounts may be obtained from
operations, from bank or other borrowings or from other financing arrangements.

    At November 30, 1994, under a syndicated credit facility provided by eight
domestic and international banking institutions, additional borrowings of
approximately $371,937,000 were available to Farmland.  A summary of the terms
and conditions of these credit agreements is set out in "Management's
Discussion and Analysis of Financial Condition and Results of Operations." 
Farmland has reserved the right to obtain funds in any manner deemed advisable. 
Farmland intends to maintain a continuous offering of securities as it has done
in the past.  Farmland has reserved the right to change the use of the proceeds
of this offering due to contingencies related to the volatile nature of the
Company's cash flows as discussed elsewhere herein.  See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
General."

                             PLAN OF DISTRIBUTION

    The securities offered by this Prospectus for cash and for exchange are
offered by Farmland Securities Company ("FSC"), American Heartland Investments,
Inc. ("AHI") and may be offered by other broker-dealers selected by Farmland. 
The offering is on a best efforts basis.  There is no requirement that any
minimum amount of securities offered hereby must be sold.  The offering shall
be for an indeterminate period of time not expected to be in excess of two
years.

    FSC, located at 3315 North Oak Trafficway, Kansas City, Missouri, is a
wholly-owned subsidiary of Farmland organized for the sole purpose of offering
Farmland's Demand Loan and Subordinated Debt Certificates for sale to the
general public and/or for exchange and to solicit offers therefor which are
subject to acceptance by Farmland.  FSC is a member of The National Association
of Securities Dealers, Inc. (NASD) and the Securities Investor Protection
Corporation (SIPC).  FSC's involvement in this offering is in compliance with
terms of a partial exemption from requirements of Schedule E of the NASD
Bylaws; no persons, other than persons associated with Farmland or FSC,
participated in determining the price and other terms of the securities offered
hereby.  FSC is under no firm commitment or obligation to solicit offers for
any specified amount of such debt securities.  FSC's commitment is to use its
best efforts to solicit such orders.  Farmland will pay commissions to FSC not
to exceed 4% of the aggregate price of Demand Loan Certificates and
Subordinated Debt Certificates being offered.  Farmland will pay all expenses
and liabilities incurred by FSC, limited to an amount not to exceed 3% of the
aggregate sales price of Demand Loan and Subordinated Debt Certificates being
offered.  FSC is a registered broker-dealer under the Securities Exchange Act
of 1934, but has only limited authority to engage in the offer and sale of
securities issued by Farmland.  Farmland will indemnify FSC for certain
liabilities under the Securities Act of 1933. 

    The Company has engaged AHI, located at 219 South Santa Fe, P. O. Box 1303,
Salina, Kansas 67402, to offer Farmland Demand Loan and Subordinated Debt
Certificates to the general public and for exchange and to solicit offers
therefore which are subject to acceptance by Farmland.  Farmland may engage
other broker-dealers that are qualified to offer and sell the Demand Loan
Certificates and Subordinated Debt Certificates in a particular state and that
are members of the National Association of Securities Dealers, Inc.  AHI and
each broker-dealer participating in this offering shall be held responsible for
complying with all statutes, rules and regulations of all jurisdictions in
which each participating broker-dealer offers the Demand Loan and Subordinated
Debt Certificates for sale.  Farmland will pay to AHI and may pay to other
selected broker-dealers for their services a sales commission of not more than
4% of the face amount of Subordinated Debt Certificates and not more than 1/2
of 1% of the face amount of Demand Loan Certificates which AHI and other
selected broker-dealers sell.  In addition, Farmland will pay to AHI and may
pay to other selected broker-dealers an unallocated due diligence and marketing
fee of not more than 1/2 of 1% of the face amount of such certificates the
broker-dealers sell.  Farmland may indemnify AHI and other selected
broker-dealers for certain liabilities arising out of violations by Farmland of
blue sky laws, or the Securities Act.

    Interstate/Johnson Lane Corporation, a member of the NASD, participated as
a qualified independent underwriter in the "due diligence" review with respect
to the preparation of this Prospectus, however, as discussed above,
Interstate/Johnson Lane Corporation will not be participating in the pricing of
this issue.

                                EXCHANGE OFFER

    Farmland is offering: (1) to the owners of its Subordinated Capital
Investment Certificates the right to exchange such certificates for an
equivalent principal amount of any Subordinated Monthly Income Capital
Investment Certificate ($5,000 minimum) which, at the time of the exchange, is
being offered by this Prospectus, and (2) to the owners of its Subordinated
Capital Investment Certificates, which have been held until eligible for
redemption prior to maturity at the option of the owner, the right to exchange
such certificates for an equivalent principal amount of any Subordinated
Capital Investment Certificate which, at the time of the exchange, is being
offered by this Prospectus.

    The exchange will be made effective on the day certificates eligible for
exchange are received at Farmland's office in Kansas City, Missouri, provided,
however, that any certificates received within a ten (10) day period preceding
the record date of such certificates, the exchange shall be made effective as
of the first day following such record date.  The exchange is irrevocable after
the effective date, but is revocable at any time prior to the effective date. 
Notice of an owner's revocation may be in writing, delivered to the address
given below (see "How to Accept Exchange Offer") or by telephone to (816)
459-6360.  This exchange offer will expire at 12:00 P.M. Eastern Standard Time
on December 31, 1995, unless terminated prior to such date.  Owners of
certificates eligible for exchange shall be notified by letter from Farmland at
least 30 days prior to the effective date of Farmland's termination of this
exchange offer.

    Any interest accrued on a certificate being exchanged will be paid on the
day the exchange is made effective.

    The opinion of Robert B. Terry, Vice President and General Counsel of
Farmland, which opinion is set forth herein in full as follows, is:  The
exchange of certificates would be considered as taxable exchanges.  The basis
for determining a taxable gain or loss on a taxable exchange is for an owner to
take into account as gain or loss the difference between the fair market value
of the security being received and his basis (usually cost) in the security
being exchanged.  As a practical matter, most owners should have no gain or
loss since the securities were sold at 100% of Face Amount and are being
exchanged at 100% of Face Amount.  However, since it is possible for a prior
owner to have sold his certificate to another person at a cost which is more or
less than he had paid for it, a subsequent owner could have a different cost
than the original issued cost.  Any gain or loss recognized on a taxable
exchange would be taken into account for purpose of federal income taxes as a
gain or loss from the sale or disposition of a capital asset and would be
short-term gain or loss unless, at the time of exchange, it had been held for a
period of more than twelve months.  Owners of these certificates should seek
advice from their tax advisor before accepting the exchange offer.

                         HOW TO ACCEPT EXCHANGE OFFER

    The exchange offer may be accepted by delivering any of the Subordinated
Capital Investment Certificates, which are eligible for exchange (see "Exchange
Offer" immediately above), to Farmland Securities Company, P.O. Box 7305,
Kansas City, Missouri 64116 or American Heartland Investments, Inc. P. O. Box
1303, Salina, Kansas, 67402.  The certificates should be assigned to Farmland
in the transfer section (on the reverse side of the certificate) and endorsed
by all of the persons whose names appear on the face of the certificate. 
Should any registered owner be incapable of endorsing the certificate,
additional documentation may be necessary.  Call (816) 459-6360 or write to the
above address for specific information.  Should registered owners wish to have
the new certificate issued to persons other than as shown on the certificate
being surrendered in the exchange, the endorsement signatures must be
guaranteed by a commercial bank or trust company officer or a NASD member firm
representative.  The exchange offer must be accompanied by a completed "Order
and Receipt for Investment" form supplied by Farmland Securities Company or
American Heartland Investments, Inc.  The U.S. Treasury Form W-9 Backup
Withholding Certificate included on the order form must be completed and signed
by the principal owner of the new certificate.

                           HOW TO TRANSFER OWNERSHIP

    To transfer ownership of certificates, the certificates should be assigned
to the new owner(s) in the transfer section on the reverse side of the
certificate and endorsed by all persons named on the face of the certificate. 
Should any registered owner be incapable of endorsing the certificate,
additional documentation may be necessary.  Call (816) 459-6360 or write
Farmland Industries, Inc., P.O. Box 7305, Kansas City, Mo. 64116 for specific
information.  All transfer requests require that endorsement signatures be
guaranteed by a commercial bank or trust company officer or an NASD member firm
representative.  Requests for transfer should be accompanied by a completed
"Order and Receipt for Investment" form supplied by Farmland Securities
Company.  The U.S. Treasury Form W-9 Backup Withholding Certificate included on
the order form must be completed and signed by the new principal owner.

DESCRIPTION OF THE TEN-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES

    The Ten-Year Subordinated Capital Investment Certificates, hereinafter
referred to as "Certificates," bearing an interest rate hereinafter described
and referred to as the "Certificate Interest Rate," are issued under an
indenture (the "Indenture of November 8, 1984") dated November 8, 1984, as
amended January 3, 1985 and December 3, 1991, between Farmland Industries, Inc.
("Farmland") and Commerce Bank of Kansas City, National Association, Kansas
City, Missouri, as Trustee (the "Trustee.")

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 8, 1984.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
a part of the statements, made, and such statements are qualified in their
entirety by such reference.

GENERAL

    The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable.  Interest on the principal sum at the Certificate
Interest Rate per annum is payable at the election of the owner, made at the
time of purchase, (i) semiannually or (ii) at maturity or at the date of
redemption if redeemed prior to maturity.  See "Certificate Interest Rate"
below.  The Certificates are issued in amounts of $100 or more as of the first
day on which offers acceptable to Farmland and accompanied by payment of the
full purchase price have been received by Farmland in Kansas City, Missouri. 
The Certificates mature ten years from date of issue.  The payment of the
principal at maturity may, at the request of the owner, be paid in a lump sum
or in equal monthly, quarterly, semiannual or annual installments, including
interest on the unpaid balance at the rate of six percent (6%) per annum, over
a period of not more than thirty-six months.

    The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 8, 1984, but such Indenture does not limit
the amount of other securities, either secured or unsecured, which may be
issued by Farmland.  At August 31, 1994, a total of $108,125,000 was
outstanding.

    Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statements
upon written request of the owner to Farmland Industries, Inc., P. O. Box 7305,
Kansas City, Missouri 64116.  Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.

CERTIFICATE INTEREST RATE

    The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate.  The Certificate Interest Rate will be such as Farmland may
from time to time determine but any change of the Certificate Interest Rate
will not affect the Certificate Interest Rate on any Certificate for which the
full purchase price was received prior to the change.  See "Determination of
the Certificate Interest Rate."

    Interest at the Certificate Interest Rate per annum is payable on the
principal sum at the election of the purchaser, made at the time of purchase,
in one of the following ways:  (i) semiannually on January 1 and July 1 to
owners of record on the last preceding December 31 and June 30, respectively;
or (ii) at maturity, or at the date of redemption if redeemed prior to
maturity, compounded semiannually on December 31 and June 30 at the Certificate
Interest Rate which is stated on the face of the Certificate.  Any election to
receive payment of the interest semiannually is irrevocable.  The election to
receive payment of the interest at maturity, or at the date of redemption if
redeemed prior to maturity, will be terminated upon written request of the
owner, such termination to be effective as of the last previous interest
compounding date.  Such termination is irrevocable and, at the same time, is an
election to thereafter receive payment of the interest semiannually.  Any
interest attributable to periods starting with the date of purchase and ending
with the effective date of the written request of the holder to terminate the
election to receive payment of the interest at maturity or at the date of
redemption if redeemed prior to maturity will be paid upon receipt of the
written request to terminate the election.  Farmland shall have the right at
any time by notice to the owner to terminate any obligation to continue
retaining the interest of any owner pursuant to an owner's election.  Such
termination shall be effective as of the opening of business on the day
following the first interest compounding date after such notice is mailed to
the owner and the owner will be paid all the interest in the owner's account on
the effective date.

REMEDIES IN EVENT OF DEFAULT

    The Indenture of November 8, 1984 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes).  The Indenture
describes the duties and alternative courses of action which, upon the
occurrence of a default, will be taken by the Trustee as directed by written
notice of the holders of a majority of the principal amount of the Certificates
then outstanding.  The Indenture provides that action taken by the Trustee, as
a result of default, will not impair and that no other provisions in the
Indenture will impair the rights of any certificate owner to receive payment of
the principal of and interest on such Certificates on or after the respective
dates expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of
an interest payment for a period not exceeding three years from its due date.

SUBORDINATION

    The payment of the principal and interest on the Certificates is
subordinate in right of payment to the extent set forth in the Indenture to the
prior payment in full of all Senior Indebtedness.  Senior Indebtedness is
defined as (a) the principal of and interest on indebtedness of Farmland (other
than the indebtedness of Farmland with respect to its Subordinated Certificates
of Investment issued under indentures dated February 25, 1970 and under
indentures dated November 29, 1971; and with respect to its Subordinated
Capital Investment Certificates issued under indentures dated July 29, 1974,
and under an indenture dated November 29, 1976, and under an indenture dated
October 24, 1978, and under an indenture dated October 24, 1979, and under an
indenture dated May 20, 1980, and under indentures dated November 5, 1980 and
under indentures dated November 8, 1984; and with respect to its Subordinated
Monthly Income Capital Investment Certificates issued under an indenture dated
July 29, 1974, and under an indenture dated October 24, 1979, and under an
indenture dated November 5, 1980, and under an indenture dated November 8,
1984, and under an indenture dated November 11, 1985; and with respect to its
Subordinated Individual Retirement Account Certificates issued under an
indenture dated November 20, 1981 and under an indenture dated November 8,
1984) for money borrowed from or guaranteed to banks, trust companies,
insurance companies, or pension trusts or evidenced by securities issued under
the provisions of an indenture or similar instrument between Farmland and a
bank or trust company other than indebtedness evidenced by instruments which
expressly provide that such indebtedness is not superior, or (b) indebtedness
created after the date of the Indenture of November 8, 1984, as to which the
instrument creating or evidencing the indebtedness provides that such
indebtedness is superior in right of payment to the Certificates.

    In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or in
bankruptcy, insolvency, receivership or other proceeding of Farmland, the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment.  After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have
been entitled if there had been no subordination.  By reason of such
subordination, in the event of Farmland's insolvency, holders of Senior
Indebtedness may receive more, ratably, and owners of the Certificates may
receive less, ratably, than other creditors of Farmland (Section 4.05(a)).

REDEMPTION

    The Certificates may be redeemed, after two (2)  years from date of
issuance, at the option of Farmland at any time prior to maturity, on at least
ten days written notice, at face value plus accrued interest to the date of
redemption only.  The Indenture of November 8, 1984 permits Farmland to select
in any manner at its discretion the Certificates to be redeemed.

    Commencing three (3) years after date of issuance, a limited amount of
Certificates can be redeemed prior to maturity during each month.  The maximum
amount that Farmland will redeem prior to maturity during any month is the
greater of $500,000 or 1/2 of 1% of the balance outstanding provided the
balance outstanding is greater than $5,000,000.  If the balance outstanding is
less than $5,000,000 there will be no limitation on early redemption of
eligible Certificates.

    The 1/2 of 1% limitation is determined as follows:

        (1) Add the face amount of Certificates held by all investors
            at the end of the preceding month to establish the
            "combined amount" held by investors at the end of the
            preceding month.

        (2) Multiply the "combined amount" by 1/2 of 1%.

    If the amount made available for redemption prior to maturity (as
determined in step one and two) exceeds the amount requested for redemption
prior to maturity, such excess is carried over to the next month and added to
the amount available for redemption prior to maturity, provided however that
any excess will not be carried beyond Farmland's fiscal year end.

    Redemption prior to maturity will be made upon the surrender of such
eligible Certificates properly endorsed accompanied by written request for
early redemption to Farmland, in the order in which such written requests for
redemption prior to maturity are received by Farmland.  In addition to the
amount available for redemption prior to maturity as determined above,
redemptions will be made in the case of death of an owner of the Certificates
upon written request of the legal owner accompanied by satisfactory proof of
ownership.  Redemptions prior to maturity will be made at the face value of the
Certificates plus interest to the date of redemption only.  Amounts available
for redemption prior to maturity are not set aside in a separate fund (Section
3.01 and 3.02).

CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture.  In
the case of a default, the owners of a majority in aggregate principal amount
of the Certificates outstanding at the time of the occurrence of a default have
the right to require the Trustee to take action to remedy such default.  Upon
the occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

    The Indenture of November 8, 1984 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

    The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indenture shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce  the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
Certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

    The Indenture of November 8, 1984 provides that any of the following shall
constitute a default: (1) failure to pay principal when due; (2) failure to pay
interest on Certificates when due, continued for 60 days; (3) certain events of
bankruptcy or insolvency; and (4) failure to perform any other covenant or
agreement contained in the Indenture, continued for 90 days.  Failure to pay
either principal or interest when due during the pendency of any dissolution or
liquidation proceeding or action to endorse payment of indebtedness shall also
constitute such a default (Section 6.01).

    The Indenture of November 8, 1984 provides that the Trustee shall within 90
days after the occurrence of a default, not including periods of grace, give to
the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment of
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate
owners (Section 6.02).

    The Indenture of November 8, 1984 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).

DESCRIPTION OF THE FIVE-YEAR SUBORDINATED CAPITAL INVESTMENT CERTIFICATES

    The Five-Year Subordinated Capital Investment Certificates, hereinafter
referred to as "Certificates," bearing an interest rate herein after described
and referred to as the "Certificate Interest Rate," are issued under an
indenture (the "Indenture of November 8, 1984") dated November 8, 1984, as
amended January 3, 1985 and December 3, 1991, between Farmland Industries, Inc.
("Farmland") and Commerce Bank of Kansas City, National Association, Kansas
City, Missouri, as Trustee (the "Trustee.")

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 8, 1984.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
a part of the statements made, and such statements are qualified in their
entirety by such reference.

GENERAL

    The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable.  Interest on the principal sum at the Certificate
Interest Rate per annum is payable at the election of the owner made at the
time of purchase (i) semiannually or (ii) at maturity or at the date of
redemption if redeemed prior to maturity.  See "Certificate Interest Rate"
below.  The Certificates are issued in amounts of $100 or more as of the day on
which offers acceptable to Farmland and accompanied by payment of the full
purchase price have been received by Farmland in Kansas City.  The Certificates
mature five years from date of issue.  The payment of the principal at maturity
may, at the request of the owner, be paid in a lump sum or in equal monthly,
quarterly, semiannual or annual installments, including interest on the unpaid
balance at the rate of six percent (6%) per annum, over a period of not more
than thirty-six months.

    The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 8, 1984, but such Indenture does not limit
the amount of other securities, either secured or unsecured, which may be
issued by Farmland.  At August 31, 1994, a total of $86,561,000 was
outstanding.

    Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statements
upon written request of the owner to Farmland Industries, Inc., P.O. Box 7305,
Kansas City, Missouri 64116.   Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.

CERTIFICATE INTEREST RATE

    The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate.  The Certificate Interest Rate will be such as Farmland may
from time to time determine but any change of the Certificate Interest Rate
will not affect the Certificate Interest Rate on any Certificate for which the
full purchase price was received prior to the change.  See "Determination of
the Certificate Interest Rate."

    Interest at the Certificate Interest Rate per annum is payable on the
principal sum at the election of the purchaser, made at the time of purchase,
in one of the following ways:  (i) semiannually on January 1 and July 1, to
owners of record on the last preceding December 31 and June 30, respectively;
or  (ii) at maturity or at the date of redemption if redeemed prior to
maturity, compounded semiannually, on December 31 and June 30 at the
Certificate Interest Rate which is stated on the face of the Certificate.  Any
election to receive payment of the interest semiannually is irrevocable.  The
election to receive payment of the interest at maturity, or at the date of
redemption if redeemed prior to maturity, will be terminated upon written
request of the owner, such termination to be effective as of the last previous
interest compounding date.  Such termination is irrevocable and, at the same
time, is an election to thereafter receive payment of the interest
semiannually.  Any interest attributable to periods starting with the date of
purchase and ending with the effective date of the written request of the
holder to terminate the election to receive payment of the interest at maturity
or at the date of redemption if redeemed prior to maturity will be paid upon
receipt of the written request to terminate the election.  Farmland shall have
the right at any time by notice to the owner to terminate any obligation to
continue retaining the interest of any owner pursuant to an owner's election. 
Such termination shall be effective as of the opening of business on the day
following the first interest compounding date after such notice is mailed to
the owner and the owner will be paid all the interest in the owner's account on
the effective date.

REMEDIES IN EVENT OF DEFAULT

    The Indenture of November 8, 1984 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes).  The Indenture
describes the duties and alternative courses of action which, upon the
occurrence of a default, will be taken by the Trustee as directed by written
notice of the holders of a majority of the principal amount of the Certificates
then outstanding.  The Indenture provides that action taken by the Trustee, as
a result of default, will not impair and that no other provisions in the
Indenture will impair the rights of any certificate owner to receive payment of
the principal of and interest on such Certificates on or after the respective
dates expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of
an interest payment for a period not exceeding three years from its due date.

SUBORDINATION

    The payment of the principal and interest on the Certificates is
subordinate in right of payment to the extent set forth in the Indenture to the
prior payment in full of all Senior Indebtedness.  Senior Indebtedness is
defined as (a) the principal of and interest on indebtedness of Farmland (other
than the indebtedness of Farmland with respect to its Subordinated Certificates
of Investment issued under indentures dated February 25, 1970 and under
indentures dated November 29, 1971; and with respect to its Subordinated
Capital Investment Certificates issued under indentures dated July 29, 1974,
and under an indenture dated November 29, 1976, and under an indenture dated
October 24, 1978, and under an indenture dated October 24, 1979, and under an
indenture dated May 20, 1980, and under indentures dated November 5, 1980 and
under indentures dated November 8, 1984; and with respect to its Subordinated
Monthly Income Capital Investment Certificates issued under an indenture dated
July 29, 1974, and under an indenture dated October 24, 1979, and under an
indenture dated November 5, 1980, and under an indenture dated November 8,
1984, and under an indenture dated November 11, 1985; and with respect to its
Subordinated Individual Retirement Account Certificates issued under an
indenture dated November 20, 1981 and under an indenture dated November 8,
1984) for money borrowed from or guaranteed to banks, trust companies,
insurance companies, or pension trusts or evidenced by securities issued under
the provisions of an indenture or similar instrument between Farmland and a
bank or trust company other than indebtedness evidenced by instruments which
expressly provide that such indebtedness is not superior, or (b) indebtedness
created after the date of the Indenture of November 8, 1984, as to which the
instrument creating or evidencing the indebtedness provides that such
indebtedness is superior in right of payment to the Certificates.

    In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or in
bankruptcy, insolvency, receivership or other proceeding of Farmland the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment.  After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have
been entitled if there had been no subordination.  By reason of such
subordination, in the event of Farmland's insolvency, holders of Senior
Indebtedness may receive more, ratably, and owners of the Certificates may
receive less, ratably, than other creditors of Farmland (Section 4.05(a)).

REDEMPTION

    The Certificates may be redeemed, after two (2) years from date of
issuance, at the option of Farmland at any time prior to maturity, on at least
ten days' written notice, at face value plus accrued interest to the date of
redemption only.  The Indenture of November 8, 1984 permits Farmland to select
in any manner at its discretion the Certificates to be redeemed.

    Commencing two (2) years after date of issuance, a limited amount of
Certificates can be redeemed prior to maturity during each month.  The maximum
amount that Farmland will redeem prior to maturity during any month is the
greater of $500,000 or 1/2 of 1% of the balance outstanding provided the
balance outstanding is greater than $5,000,000.  If the balance outstanding is
less than $5,000,000 there will be no limitation on early redemption of
eligible Certificates.

    The 1/2 of 1% limitation is determined as follows:

        (1) Add the face amount of Certificates held by each investor
            at the end of the preceding month to establish the
            "combined amount" held by investors at the end of the
            preceding month.

        (2) Multiply the "combined amount" by 1/2 of 1%.

    If the amount made available for redemption prior to maturity (as
determined in step one and two) exceeds the amount requested for redemption
prior to maturity, such excess is carried over to the next month and added to
the amount available for redemption prior to maturity, provided however that
any excess will not be carried beyond Farmland's fiscal year end.

    Redemption prior to maturity will be made upon the surrender of such
eligible Certificates properly endorsed accompanied by written request for
early redemption to Farmland,  the order in which such written requests for
redemption prior to maturity are received by Farmland.  In addition to the
amount available for redemption prior to maturity as determined above,
redemptions will be made in the case of death of an owner of the Certificates
upon written request of the legal owner accompanied by satisfactory proof of
ownership.  Redemptions prior to maturity will be made at the face value of the
Certificates plus interest to the date of redemption only.  Amounts available
for redemption prior to maturity are not set aside in a separate fund (Section
3.01 and 3.02).

CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture.  In
the case of a default, the owners of a majority in aggregate principal amount
of the Certificates outstanding at the time of the occurrence of a default have
the right to require the Trustee to take action to remedy such default.  Upon
the occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

    The Indenture of November 8, 1984 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

    The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in the
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indenture shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
Certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

    The Indenture of November 8, 1984 provides that any of the following shall
constitute a default:  (1) failure to pay principal when due; (2) failure to
pay interest on Certificates when due, continued for 60 days; (3) certain
events of bankruptcy or insolvency; and (4) failure to perform any other
covenant or agreement contained in the Indenture, continued for 90 days. 
Failure to pay either principal or interest when due during the pendency of any
dissolution or liquidation proceeding or action to endorse payment of
indebtedness shall also constitute such a default (Section 6.01).

    The Indenture of November 8, 1984 provides that the Trustee shall within 90
days after the occurrence of a default, not including periods of grace, give to
the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment of
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate
owners (Section 6.02).

    The Indenture of November 8, 1984 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).

DESCRIPTION OF THE TEN-YEAR SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT
CERTIFICATES

    The Ten-Year Subordinated Monthly Income Capital Investment Certificates,
hereinafter referred to as "Certificates," bearing an interest rate hereinafter
described and referred to as the "Certificate Interest Rate," are issued under
an indenture (the "Indenture of November 8, 1984") dated November 8, 1984, as
amended January 3, 1985, between Farmland Industries, Inc. ("Farmland") and
Commerce Bank of Kansas City, National Association, Kansas City, Missouri, as
Trustee (the "Trustee.")

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 8, 1984, and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 8, 1984.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
a part of the statements made, and such statements are qualified in their
entirety by such reference.

GENERAL

    The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable.  The Certificates are issued in amounts of $5,000 or
more and in additional increments of $1,000 or more as of the day on which
offers acceptable to Farmland and accompanied by payment of the full purchase
price have been received by Farmland in Kansas City, Missouri.  The
Certificates mature ten years from date of issue.  Interest on the principal
sum at the Certificate Interest Rate per annum is payable monthly on the first
day of each month following the month in which a Certificate is issued.  The
payment of the principal at maturity may, at the request of the owner, be paid
in a lump sum or in equal monthly, quarterly, semiannual or annual
installments, including interest on the unpaid balance at the rate of six
percent (6%) per annum, over a period of not more than thirty-six months.

    The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 8, 1984, but such Indenture does not limit
the amount of other securities, either secured or unsecured, which may be
issued by Farmland.  At August 31, 1994, a total of $51,446,000 was
outstanding.

    Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statement
upon written request of the owner to Farmland Industries, Inc., P.O. Box 7305,
Kansas City, Missouri 64116.   Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.

CERTIFICATE INTEREST RATE

    The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate.  The Certificate Interest Rate will be such as Farmland may
from time to time determine but any change of the Certificate Interest Rate
will not affect the Certificate Interest Rate on any Certificate for which the
full purchase price was received prior to the change.  See "Determination of
the Certificate Interest Rate."

REMEDIES IN EVENT OF DEFAULT

    The Indenture of November 8, 1984 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes).  The Indenture
describes the duties and alternative courses of action which, upon the
occurrence of a default, will be taken by the Trustee as directed by written
notice of the holders of a majority of the principal amount of the Certificates
then outstanding.  The Indenture provides that action taken by the Trustee, as
a result of default, will not impair and that no other provisions in the
Indenture will impair the rights of any certificate owner to receive payment of
the principal of and interest on such Certificates on or after the respective
dates expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of
an interest payment for a period not exceeding three years from its due date.

SUBORDINATION

    The payment of the principal and interest on the Certificates is
subordinate in right of payment to the extent set forth in the Indenture to the
prior payment in full of all Senior Indebtedness.  Senior Indebtedness is
defined as (a) the principal of and interest on indebtedness of Farmland (other
than the indebtedness of Farmland with respect to its Subordinated Certificates
of Investment issued under indentures dated February 25, 1970 and under
indentures dated November 29, 1971; and with respect to its Subordinated
Capital Investment Certificates issued under indentures dated July 29, 1974,
and under an indenture dated November 29, 1976, and under an indenture dated
October 24, 1978, and under an indenture dated October 24, 1979, and under an
indenture dated May 20, 1980, and under indentures dated November 5, 1980, and
under indentures dated November 8, 1984, and under an indenture dated November
11, 1985; and with respect to its Subordinated Monthly Income Capital
Investment Certificates issued under an indenture dated July 29, 1974, and
under an indenture dated October 24, 1979, and under an indenture dated
November 5, 1980 and under an indenture dated November 8, 1984, and under an
indenture dated November 11, 1985; and with respect to its Subordinated
Individual Retirement Account Certificates issued under an indenture dated
November 20, 1981 and under an indenture dated November 8, 1984) for money
borrowed from or guaranteed to banks, trust companies, insurance companies, or
pension trusts or evidenced by securities issued under the provisions of an
indenture or similar instrument between Farmland and a bank or trust company
other than indebtedness evidenced by instruments which expressly provide that
such indebtedness is not superior, or (b) indebtedness created after the date
of the Indenture of November 8, 1984, as to which the instrument creating or
evidencing the indebtedness provides that such indebtedness is superior in
right of payment to the Certificates.

    In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or
bankruptcy, insolvency, receivership or other proceeding of Farmland, the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment.  After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have
been entitled if there had been no subordination.  By reason of such
subordination, in the event of Farmland's insolvency, holders of Senior
Indebtedness may receive more, ratably, and owners of the Certificates may
receive less, ratably, than other creditors of Farmland (Section 4.05(a)).

REDEMPTION

    The Certificates can not be called for redemption by Farmland at any time
prior to maturity (Section 3.01).

    In addition, Farmland will not redeem the Certificates prior to maturity
upon request of the owner.  Redemption will be made in the case of death of an
owner of the Certificates upon written request of the legal owner accompanied
by satisfactory proof of ownership.  Redemptions prior to maturity will be made
at the face value of the Certificates plus interest to the date of redemption
only.  Amounts available for redemption prior to maturity are not set aside in
a separate fund (Section 3.02).

CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 8, 1984, and is to
perform only such duties as are specifically set forth in that Indenture.  In
the case of a default, the owners of a majority in aggregate principal amount
of the Certificates outstanding at the time of the occurrence of a default have
the right to require the Trustee to take action to remedy such default.  Upon
the occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

    The Indenture of November 8, 1984 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

    The Indenture of November 8, 1984 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures, provided that no such supplemental indentures shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

    The Indenture of November 8, 1984 provides that any of the following shall
constitute a default:  (1) failure to pay principal when due; (2) failure to
pay interest on Certificates when due, continued for 60 days; (3) certain
events of bankruptcy or insolvency; and (4) failure to perform any other
covenant or agreement contained in the Indenture, continued for 90 days. 
Failure to pay either principal or interest when due during the pendency of any
dissolution or liquidation proceeding or action to endorse payment of
indebtedness shall also constitute such a default (Section 6.01).

    The Indenture of November 8, 1984 provides that the Trustee shall within 90
days after the occurrence of a default, not including periods of grace, give to
the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment or
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate
owners (Section 6.02).

    The Indenture of November 8, 1984 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 8, 1984 does not require any periodic evidence to
be furnished as to the absence of default or as to compliance with the terms of
the Indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 8, 1984 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).

DESCRIPTION OF THE FIVE-YEAR SUBORDINATED MONTHLY INCOME CAPITAL INVESTMENT
CERTIFICATES
    The Five-Year Subordinated Monthly Income Capital Investment Certificates,
hereinafter referred to as "Certificates," bearing an interest rate hereinafter
described and referred to as the "Certificate Interest Rate," are issued under
an indenture dated November 11, 1985 (the "Indenture of November 11, 1985")
between Farmland Industries, Inc. ("Farmland") and Commerce Bank of Kansas
City, National Association, Kansas City, Missouri, as Trustee (the "Trustee").

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 11, 1985, and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 11, 1985.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
a part of the statements made, and such statements are qualified in their
entirety by such reference.

GENERAL

    The Certificates are direct obligations of Farmland, but are not secured
and are not negotiable.  The Certificates are issued in amounts of $5,000 or
more and in additional increments of $1,000 or more as of the day on which
offers acceptable to Farmland and accompanied by payment of the full purchase
price have been received by Farmland in Kansas City, Missouri.  The
Certificates mature five years from date of issue.  Interest on the principal
sum at the Certificate Interest Rate per annum is payable monthly on the first
day of each month to the owners of record on such payment date commencing with
the first day of the month which follows the month in which the certificate is
issued.  The payment of the principal at maturity may, at the request of the
owner, be paid in a lump sum or in equal monthly, quarterly, semiannual or
annual installments, including interest on the unpaid balance at the rate of
six percent (6%) per annum, over a period of not more than thirty-six months.

    The issue of Certificates is limited to $500,000,000 outstanding at any one
time under the Indenture of November 11, 1985, but such Indenture does not
limit the amount of other securities, either secured or unsecured, which may be
issued by Farmland.  At August 31, 1994 a total of $18,611,000 was outstanding.

    Farmland intends to mail to the Certificate owners a copy of the latest
annual report containing Farmland's audited consolidated financial statements
upon written request of the owner to Farmland Industries, Inc., P. O. Box 7305,
Kansas City, Missouri 64116.  Attention: Executive Vice President and Chief
Financial Officer, Telephone (816) 459-6201.

CERTIFICATE INTEREST RATE

    The Certificate Interest Rate is the rate per annum stated on the face of
the Certificate.  The Certificate Interest Rate will be such as Farmland may
from time to time determine but any change of the Certificate Interest Rate
will not affect the Certificate Interest Rate on any Certificate for which the
full purchase price was received prior to the change.  See "Determination of
the Certificate Interest Rate."

REMEDIES IN EVENT OF DEFAULT

    The Indenture of November 11, 1985 contains provisions identifying events
which are defined for all purposes of the Indenture as "defaults" (except when
the terms are otherwise defined for specific purposes).  The Indenture
describes the duties and alternative courses of action which, upon the
occurrence of a default, will be taken by the Trustee as directed by written
notice of the holders of a majority of the principal amount of the Certificates
then outstanding.  The Indenture provides that action taken by the Trustee, as
a result of default, will not impair and that no other provisions in the
Indenture will impair the rights of any certificate owner to receive payment of
the principal of and interest on such Certificates on or after the respective
dates expressed on such Certificate nor will such act by the Trustee or other
provisions in the Indenture impair the right of such certificate owner to
institute suit for enforcement of such payment, except that 75 per centum in
principal amount of the Certificates at the time outstanding may consent on
behalf of the owners of all the outstanding Certificates to a postponement of
an interest payment for a period not exceeding three years from its due date.

SUBORDINATION

    The payment of the principal and interest on the Certificates is
subordinate in right of payment to the extent set forth in the Indenture to the
prior payment in full of all Senior Indebtedness.  Senior Indebtedness is
defined as (a) the principal of and interest on indebtedness of Farmland (other
than the indebtedness of Farmland with respect to its Subordinated Certificates
of Investment issued under indentures dated February 25, 1970, and under
indentures dated November 29, 1971; and with respect to its Subordinated
Capital Investment Certificates issued under indentures dated July 29, 1974,
and under an indenture dated November 29, 1976, and under an indenture dated
October 24, 1978, and under an indenture dated October 24, 1979, and under an
indenture dated May 20, 1980, and under indentures dated November 5, 1980, and
under indentures dated November 8, 1984, and under an indenture dated November
11, 1985; and with respect to its Subordinated Monthly Income Capital
Investment Certificates issued under an indenture dated July 29, 1974, and
under an indenture dated October 24, 1979, and under an indenture dated
November 5, 1980, and under an indenture dated November 8, 1984, and under an
indenture dated November 11, 1985; and with respect to its Subordinated
Individual Retirement Account Certificates issued under an indenture dated
November 20, 1981, and under an indenture dated November 8, 1984) for money
borrowed from or guaranteed to banks, trust companies, insurance companies, or
pension trusts or evidenced by securities issued under the provisions of an
indenture or similar instrument between Farmland and a bank or trust company
other than indebtedness evidenced by instruments which expressly provide that
such indebtedness is not superior, or (b) indebtedness created after the date
of the Indenture of November 11, 1985, as to which the instrument creating or
evidencing the indebtedness provides that such indebtedness is superior in
right of payment to the Certificates.
 
    In the event of any distribution of assets of Farmland under any
dissolution, winding up, total or partial liquidation, reorganization or
bankruptcy, insolvency, receivership or other proceeding of Farmland, the
holders of all Senior Indebtedness shall be entitled to receive payment in full
before the owners of the Certificates are entitled to receive payment.  After
payment in full of the Senior Indebtedness, the owners of the Certificates will
be entitled to participate in any distribution of assets, both as such owners
and by virtue of subrogation to the rights of the holders of the Senior
Indebtedness to the extent that the Senior Indebtedness was benefited by the
receipt of distributions to which the owners of the Certificates would have
been entitled if there had been no subordination.  By reason of such
subordination, in the event of Farmland's insolvency, holders of Senior
Indebtedness may receive more, ratably, and owners of the Certificates may
receive less, ratably, than other creditors of Farmland (Section 4.05(a)).

REDEMPTION

    The Certificates can not be called for redemption by Farmland at any time
prior to maturity (Section 3.01).

    In addition, Farmland will not redeem the Certificates prior to maturity
upon request of the owner.  Redemption will be made in the case of death of an
owner of the Certificates upon written request of the legal owner accompanied
by satisfactory proof of ownership.  Redemptions prior to maturity will be made
at the face value of the Certificates plus interest to the date of redemption
only.  Amounts available for redemption prior to maturity are not set aside in
a separate fund (Section 3.02).

CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, is the Trustee under the Indenture of November 11, 1985, and is to
perform only such duties as are specifically set forth in that Indenture.  In
the case of a default, the owners of a majority in aggregate principal amount
of the Certificates outstanding at the time of the occurrence of a default have
the right to require the Trustee to take action to remedy such default.  Upon
the occurrence of a default, the Trustee may, and upon the written request of a
majority in aggregate principal amount of the outstanding Certificates shall,
declare the principal of all Certificates outstanding and interest accrued
thereon immediately due and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

    The Indenture of November 11, 1985 contains provisions permitting Farmland,
with the consent of the Trustee, to execute supplemental indentures to, (a)
evidence any succession for another corporation to Farmland and the assumption
by the successor corporation of covenants and obligations of Farmland, (b) to
add further covenants or provisions which Farmland's Board of Directors and the
Trustee consider to be for the protection of the holders of the Certificates,
or, (c) to cure any ambiguity in the Indenture (Section 10.01).

    The Indenture of November 11, 1985 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Certificates then outstanding, to execute
supplemental indentures,provided that no such supplemental indentures shall
(1) extend the fixed maturity of any Certificates, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest,
without the consent of the owner of each Certificate so affected, or (2) reduce
the 66-2/3% requirement as to the consent of the owners of the Certificates for
changes in any supplemental indenture, without the consent of the owners of all
certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

    The Indenture of November 11, 1985 provides that any of the following shall
constitute a default:  (1) failure to pay principal when due; (2) failure to
pay interest on Certificates when due, continued for 60 days; (3) certain
events of bankruptcy or insolvency; and (4) failure to perform any other
covenant or agreement contained in the Indenture, continued for 90 days. 
Failure to pay either principal or interest when due during the pendency of any
dissolution or liquidation proceeding or action to endorse payment of
indebtedness shall also constitute such a default (Section 6.01).

    The Indenture of November 11, 1985 provides that the Trustee shall within
90 days after the occurrence of a default, not including periods of grace, give
to the Certificate owners notice of all such defaults unless such defaults have
been cured; provided, that, except in the case of default in the payment or
principal of or interest on any of the Certificates, the Trustee shall be
protected in withholding such notice if and so long as the Trustee determines
that the withholding of such notice is in the interest of the Certificate
owners (Section 6.02).

    The Indenture of November 11, 1985 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 11, 1985 does not require any periodic evidence
to be furnished as to the absence of default or as to compliance with the terms
of the Indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 11, 1985 shall be discharged upon payment or
redemption of all Certificates or upon deposit with the Trustee of funds
sufficient therefor (Section 12.01).

                  DESCRIPTION OF THE DEMAND LOAN CERTIFICATES

    The Demand Loan Certificates are issued under an indenture (the "Indenture
of November 20, 1981") dated November 20, 1981, as amended January 4, 1982,
between Farmland Industries, Inc. ("Farmland") and Commerce Bank of Kansas
City, National Association, Kansas City, Missouri as Trustee (the "Trustee.")
Effective January 31, 1989, Commerce Bank resigned as Trustee and UMB Bank,
National Association, Kansas City, Missouri has been appointed the Trustee.

    The following descriptive paragraphs are brief summaries of certain terms
and provisions contained in the Indenture of November 20, 1981 and do not
purport to be complete.  The section references therein refer to the sections
of the Indenture of November 20, 1981.  Where references are made to particular
sections of the said Indenture, such sections are incorporated by reference as
part of the statements made, and such statements are qualified in their
entirety by such reference.

GENERAL

    The Demand Loan Certificates are direct obligations of Farmland but are not
secured and are not negotiable.  The Demand Loan Certificates are issued in
amounts of $100 or more, and dated on the day payment of the full purchase
price is received by Farmland in Kansas City, Missouri.  If purchased and held
by a member of Farmland for a one (1) month period or by any other purchaser
for a six (6) month period immediately following the date of issue the
principal amount of the Demand Loan Certificates will bear interest at the
Certificate Interest Rate (herein referred to as the "CIR.") The CIR is the
interest rate for the Demand Loan Certificates as determined, from time to
time, by Farmland.  Except as hereinafter provided, each Demand Loan
Certificate shall earn interest at the CIR in effect on the date of issuance of
such Demand Loan Certificate for a period of six (6) months only; provided,
however, that if during such six (6) month period the CIR is increased to a
rate higher than that currently in effect for the Demand Loan Certificates,
then each such Demand Loan Certificate shall earn interest at the increased
rate from the effective date of the increase to the end of such Demand Loan
Certificate's then current six (6) month period.  Six (6) months from the date
of issue of each Demand Loan Certificate and each six (6) month anniversary
date thereafter, such Demand Loan Certificate shall, if not redeemed, earn
interest at the CIR in effect on such anniversary date, but only for a six (6)
month period from such anniversary date, subject to the escalation provisions
previously set forth.  A decrease in the CIR will have no effect on any Demand
Loan Certificate issued prior to the decrease until the first day of the next
subsequent six (6) month period of such outstanding Demand Loan Certificate. 
Holders of Demand Loan Certificates are notified of the effective date of any
change of the CIR which effects the Demand Loan Certificates held.  The Demand
Loan Certificates may be redeemed at face value plus interest to date of
redemption at the option of the owner, at any time.  No partial redemptions
will be permitted.  If redeemed by a Farmland member cooperative during a one
(1) month period or by any other purchaser during a six (6) month period
immediately following the date of issuance, the Demand Loan Certificates shall
bear interest from date of issuance to date of redemption at a demand rate of
2% below the CIR.  Interest on the principal amount of any Demand Loan
Certificate held longer than six (6) months will be computed at the effective
CIR and is payable in one of the following ways at the option of the owner,
made at the time of purchase and irrevocable as to the purchaser:  (i) six (6)
months after the date of issuance and at the end of each and every six (6)
month period thereafter until the Demand Loan Certificate is surrendered for
redemption, or (ii) only at the date of redemption compounded semi-annually at
the effective CIR.

    The issuance of Demand Loan Certificates is limited to $500,000,000
outstanding at any one time under the Indenture of November 20, 1981 but such
Indenture does not limit the amount of other securities either secured or
unsecured, which may be issued by Farmland.  At August 31, 1994, a total of
$23,158,000 was outstanding.

REDEMPTION

    Farmland will redeem the Demand Loan Certificates at any time upon written
request of the owner.  If the certificate is surrendered for redemption by a
Farmland member cooperative during a one (1) month period or by any other owner
during a six (6) month period immediately following the date of issuance,
interest computed at the applicable demand rate from date of issuance to date
of redemption will be paid at the time of redemption of the Demand Loan
Certificate.  If the Demand Loan Certificate is held for a period longer than
six (6) months from date of issuance, interest from the last previous date on
which interest was paid or compounded to the date of redemption computed at the
applicable CIR will be paid upon redemption.  Any interest held for compounding
by Farmland in accordance with an interest option made by the purchaser will be
paid upon redemption of the Demand Loan Certificate.

CONCERNING THE TRUSTEE

    The Commerce Bank of Kansas City, National Association, Kansas City,
Missouri, the corporation designated to act as Trustee under the Indenture,
resigned effective January 31, 1989 and UMB Bank, National Association, Kansas
City, Missouri, has been appointed the Trustee under the Indenture of November
20, 1981 and is to perform only such duties as are specifically set forth in
that Indenture.  In the case of a default, the owners of a majority in
aggregate principal amount of the Demand Loan Certificates outstanding at the
time of the occurrence of a default have the right to require the Trustee to
take action to remedy such default.  Upon the occurrence of a default, the
Trustee may, and upon the written request of a majority in aggregate principal
amount of the Demand Loan Certificates outstanding shall, declare the principal
of all Demand Loan Certificates and interest accrued thereon immediately due
and payable (Section 6.03 and 7.02).

MODIFICATION OF THE INDENTURE

    The Indenture of November 20, 1981 contains provisions permitting Farmland
and the Trustee, with the consent of the owners of not less than 66-2/3% in
aggregate principal amount of the Demand Loan Certificates then outstanding, to
execute supplemental indentures adding to or changing any provisions of the
indenture of November 20, 1981, or supplemental indentures, provided that no
such supplemental indenture shall (1) extend the fixed maturity of any Demand
Loan Certificates, or reduce the principal amount thereof, or reduce the rate
or extend the time of payment of interest, without the consent of the owner of
each Demand Loan Certificate so affected, or (2) reduce the 66-2/3% requirement
as to the consent of the owners of the Demand Loan Certificates for changes in
any supplemental indenture, without the consent of the owner of all Demand Loan
Certificates then outstanding (Section 10.02).

DEFAULTS AND NOTICE THEREOF

    The Indenture of November 20, 1981 provides that any of the following shall
constitute a default: (1) failure to pay principal when due; (2) failure to pay
interest on Demand Loan Certificates when due, continued for 60 days; (3)
certain events of bankruptcy or insolvency; and (4) failure to perform any
other covenant or agreement contained in the Indenture, continued for 90 days. 
Failure to pay either principal or interest when due during the pendency of any
dissolution or liquidation proceeding or action to endorse payment of
indebtedness shall also constitute such a default (Section 6.01).

    The Indenture of November 20, 1981 provides that the Trustee shall within
90 days after the occurrence of a default, not including periods of grace, give
to the Demand Loan Certificate owners notice of all such defaults unless such
defaults have been cured; provided, that, except in the case of default in the
payment of principal of or interest on any of the Demand Loan Certificates, the
Trustee shall be protected in withholding such notice if and so long as the
Trustee determines that the withholding of such notice is in the interest of
the Demand Loan Certificate owners (Section 6.02).

    The Indenture of November 20, 1981 requires Farmland to file with the
Trustee and the Securities and Exchange Commission such additional information,
documents and reports with respect to compliance by Farmland with the
conditions and covenants provided for in this Indenture as may be required from
time to time by the Securities and Exchange Commission.  Summaries of any such
reports filed with the Trustee or the Securities and Exchange Commission
pursuant to rules and regulations as prescribed by the Securities and Exchange
Commission shall be transmitted to the owners of Certificates in the manner and
to the extent provided for in the Indenture (Section 5.03).

    The Indenture of November 20, 1981 does not require any periodic evidence
to be furnished as to the absence of default or as to compliance with the terms
of the Indenture.

SATISFACTION AND DISCHARGE OF INDENTURE

    The Indenture of November 20, 1981 shall be discharged upon payment or
redemption of all Demand Loan Certificates or upon deposit with the Trustee of
funds sufficient therefor (Section 12.01).

                     INTEREST OF NAMED EXPERTS AND COUNSEL

    Robert B. Terry, Vice President and General Counsel of the Registrant, has
given an opinion upon the legality of the securities being registered and upon
certain other legal matters in connection with the registration of these
securities.

                                  THE COMPANY

    Farmland Industries, Inc. ("Farmland") is a regional farm supply and
marketing cooperative.  Farmland is owned by its members and only its members
are eligible to vote for directors or for the management or affairs of
Farmland.  Members are entitled to receive patronage refunds distributed by
Farmland from its member-sourced annual net income.  See "Business and
Properties - Patronage Refunds and Distribution of Net Income."

    Farmland was incorporated in Kansas in 1931.  Its principal executive
offices are at 3315 North Oak Trafficway, Kansas City, Missouri 64116
(telephone 816-459-6000).  Unless otherwise noted, references to years are to
fiscal years ended August 31.

MEMBERSHIP

    Farmland's membership includes voting members and associate members. 
Membership requirements are determined by the Farmland Board of Directors. 

  VOTING MEMBERS

    The current requirements for membership are as follows:  1) Voting
membership is limited to:   (a) farmers' and ranchers' cooperative associations
which have purchased farm supplies from or provided grain to Farmland during
Farmland's two most recently completed years, and (b) producers of hogs and
cattle or associations of such producers which have provided hogs or cattle to
Farmland during Farmland's two most recent years.  2)  Voting members must
maintain a minimum investment of $1,000 in par value of Farmland common stock. 
3) A cooperative must limit voting to agricultural producers and conduct a
majority of their business with voting producers.

  ASSOCIATE MEMBERS

    Associate members have all the rights of membership except that they do not
have the right to vote at a meeting of the shareholders.

    Associate membership requirements in Farmland are as follows:  1) Any
person meeting the requirements for voting membership can be an associate
member.  2) Associate members must maintain a minimum investment of $1,000 in
par value of Farmland associate member common stock.  3) Associations other
than those owned 100% by members, associate members or Farmland must conduct
business on a cooperative basis.  4) Hog and/or cattle feeding businesses must
derive a majority of earned income from such feeding business and agree to
provide the information Farmland needs to pay patronage refunds from its hog
and/or cattle marketing operations to members or other associate members that
are eligible to receive such refunds.

    At August 31, 1994, Farmland's membership consisted of 1,480 cooperative
associations of farmers and ranchers and 1,365 pork or beef producers or
associations of such producers.  See "Patronage Refunds and Distribution of Net
Income."

    In the event the Board of Directors of Farmland shall determine that any
holder of the common stock or associate member common stock of Farmland does
not meet the qualifications as may be established by the Board of Directors for
holders thereof, such person shall have no rights or privileges on account of
such common stock to vote for director(s) or to vote on the management or
affairs of Farmland, and Farmland shall have the right, at its option, (a) to
purchase such common stock at its book or par value, whichever is less, as
determined by the Board of Directors of Farmland, or (b) in exchange for such
common stock or associate member common stock to issue or record on the books
of Farmland capital credits in an equivalent amount.  On the failure of any
holder, following any demand by Farmland therefor, to deliver the certificate
or certificates evidencing any common stock or associate member common stock,
Farmland may cancel the same on its books and issue or record on the books of
Farmland an equivalent amount of capital credits in lieu thereof.  

                                   BUSINESS

GENERAL

    Farmland and subsidiaries (the "Company") conducts business primarily in
two operating areas.  On the input side of the agricultural industry, the
Company operates as a farm supply cooperative.  On the output side of the
agricultural industry, the Company operates as a processing and marketing
cooperative.

    Cooperative farm supply operations consist  of three product
divisions--petroleum, crop production and feed.  Products of the petroleum
division are principally refined fuels, propane, by-products of petroleum
refining and a complete line of car, truck and tractor tires, batteries and
accessories.  Principal products of the crop production division are nitrogen,
phosphate and potash fertilizers and a complete line of insecticides,
herbicides and mixed chemicals.  Feed division products include swine, dairy,
pet, beef, poultry, mineral and specialty feeds, feed ingredients and
supplements, animal health products and livestock services.

    Geographically, the Company's markets are mid-western states which comprise
the corn belt and the wheat belt.  The Company distributes products at
wholesale.  Approximately 65% of the Company's farm supply sales in 1994 were
to local farm cooperative associations which are members and owners of
Farmland.  These cooperatives distribute products primarily to farmers and
ranchers who utilize the products in the production of farm crops and
livestock.

    Cooperative marketing operations include the storage and marketing of
grain, processing pork and beef, and marketing fresh pork, processed pork,
fresh beef and boxed beef.  In 1994, approximately 61% of the hogs processed
and 46% of the grain marketed were supplied to the Company by members.  Cattle
are purchased from producers in the proximity of the beef plants at Liberal and
Dodge City, Kansas.

    A substantial portion of the Company's farm supply, pork and beef products,
is produced in facilities owned by the Company or operated by the Company under
long-term lease arrangements.  No material part of the business of any segment
of the Company is dependent on a single customer or a few customers. 
Information regarding the Company's property and its business is presented
below.  Financial information about the Company's industry segments is
presented in note 12 of the notes to consolidated financial statements.

    The Company competes for market share with numerous participants with
various levels of vertical integration, product and geographical
diversification, sizes and types of operations.  In the petroleum industry,
competitors include major oil companies, independent refiners, other
cooperatives and product brokers.  Competitors in the crop production industry
include global producers of nitrogen and phosphate fertilizers (some of which
are cooperatives) and product importers and brokers.  The feed, pork and beef
industries are comprised of an infinite variety of competitive participants. 
Approximately 57% of the Company's supply product sales are manufactured by the
Company.  See "Cooperative Farm Supply Business and Properties - Petroleum,
Crop Production and Feed" for information regarding the Company's manufacturing
properties by business segment.

COOPERATIVE FARM SUPPLY BUSINESS AND PROPERTIES

PETROLEUM

  MARKETING

    The principal product of this business segment is refined fuels. 
Approximately 68% of refined product sales in 1994 resulted from transactions
with Farmland's members.  The balance of the Company's refined product sales
were principally through retailing chains in urban areas.  Based on total
volume of refined fuels withdrawn at terminal storage facilities along
pipelines which serve most of the Company's trade territory, the Company
estimates its market share in rural markets is approximately 8%.  Other
petroleum products include lube oil, grease, by-products of petroleum refining,
and a complete line of car, truck and tractor tires, batteries and accessories. 
Sales of petroleum products as a percent of the Company's consolidated sales
for 1994, 1993 and 1992 were 13%, 19% and 29%, respectively.

    Competitive methods in the petroleum industry include service, product
quality and pricing.  However, in refined fuel markets, price competition is
most dominant.  Many participants in the industry engage in one or more of the
industry's processes (oil production and transportation, refining, wholesale
distribution and retailing).  The Company participates in the industry
primarily as a midcontinent refiner and as a wholesale distributor of petroleum
products.

  PRODUCTION

    The Company owns a refinery at Coffeyville, Kansas and at Phillipsburg,
Kansas.  Prior to June 30, 1992 the Company owned approximately 30% of the
National Cooperative Refinery Association ("NCRA").  As a 30% owner, Farmland
was required to purchase 30% of the production of this refinery.  On June 30,
1992, the Company sold its ownership interest in NCRA. 

    The Company owns a refinery at Phillipsburg, Kansas which is closed.  A
loading terminal located at the refinery remains in operation.  The carrying
value of this refinery at August 31, 1994 was approximately $2,400,000.  The
Company is evaluating alternative uses for this facility and cannot at this
time determine the extent of any losses related to the closure of the refinery,
but such losses are expected not to be significant.  During the four months of
1992 in which it operated, sales associated with products of the Phillipsburg
refinery amounted to approximately $20,900,000 and the barrels processed by the
refinery were 871,000.

    Production volume for 1994, 1993 and 1992 is as follows:
Barrels of Crude Oil Processed
                                   Daily Average
                             Based on 365 Days per Year
                                      (barrels)
    Location                 1994        1993      1992
Coffeyville, Kansas       64,211       53,000    57,000
The Coffeyville refinery produced 25 million barrels of motor fuels and
heating fuels in 1994, 20 million barrels in 1993, and 23 million barrels in
1992.  Approximately 68% of petroleum product sales in 1994 represented
products produced at this location.

  Management terminated negotiations with a potential purchaser of the
Coffeyville refinery in 1994 when final sale terms were determined not to be in
the Company's best interest.  See note 17 of the notes to consolidated
financial statements.  The Company acquired a mothballed refinery in Texas
which is being reassembled at the Coffeyville refinery site.  When reassembly
is complete in 1996, crude oil processing capacity is expected to increase. 
See "Business - Capital Expenditures."

  RAW MATERIALS

     Farmland's refinery at Coffeyville, Kansas is designed to process high
quality crude oil with low sulfur content ("sweet crude").  Competition for
sweet crude and declining production in proximity of the refinery has increased
its cost of raw material relative to such cost for coastal refineries with the
capacity for processing and access to lower quality crude grades.  The
Company's pipeline/trucking gathering system collects approximately 27% of its
crude oil supplies from producers near its refineries.  Additional supplies are
acquired from diversified sources.  Modifications to the Coffeyville refinery
which increase its capability to efficiently process crude oil streams
containing greater amounts of lower quality crude are continuing.  

     Crude oil is purchased approximately 45 to 60 days in advance of the time
the related refined products are marketed.  Certain of these advance crude oil
purchase transactions, as well as fixed price refined products advance sales
contracts, are hedged utilizing petroleum futures contracts.

     During periods of volatile crude oil price changes or in extremely short
crude supply conditions, the Company's petroleum operations could be affected
to a greater extent than petroleum operations of more vertically integrated
competitors with crude oil supplies available from owned producing reserves. 
In past periods of relatively severe crude oil shortages, various governmental
regulations such as price controls and mandatory crude oil allocating programs
have been implemented to spread the adversity among all industry participants. 
There can be no assurance as to what, if any, government action would be taken
in the event a crude oil shortage developed.

CROP PRODUCTION

  MARKETING

     The Company's crop production business segment includes nitrogen-,
phosphate-, and potash-based  fertilizer products and a complete line of crop
protection products such as insecticides, herbicides and mixed chemicals. 
Sales of the crop production business segment as a percent of consolidated
sales for 1994, 1993 and 1992 were 17%, 19% and 26%, respectively.

     Competition in the plant nutrient industry is dominated by price
considerations.  However, during the spring and fall plant nutrient application
seasons, farming activities intensify and delivery service capacity is a
significant competitive factor.  Therefore, the Company maintains a significant
capital investment in distribution assets and a seasonal investment in
inventory to support its manufacturing operations.  The Company has plant
nutrient custom dry blending, liquid mixing, storage and distribution
facilities at 15 locations throughout its trade territory.

     The Company's sales of crop production products are primarily at wholesale
to local cooperative associations (the members, owners and customers of the
Company).  In view of this owner/customer relationship, management believes
that, with respect to such customers, the Company has a slight competitive
advantage.

     Domestic competition, mainly from other regional cooperatives, major
petroleum companies with chemical divisions and integrated chemical companies,
is very aggressive due to customers' sophisticated buying tendencies and
production strategies that focus on costs and service.  Also, foreign
competition exists from producers of crop production products  manufactured in
countries with lower cost natural gas supplied (the principal raw material in
nitrogen-based fertilizer products).  In certain cases, foreign producers of
fertilizer for export to the U.S. may be subsidized by their governments.

  PRODUCTION

     The Company manufacturers nitrogen-based crop production products.  Based
on total production capacity, the Company is one of the largest producers of
anhydrous ammonia fertilizer in the U.S.  The Company owns and produces
nitrogen-based products at four anhydrous ammonia plants, four urea ammonium
nitrate plants and two urea plants.  In addition, the Company operates three
anhydrous ammonia plants under long-term lease arrangements. 

     The Company owns and produces phosphate-based products at one plant and
has 50% ownership interest in two ventures which produce phosphate-based
products.

     Nitrogen fertilizer production information for 1994, 1993 and 1992 is as
follows:

                                  Actual Annual Production
                                     Anhydrous Ammonia   
  Plant Location                1994      1993     1992 
                                      (tons)
Lawrence                     443,000   375,000   450,000
  Dodge City                   257,000   241,000   254,000
  Fort Dodge                   256,000   232,000   240,000
  Beatrice                     277,000   243,000   250,000
  Enid (2 plants)*             985,000   969,000 1,017,000
  Pollock*                     526,000   490,000   501,000

 *Indicates leased plants
Synthetic anhydrous ammonia is the basic component of other commercially
produced nitrogen-based crop production products and uses natural gas as the
major raw material.  

    Ammonia is used as the principal raw material in the production of value-
added nitrogen-based products such as urea, ammonium nitrate, urea ammonium
nitrate solutions and other products.

    Production of urea, ammonium nitrate, urea ammonium nitrate solutions and
other nitrogen-based products from anhydrous ammonia, as a raw material, for
1994, 1993 and 1992 is as follows:
Actual Annual Production
           Location            1994      1993      1992
                                        (tons)
Lawrence           654,000   661,000   691,000
           Enid               433,000   473,000   452,000
           Dodge City         163,000   241,000   217,000
           Beatrice           162,000   166,000   177,000
Ammonia is also used to react with phosphoric acid to produce phosphoric
acid products such as liquid mixed fertilizer, diammonium phosphate and
monoammonium phosphate.

    The Company owns a phosphate chemical plant located in Joplin, Missouri and
land in Florida which contains an estimated 40 million tons of phosphate rock. 
The Joplin plant produces ammonium phosphate which is combined in varying
ratios with muriate of potash to produce 12 different fertilizer grade
products.  In addition, feed grade phosphate (dicalcium phosphate) is produced
at this facility.

    Production at the Joplin plant for 1994, 1993 and 1992 is as follows:
Actual Annual Production
              Product          1994        1993      1992
                                        (tons)
Ammonium Phosphate       75,000    72,000    88,000
        Feed Grade Phosphate    157,000   141,000   129,000
Prior to November 15, 1991, the Company owned and operated a phosphate
chemical plant located in Green Bay, Florida.  Effective November 15, 1991, the
Company and Norsk Hydro a.s. formed Farmland Hydro, L.P. ("Hydro") to
manufacture phosphate fertilizer products for distribution to international
markets.  Hydro operates a phosphate plant at Green Bay, Florida and owns
phosphate rock reserves located in Hardee County, Florida which contain an
estimated 40 million tons of phosphate rock.  The Company provides management
and administrative services and Norsk Hydro a.s. provides marketing services to
Hydro.  The joint venture's plant produces phosphoric acid products such as
super acid, diammonium phosphate and monoammonium phosphate.  Annual production
in short tons of such products for 1994, 1993 and for the ten months in 1992
during which the venture operated is 1,437,000, 1,216,000 and 880,000,
respectively.  The phosphate rock required to operate the joint venture's plant
is presently purchased from outside suppliers and adequate supplies of sulfur
are available from several producers.  

    Plans for development of the phosphate reserves owned by the Company and
Hydro have not been established in view of the availability of adequate
supplies of phosphate rock from alternative sources.

    The Company and J.R. Simplot Company formed a joint venture in April 1992,
SF Phosphates, Limited, to own and operate a phosphate mine located in Vernal,
Utah, a phosphate chemical plant located in Rock Springs, Wyoming and a 96-mile
pipeline connecting the mine to the plant.  The plant produces monoammonium
phosphate and super acid with annual production of 465,000 tons for 1994,
440,000 tons for 1993 and 131,000 tons for the five months of operations in
1992.  Under the venture agreement, the Company and J.R. Simplot Company
purchase the production of the venture in proportion to their ownership.

    The Company, The National Gas Company of Trinidad and Tobago LTD., and
Enron International C.V. have entered into an agreement to develop a new
ammonia production facility in LaBrea, Trinidad, West Indies.  Upon completion,
the plant contemplated at this time is expected to have a production capacity
of approximately 675,000 short tons of ammonia annually.  The Company intends
to operate the plant and to receive and market the production under agreements
being negotiated at this time.  The cost to complete this project has not been
determined.

  RAW MATERIALS

    Natural gas, the largest single component of nitrogen-based fertilizer
production, is purchased directly from natural gas producers.  Natural gas
purchase contracts are generally market sensitive and contract prices change as
the market price for natural gas changes.  The Company's management believes
that the flexible pricing attributes of its gas supply contracts, without
relinquishing rights to long-term supplies, are essential to its competitive
position.  In addition, the Company has a hedging program which utilizes
natural gas futures and options to reduce risks of market price volatility.

    Natural gas is delivered to the Company's facilities under pipeline
transportation delivery contracts which have been negotiated with each plant's
delivering pipeline.  Transportation delivery contracts, for the most part, are
interruptible as defined by the Federal Energy Regulatory Commission.  No
significant production of nitrogen-based products has been lost, and none is
anticipated, because of curtailments in transportation.

FEED

    Products in the Company's feed line include swine, beef, poultry, dairy,
pet, mineral and specialty feeds, feed ingredients and supplements, animal
health products and livestock services.

    This business segment's sales were approximately 8%, 10% and 13% of
consolidated sales for the years 1994, 1993 and 1992, respectively. 
Approximately 45% of the feed business segment's sales in 1994 was attributable
to products manufactured in the Company's feed mills.  The Company operates
feed mixing plants at 19 locations throughout its territory, an animal protein
and premix plant located in Eagle Grove, Iowa and a pet food plant in Muncie,
Kansas.

    Feed production is as follows:
Actual Annual Production
        Location                 1994        1993      1992
                                        (tons)
22 feed mills (combined)  1,118,000  1,030,000   954,000
In addition, the Company's feed operations include placement of
Company-owned feeder pigs with individuals who have contractual arrangements
with the Company to feed pigs on a fee basis until weight gain is finished. 
During 1994, 1993 and 1992, approximately 250,100 pigs, 113,000 pigs and 46,300
pigs, respectively, were finished under this program.  The majority of the
finished pigs were sold to Farmland Foods, Inc. ("Foods") for processing.

    The Company owns a 45% interest in Alliance Farm Cooperative Association
(formerly Yuma Feeder Pig Limited Liability Company) which operates farrowing
facilities.

    The Company operates a facility for production of quality swine breeding
stock.  These animals are placed with farrowers under contractual arrangements. 
In addition, the Company purchases swine breeding stock for placement with such
farrowers.

    The Company conducts research in genetic selection, breeding, animal health
and nutrition at its research facility in Bonner Springs, Kansas.  Through
local cooperative associations of farmers and ranchers, the Company
participates in livestock and hog services designed to produce lean,
feed-efficient animals and help livestock producers select feed formulations
which maximize weight gain.

COOPERATIVE PROCESSING AND MARKETING BUSINESS AND PROPERTIES

PORK PROCESSING AND MARKETING

  PRODUCTION

    The Company's pork processing and marketing operations are conducted
through a 99%-owned subsidiary, Farmland Foods, Inc. ("Foods").  Foods operates
eight food processing facilities.  Meat processing facilities at Springfield,
Massachusetts, Carey, Ohio, and New Riegel, Ohio produce Italian-style
specialty meats and ham products.  A facility at Wichita, Kansas processes pork
into fresh sausage, and pork and beef into hot dogs, dry sausage and other
luncheon meats.  A facility at San Leandro, California was closed on September
1, 1993.  A facility in Denison, Iowa and one in Crete, Nebraska function as
pork abattoirs and have additional capabilities for processing pork into bacon,
ham and smoked meats.  An additional facility at Monmouth, Illinois was
purchased on February 15, 1993.  These facilities also process fresh pork into
primal cuts for additional processing into fabricated meats which are sold to
commercial users and to retail grocery chains, as well as case-ready and
label-branded cuts for retail distribution.  The eighth plant located in
Carroll, Iowa is primarily a packaging facility for canned or cook-in-bag
products.  A previously closed pork processing plant at Iowa Falls, Iowa is
currently held for sale.

    Production for 1994, 1993 and 1992 is as follows:
Actual Weekly Production
                                    On a One-Shift Basis   
            Location           1994           1993      1992
                                           (tons)
Wichita               1,884,000    1,514,000  1,618,000
        San Leandro**               -0-      243,000    269,000
        Carroll               1,111,000*   1,204,000* 1,131,000*
        Springfield             622,000      666,000    560,000
        Carey/Riegel            257,000      231,000    220,000
*  All ham products were produced on 2 shifts during 1994, 1993 and 1992.
** Closed September 1, 1993
Actual Weekly Production
                                   On a One-Shift Basis
            Location             1994        1993      1992
                                        (tons)
Denison                  40,000    37,000    39,000
        Crete                    47,000    45,000    47,000
        Monmouth                 28,000    25,000       -0-*
*The Company did not own the Monmouth facility in 1992.
MARKETING

    The Company's pork marketing operations include meat processing, primarily
pork, and marketing.  Products marketed include fresh pork, fabricated pork,
smoked meats, ham, bacon, fresh sausage, dry sausage, hot dogs, and packing
house by-products.  These products are marketed under Farmland, Maple River,
Marco Polo, Carando, Regal, and other brand names.  Product distribution is
through national and regional retail food chains, food service accounts,
distributors and international marketing activities.

    Pork marketing is a highly competitive industry with many suppliers of live
hogs, fresh pork and processed pork products.  Other meat products such as
beef, poultry and fish also compete directly with pork products.  Competitive
methods in this segment include price, product quality, product differentiation

and customer service.

BEEF PROCESSING AND MARKETING

  PRODUCTION

    The Company's beef processing and marketing operations are conducted
through two ventures.  National Beef Packing Company, L.P., formed in April
1993, is located in Liberal, Kansas and is 58%-owned by Farmland.  Hyplains
Beef, L.C., formed in July 1992, is located in Dodge City, Kansas and is
50%-owned by Farmland.  These facilities function as beef abattoirs and have
capabilities for processing fresh beef into primal cuts for additional
processing into fabricated or boxed beef.  During the year ended August 31,
1994, the two plants operated at 97% of capacity and slaughtered 1,708,00
cattle. 

  MARKETING

    Products in the Company's beef processing and marketing operations include
fresh beef, boxed beef and packing house by-products.  Product distribution is
through national and regional retail and food service customers under Farmland
Black Angus Beef and other brand names.  There is also a limited amount of
international product distribution.

    Beef marketing is a highly competitive industry with many suppliers of live
cattle, fresh beef and processed beef.  Other meat products such as pork,
poultry and fish also compete directly with beef products.  Competitive methods
in this industry include price, product quality and customer service.

GRAIN MARKETING

    Effective June 30, 1992, the Company acquired substantially all the
business and assets of Union Equity Co-Operative Exchange ("Union Equity") and
conducts the grain marketing and storage operations, previously conducted by
Union Equity, using the Union Equity name.

    The Company markets wheat, milo, corn, soybeans, barley and oats, with
wheat constituting the majority of the marketing business.  The Company
purchases grain from members, associate members and nonmembers located in the
midwestern part of the United States.  Once the grain is purchased, the Company
assumes all risks related to selling such grain.  Since grain is a commodity,
pricing of grain in the United States is principally conducted through bids
based on the commodity futures markets.

    In 1994, approximately 37% of grain revenues have been from export sales. 
The five largest purchasers in terms of total revenues from grain operations
were Mexico (6%), Jordan (5%), Egypt (4%), Israel (4%) and South Africa (2%). 
In 1993 and 1992, export sales or sales to domestic customers for export
accounted for approximately 60% and 55%, respectively, of consolidated grain
revenues.  A majority of the grain export sales are under price subsidies or
credit arrangements guaranteed by the United States Government, primarily
through programs administered by the United States Department of Agriculture
("USDA").  Export-related sales are subject to international political
upheavals and changes in other countries' trade policies which are not within
the control of the United States or the Company.  Foreign sales of grain are
required to be paid in U.S. Dollars.

  TRADIGRAIN

    In December 1993, the Company acquired all the common stock of seven
international grain trading companies (collectively referred to as
"Tradigrain") formerly owned by B.P. Nutrition B.V.  Tradigrain imports,
exports and ships all major grains from the major producing countries to final
consumers which are either governmental entities, private companies or other
major grain companies.

    Tradigrain's purchases of grain are made on a cash basis against
presentation of documents.  Its sales of grain are mostly done against
confirmed Letters of Credit at sight or on 180/360 days deferred basis.  The
volume of grain traded by Tradigrain varies from seven to ten million metric
tons per year and represents total sales of between U.S. $800 million to U.S.
$1.2 billion per year.

  PROPERTY

    The Company owns or leases thirty-one (31) inland elevators, and one (1)
export elevator with a total licensed capacity of approximately 177,157,000
bushels of grain.  The location, type, number and aggregate licensed capacity
in bushels of the elevators at August 31, 1994 are as follows:
Aggregate
      Location                 Type     Number      Capacity
Amarillo, Texas          Inland      1       3,226,000
      Black, Texas             Inland      1       1,418,000
      Commerce City, Colorado  Inland      1       3,234,000
      Darrouzett, Texas        Inland      1       1,277,000
      Enid, Oklahoma           Inland      4      50,300,000
      Fairfax, Kansas          Inland      1      10,047,000
      Galveston, Texas         Export      1       3,253,000
      Hutchinson, Kansas       Inland      3      25,268,000
      Idaho and Utah           Inland     11       9,825,000
      Lincoln, Nebraska        Inland      1       5,099,000
      Omaha, Nebraska          Inland      1       4,266,000
      Saginaw, Texas           Inland      2      37,274,000
      Stratford, Texas         Inland      1         112,000
      Topeka, Kansas           Inland      1      12,055,000
      Wichita, Kansas          Inland      1      10,503,000
Storage of grain has declined because of changes in the U.S. Government's
farm policies.  As a result, several of the above elevators are substantially
under-utilized.  The Commerce City, Colorado elevator is leased to another
operator.  Seven of the above elevators are closed, including two at Enid,
Oklahoma, two at Hutchinson, Kansas, one at Saginaw, Texas and the elevators at
Stratford, Texas and Wichita, Kansas.  The aggregate licensed bushel capacity
of the closed elevators is 61,446,000 bushels.  

               PATRONAGE REFUNDS AND DISTRIBUTION OF NET INCOME

    For purposes of this section, annual income for 1994 means income before
income taxes determined in accordance with federal income tax regulations.  For
1995 and after, annual income means income before income taxes determined in
accordance with generally accepted accounting principles.  For this purpose,
the term "member," means any member, associate member or any other person with
which Farmland is a party to a currently effective patronage refund agreement.

    Farmland operates on a cooperative basis.  In accordance with its bylaws,
Farmland returns the member-sourced portion of its annual income to its
members.  Each member's portion of the annual patronage refund is determined by
the quantity or value of business transacted by the member with Farmland and
Farmland's income from such transactions.  Such returns are referred to as
patronage refunds.  

    Generally, a portion of the patronage refund is returned in cash and for
the balance of the patronage refund (the "invested portion") the members
receive, Farmland common stock, associate member common stock or capital
credits (the equity type received is determined by the membership status).  The
invested portion of the patronage refund is determined annually by Farmland's
Board of Directors.  The annual patronage refund is returned to members as soon
as practical after the end of each fiscal year.  The Internal Revenue Code
allows a cooperative to deduct from its taxable income the total amount of the
patronage refunds returned, provided that not less than 20% of the total
patronage refund returned is cash.  The Bylaws of Farmland provide that its
Board of Directors has complete discretion with respect to the handling and
ultimate disposition of any member-sourced losses.

    For the years ended 1994, 1993 and 1992, Farmland returned the following
patronage refunds.
Cash Portion         Invested Portion       Total Patronage
           of Patronage Refunds    of Patronage Refunds     Refunds    
                            (Amounts in thousands)
1994     $    26,552             $   44,032           $    70,584
  1993     $       -0-             $      -0-           $       -0-
  1992     $    17,449             $      -0-           $    17,449
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a discussion of the reasons for changes in the
Company's income for 1994, 1993 and 1992.

    Income or loss from transactions with patrons not eligible to receive
patronage refunds and extraneous income or loss (income from sources unrelated
to the type of transactions conducted by the cooperative with its members) is
subject to income taxes computed on the same basis as such tax is computed on
the income or loss of other corporations.

                            EQUITY REDEMPTION PLANS

    The Equity Redemption Plans described below (the "Plans") may be changed at
any time or from time to time at the sole and absolute discretion of the Board
of Directors.  The Plans are also not binding upon the Board of Directors or
the Company and the Board of Directors reserves the right to redeem, or to not
redeem, any equities of the Company without regard to whether such action or
inaction is in compliance with the Plans.  Equity holders should therefore not
rely to their detriment on the current terms of the Plans because they are
subject to change without advance notice and may be deviated from in the sole
and absolute discretion of the Board of Directors.  The factors which may be
considered by the Board of Directors in determining when, and under what
circumstances, the Company may redeem equities include, but are not limited to,
the terms of the Company's base capital plan, income and other tax
considerations, the Company's results of operations, financial position, cash
flow, capital requirements, long-term financial planning needs and other
relevant considerations.  By retaining discretion to determine the amount,
timing and ordering of any equity redemptions, the Board believes that it can
continue to assure that the best interests of the Company and thus of its
members will be protected.

BASE CAPITAL PLAN

    For the purposes of acquiring and maintaining adequate capital to finance
the business of the Company, the Board of Directors has established a base
capital plan ("Plan").  The Plan provides a mechanism for determining the
Company's total capital requirements and each member's or patron's share
thereof (the base capital requirement).  As part of the Plan, the Board of
Directors may, in its discretion, provide for redemption of Farmland common
stock or associate member common stock held by members or associate members who
have an investment in Farmland common stock or associate member common stock
which exceeds the members' or associate members' base capital requirement.  The
Plan may provide a mechanism under which the cash portion of the patronage
refund payable to members or patrons will depend upon the degree to which such
members or associate members meet their base capital requirements.

ESTATE SETTLEMENT PLAN

    The "Estate Settlement Plan" is subject to paragraph one above under the
heading, "Equity Redemption Plans."

    The estate settlement plan provides that in the event of the death of an
individual (a natural person) equity holder, the equity holdings of the
deceased will be redeemed at par value with the exception of purchased equity
holdings owned by the decreased for less than five years.  This provision is
subject to a limitation of $1.0 million in any one fiscal year without further
authorization by the Board of Directors.

SPECIAL REDEMPTION PLAN

    The "Special Redemption Plan" is subject to paragraph one above under the
heading "Equity Redemption Plans."

  Provisions of the special redemption plan are as follows:

  1.    No special redemption will be made if the redemption of equities may
        result in a violation of the lending covenants; and

  2.    The targeted amount for special redemptions is based on consolidated
        net income (member and nonmember) and the ratio of funded indebtedness
        to capitalization before the special redemption but after giving effect
        to the distribution of cash and the redemption of equities under the
        base capital plan.  The calculation for special redemption is as
        follows:

        Funded Indebtedness as           Total Special Redemption
           as a Percent of                  as a Percent of
            Capitalization               Consolidated Net Income

                    >   50 %                       None
                   48 - 50 %                       2.5 %
                   44 - 47 %                       5.0 %
                   40 - 43 %                       7.5 %
                    <   40 %                      10.0 %

  3.    The priority for redeeming equities under the Special Redemption
        Program will be as follows listed in order of first to be redeemed.

    a.  Capital Credits (Series of Ten) which, on or before August 31,
        1992, were issued to and which are currently held by, any dissolved
        cooperative for the benefit of its membership.  One-third of the
        total outstanding amount of such Capital Credits, Series of Ten to
        be redeemed pro rata to such holders following each of the next
        three fiscal year-ends.

    b.  Capital Credits (Series of Ten) outstanding ten years or longer --
        paid in order of lowest numbered series first.

    c.  Capital Credits held by individual livestock producers age 70 or
        older who have been held for five years or longer -- paid in
        descending order of age of the individual (oldest person first). 
        Holders of equities in Farmland Foods, Inc. will have their
        equities redeemed on the same basis as holders of Farmland equity. 
        Former Farmland Foods equity holders who accepted the exchange
        offer for Farmland Industries' equities in 1991 will be deemed to
        have met the five-year holding requirement for those equities
        involved in the exchange.

    d.  Capital Credits (Series of Ten) outstanding five years or longer --
        paid in order of lowest numbered series first.

    e.  Capital Credits held by individual livestock producers age 65 or
        older that have been held for five years or longer -- paid in
        descending order of age of the individual (oldest person first). 
        Holders of equities in Farmland Foods, Inc. will have their
        equities redeemed on the same basis as holders of Farmland equity. 
        Former Farmland Foods equity holders who accepted the exchange
        offer for Farmland Industries' equities in 1991 will be deemed to
        have met the five-year holding requirement for those equities
        involved in the exchange.

    f.  Any Capital Credits outstanding for twenty years or more -- paid in
        order of year issued, oldest first.  Holders of equities in
        Farmland Foods, Inc. will have their equities redeemed on the same
        basis as holders of Farmland equity.  Former Farmland Foods equity
        holders who accepted the exchange offer for Farmland Industries'
        equities in 1991 will be deemed to have met the five-year holding
        requirement for those equities involved in the exchange.  Nonmember
        capital will participate on the same bassi as capital credits in
        the redemption.

    g.  Capital Credits (Series of Ten) remaining balance -- paid in order
        of lowest numbered series first.

    h.  Minority held equities in Farmland Foods, Inc. remaining balance --
        paid in descending order of years outstanding, oldest first.

    i.  Any Capital Credits outstanding for ten years or more -- paid in
        order of year issued, oldest first.  Nonmember capital will
        participate on the same bassi as capital credits in the redemption.

    j.  Any Common Stock or Associate Member Common Stock outstanding for
        twenty years or more -- in order of year issued, oldest first.

    k.  Any Capital Credit outstanding for five years or more -- paid in
        order of year issued, oldest first.  Nonmember capital will
        participate on the same bassi as capital credits in the redemption.

    l.  Any Common Stock or Associate Member Common Stock outstanding for
        five years or more -- paid in order of year issued, oldest first.

                                 OTHER MATTERS

RESEARCH

    The Company operates a research and development farm near Bonner Springs,
Kansas where many aspects of animal nutrition are studied.  The research is
directed toward improving the nutrition and feeding practices of livestock and
pets.

    Research related to commercialization of a wheat processing plant to
produce wheat gluten as a replacement source for raw material used in certain
consumer products has been completed and technology for an economically viable
plant has been developed.  Farmland has formed Heartland Wheat Growers, L.P., a
joint venture with local cooperatives, and is currently building a wheat
processing plant in Russell, Kansas that will process approximately 4.25
million bushels of wheat a year.  See "Capital Expenditures."

    Expenditures related to Company-sponsored product and process improvements
amounted to $2,702,000, $3,303,000 and $3,338,000 for the years ended 1994,
1993 and 1992, respectively.

CAPITAL EXPENDITURES

    The Company plans capital expenditures of approximately $289.9 million
during its two fiscal years ending August 31, 1995 and 1996.

    Capital expenditures of approximately $111.8 million are planned for the
crop production business segment (excluding costs for construction of an
anhydrous ammonia plant in Trinidad which is being evaluated at this time).  A
new urea ammonium nitrate ("UAN") facility is planned at the Fort Dodge, Iowa
anhydrous ammonium plant.  The new facility is expected to cost approximately
$30.0 million of which $21.0 million are to be expended during this period. 
This facility will upgrade anhydrous ammonium to produce approximately 115,000
tons of UAN per year.  A UAN plant at the Lawrence, Kansas facility is being
expanded to increase production by approximately 128,000 tons per year.  An
estimated $2.5 million will be expended in fiscal 1995 to complete the project. 
Expenditures at the Dodge City, Kansas facility of approximately $6.0 million
are expected to increase anhydrous ammonia and UAN production capacity by
52,500 tons and 10,500 tons, respectively.  Capital expenditures of $66.4
million are planned for operating efficiency improvements, necessities and
replacements, and $15.9 million is for environmental and safety issues,
predominately at nitrogen fertilizer plants. 

    Capital expenditures in the feed business segment are estimated to be $23.4
million.  A feed mill in southeast New Mexico is being constructed at an
approximate cost of $1.3 million.  The remaining projected expenditures of
$22.1 million are for feed mill and livestock production efficiencies,
operating necessities and replacements.

    Capital expenditures in the petroleum business segment are expected to be
$87.4 million and include approximately $32.9 million to increase daily crude
oil processing capacity at the Coffeyville, Kansas refinery of which $27.9
million is to be expended during this period.  The remaining projected
expenditures of the petroleum business segment are as follows:  $23.6 million
for operating necessities; $20.7 million for increased operating efficiency;
and, $10.2 million for environmental and safety issues.

    Capital expenditures of approximately $32.6 million are planned in the pork
marketing business segment.  A waste water expansion project at the Crete,
Nebraska facility is expected to cost approximately $2.4 million.  A 10,000
square foot loading dock and storage facility will be constructed at the
Monmouth, Illinois plant for an estimated $1.5 million. The remaining
expenditures are mostly for operational improvements and replacements.

    Capital expenditures of approximately $7.3 million planned for the grain
business segment are mainly for expansion and replacements.

    Heartland Wheat Growers, L.P. (a partnership between the Company and local
cooperatives) located in Russell, Kansas, was formed for the purpose of
constructing and operating a wheat processing facility, to produce wheat
gluten, wheat starch and derivative products and to market and distribute such
products.  The Company has a seventy-nine percent (79%) interest in the
partnership.  The Company's planned investment to finance construction of the
wheat gluten plant amounts to approximately $25.5 million of which $21.5
million will be expended during the period.

    The Company intends to fund its capital program with cash from operations
or from its primary sources of debt capital.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources."

MATTERS INVOLVING THE ENVIRONMENT

    The Company's farm supply manufacturing and distribution operations, its
food processing and marketing operations and its grain marketing operations
continue to be affected to some extent by federal, state and local regulations
regarding the environment.  The Company recognizes liabilities related to
remediation of contaminated properties when the related costs are probable and
can be reasonably estimated.  Estimates of these costs are based upon currently
available facts, existing technology, undiscounted site specific costs, and
currently enacted laws and regulations.  In reporting environmental
liabilities, no offset is made for potential recoveries.  Such liabilities
include estimates of the Company's share of costs attributable to potentially
responsible parties ("PRPs") which are insolvent or otherwise unable to pay. 
All liabilities are monitored and adjusted regularly as new facts or changes in
law or technology occur. 

    The Company has been designated as a PRP under the Comprehensive
Environmental Response, Compensation and Liability Act, at 17 sites.  The
Company's responsibilities at nine sites appear to be de minimis.  The Company
is aware of probable obligations for environmental matters at 30 other sites. 
At certain of these sites no claim or assessment has been made.  In the opinion
of management, the probable and reasonably determinable costs related to PRP
and other sites are $7,164,000 and such amount has been accrued.

    The costs of resolving environmental matters are not quantifiable because
many such matters are in preliminary stages and the timing, extent and costs of
various actions which governmental authorities may require are unknown.  It is
possible that costs of such resolution may be greater than the liabilities
which, in the opinion of management, are probable and reasonably determinable
at August 31, 1994.  In the opinion of management, it is reasonably possible
for such costs to approximate $39,000,000 and to extend over 30 years.

    Under the Resource Conservation Recovery Act of 1976 ("RCRA"), the company
has four closure and five post-closure plans in place for six locations. 
Closure and post-closure plans are also in place for three landfills and two
injections wells as required by state regulations.  Operations are being
conducted at these locations and the Company does not plan to terminate such
operations in the foreseeable future.  Therefore, the Company has not accrued
these environmental exit costs.  The Company accrues these liabilities when
plans for termination of plant operations have been made.  Such closure and
post-closure care costs are estimated to be $5.4 million at August 31, 1994.  

    The Company has been notified by the Environmental Protection Agency
("EPA") of proposed civil penalties totaling approximately $1,715,000 for
alleged violations of environmental regulations at the Coffeyville refinery. 
The Company is negotiating with the EPA concerning these matters and believes
that such negotiations may result in compromise settlements.  Absent such
settlements, the Company may contest these matters.  Accordingly, no provision
has been made in the accompanying financial statements for these proposed
penalties.

    Protection of the environment requires the Company to incur expenditures
for equipment or processes, which may impact the Company's future net income. 
However, the Company does not anticipate that its competitive position will be
adversely affected by such expenditures or by laws and regulations enacted to
protect the environment.  Environmental expenditures are capitalized when such
costs provide future economic benefits.  In 1994, the Company had capital
expenditures of approximately $2,592,000 to prevent future discharges into the
environment.  The majority of such expenditures was for improvements at the
Coffeyville refinery.  Management believes the Company is currently in
substantial compliance with existing environmental rules and regulations.  

GOVERNMENT REGULATION

    The Company's business is conducted within a legal environment created by
numerous federal, state and local laws which have been enacted to protect the
public's interest by promoting fair trade practices, safety, health and
welfare.  The Company's operating procedures conform to the intent of these
laws and management believes that the Company is currently in compliance with
all such laws, the violation of which could have a material effect on the
Company.

    Certain policies may be implemented from time to time by the U.S.
Department of Agriculture, the Department of Energy, or by other governmental
agencies which may impact the demands of farmers and ranchers for the Company's
products or which may impact the methods by which certain of the Company's
operations are conducted.  Such policies may impact the Company's farm supply
and marketing operations.

    Management is not aware of any newly implemented or pending policies having
a significant impact or which may have a significant impact on operations of
the Company.

EMPLOYEE RELATIONS

    At August 31, 1994, the Company had approximately 11,000 employees. 
Approximately 41% of the Company's employees were represented by unions having
national affiliations.  The Company's relationship with employees is considered
to be generally satisfactory.  No labor strikes or work stoppages within the
last three fiscal years have had a materially adverse effect on the Company's
operating results.  Current labor contracts expire on various dates through
March 1997.  There are no wage re-openers in any of the collective bargaining
agreements.

RECENT ACCOUNTING PRONOUNCEMENTS

    See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." 

                               LEGAL PROCEEDINGS

    In the opinion of Robert B. Terry, Vice President and General Counsel of
Farmland, there is no litigation existing or pending against Farmland, or any
of its subsidiaries, which if determined adversely, would have a material
adverse effect on the financial position of the Company, and with respect to
income tax matters as explained in note 7 of the notes to consolidated
financial statements, he has no knowledge which would result in a different
conclusion than the opinion of special tax counsel to the Company which is
cited in note 7 of the notes to consolidated financial statements.

    The Company is involved in two environmental regulatory matters with the
government involving potential monetary sanctions as follows:

    1)  The Company is a party to an administrative enforcement action
        brought by the U.S. Environmental Protection Agency ("EPA") which
        alleges violations of the Emergency Planning and Community
        Right-to-Know Act and the release reporting requirements of the
        Comprehensive Environmental Response, Compensation, and Liability
        Act, as amended, at its Coffeyville, Kansas refinery.  This action
        involves alleged violations of release reporting requirements and
        seeks a civil fine in the amount of $350,000.

    2)  The Company is a party to an administrative enforcement action
        brought by the EPA which alleges violations of the Resource
        Conservation Recovery Act of 1976, as amended, at its Coffeyville,
        Kansas refinery.  In this action, the government has proposed a
        civil penalty in the amount of $1,365,000.

                                    EXPERTS

    The consolidated financial statements and schedules of Farmland and
subsidiaries as of August 31, 1994 and 1993 and for each of the years in the
three-year period ended August 31, 1994 included herein and elsewhere in the
Registration Statement, have been included herein and in the Registration
Statement in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.

    The report of KPMG Peat Marwick LLP covering the consolidated financial
statements contains an explanatory paragraph concerning income tax adjustments
proposed by the Internal Revenue Service on the gain on sale of and certain
distributions by Terra Resources, Inc. 

                       QUALIFIED INDEPENDENT UNDERWRITER

    Interstate/Johnson Lane Corporation, a member of the NASD, has participated
as a qualified independent underwriter in the "due diligence" review with
respect to the preparation of this Prospectus.  See "Plan of Distribution"
regarding the exception from pricing by the qualified independent underwriter.

              INDEX TO FARMLAND CONSOLIDATED FINANCIAL STATEMENTS

      Independent Auditors' Report  . . . . . . . . . . . . . . 49

      Consolidated Balance Sheets, August 31, 
      1994 and 1993   . . . . . . . . . . . . . . . . . . . . . 50

      Consolidated Statements of Operations for 
      each of the years in
      the three-year period ended August 31, 1994   . . . . . . 52

      Consolidated Statements of Cash Flows for 
      each of the years in
      the three-year period ended August 31, 1994   . . . . . . 53

      Consolidated Statements of Capital 
      Shares and Equities for
      each of the years in the three-year 
      period ended August 31, 1994  . . . . . . . . . . . . . . 55

      Notes to Consolidated Financial Statements  . . . . . . . 56

                         INDEPENDENT AUDITORS' REPORT

The Board of Directors
Farmland Industries, Inc.:

    We have audited the accompanying consolidated balance sheets of Farmland
Industries, Inc. and subsidiaries as of August 31, 1994 and 1993, and the
related consolidated statements of operations, cash flows and capital shares
and equities for each of the years in the three-year period ended August 31,
1994.  These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Farmland
Industries, Inc. and subsidiaries as of August 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended August 31, 1994, in conformity with generally accepted
accounting principles.

    As discussed in note 7 to the consolidated financial statements, the
Internal Revenue Service (IRS) has examined the Company's tax returns for the
years ended August 31, 1984 and 1983, and has proposed certain adjustments. 
Should the IRS ultimately prevail, the federal and state income taxes and
statutory interest thereon could be significant.  Farmland believes it has
meritorious positions with respect to such claims and, based upon the opinion
of special tax counsel, management believes it is more likely than not that the
courts will ultimately conclude that Farmland's treatment of such items was
substantially, if not entirely, correct.  The ultimate outcome of this matter
can not presently be determined.  Therefore, no provision for such income taxes
and interest has been made in the accompanying consolidated financial
statements.

                                   KPMG PEAT MARWICK LLP
Kansas City, Missouri
October 21, 1994  

                    FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                    ASSETS
August 31          
                                                     1994               1993     
                                                     (Amounts in Thousands)
Current Assets:
      Cash and cash equivalents  . . . . . . .  $       44,084     $       28,373
      Accounts receivable - trade  . . . . . .         394,906            320,980
      Inventories (note 3)   . . . . . . . . .         538,314            496,690
      Other current assets   . . . . . . . . .         119,139             69,357

            Total Current Assets . . . . . . .  $    1,096,443     $      915,400

Investments and Long-Term Receivables (note 4)  $      189,601     $      183,312

Property, Plant and Equipment (notes 5 and 6):
Property, plant and equipment, at cost  . . .   $    1,202,159     $    1,154,343
Less accumulated depreciation and amortization         700,869            649,965

     Net Property, Plant and Equipment  . . .   $      501,290     $      504,378

Other Assets      . . . . . . . . . . . . . .   $      139,297     $      116,891

Total Assets      . . . . . . . . . . . . . .   $    1.926,631     $    1,719,981
See accompanying notes to consolidated financial statements.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                           LIABILITIES AND EQUITIES
August 31          
                                                         1994               1993     
                                                          (Amounts in Thousands)
Current Liabilities:
    Demand loan certificates   . . . . . . . . . .  $       23,158     $       29,860
    Short-term notes payable (note 6)  . . . . . .         279,137            256,655
    Current maturities of long-term debt (note 6)           27,840             31,947
    Accounts payable - trade   . . . . . . . . . .         246,181            217,982
    Other current liabilities (note 9)   . . . . .         229,423            118,437

                Total Current Liabilities  . . . .  $      805,739     $      654,881

 Long-Term Debt (excluding current maturities)
    (note 6)                    . . . . . . . . .   $      517,806     $      485,861

 Deferred Income Taxes (note 7)  . . . . . . . . . .$        6,340     $        2,169

 Minority Owners' Equity in Subsidiaries (note 8)  .$       11,733     $       15,363

 Capital Shares and Equities (note 9):
    Preferred shares, $25 par value--Authorized 
        8,000,000 shares,
        148,069 shares issued and outstanding 
        (148,325 shares in 1993)   .            .   $        3,702     $        3,708
    Common shares, $25 par value -- Authorized 
        50,000,000 shares,
        14,542,478 shares issued and outstanding
         (15,199,833 shares in 1993) . . . . . . . .       363,562            379,996
    Associate member common shares 
        (nonvoting), $25 par value --
        Authorized 2,000,000 shares, 
        370,707 shares issued and
        outstanding (327,828 shares in 1993) . . . .         9,268              8,196
    Earned surplus and other equities  . . . . . . . . . . 208,481            169,807

                Total Capital Shares and Equities  .$      585,013     $      561,707

 Contingent Liabilities and Commitments 
    (notes 4, 6, 7, 10 and 11)

 Total Liabilities and Equities  . . . . . . . . . .$    1,926,631     $    1,719,981
See accompanying notes to consolidated financial statements.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended August 31               
                                                              1994           1993          1992      
                                                                          (Amounts in Thousands)
Sales             . . . . . . . . . . . . . . . . . . .   $ 6,677,933    $ 4,722,940    $ 3,429,307
Cost of sales     . . . . . . . . . . . . . . . . . . .     6,284,084      4,470,290      3,099,316

Gross income     . . . . . . . . . . . . . . . . . . .    $   393,849    $   252,650    $   329,991

Selling, general and administrative expenses  . . . . .   $   305,279    $   223,792    $   236,065

Other income (deductions):
      Interest expense   . . . . . . . . . . . . . . . .  $   (51,485)   $   (36,764)   $   (27,965)
      Interest income  . . . . . . . . . . . . . . . . .        6,170          4,189          2,667
      Equity in income (loss) of investees (note 4)  . .       10,878        (12,394)        (2,341)
      Provision for loss on disposition of assets
            (note 17)  . . . . . . . . . . . . . . . . .          -0-        (29,430)           -0-
      Other, net (note 16)   . . . . . . . . . . . . . .       20,111          9,536          4,217
                                                          $   (14,326)   $   (64,863)   $   (23,422)

Income (loss) before income taxes, minority
      owners' interest and extraordinary item  . . . . .  $    74,244    $   (36,005)   $    70,504

Income tax (expense) benefit (note 7) . . . . . . . . .        (4,890)         6,433         (9,458)
Minority owners' interest in loss (income)  
     of subsidiaries  . . . . . . . . . . . . . . . . .         4,522           (828)           -0-
Income (loss) before extraordinary item . . . . . . . .   $    73,876    $   (30,400)   $    61,046
Extraordinary item - Utilization of loss 
     carryforward (note 7)  . . . . . . . . . . . . . .           -0-            -0-          1,267
           Net income (loss)  . . . . . . . . . . . . .   $    73,876    $   (30,400)   $    62,313

Distribution of net income (note 9):
     Patronage refunds:
           Farm supply patrons  . . . . . . . . . . . .   $    59,685    $       -0-    $    16,229
           Pork marketing patrons . . . . . . . . . . .        10,927            -0-          1,245
           The Cooperative Finance 
                Association's patrons . . . . . . . . .           -0-          1,650          1,482
                                                          $    70,612    $     1,650    $    18,956
Earned surplus and other equities . . . . . . . . . . .         3,264        (32,050)        43,357
                                                          $    73,876    $   (30,400)   $    62,313
See notes to consolidated financial statements
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended August 31               
                                                                1994                 1993             1992      
                                                                          (Amounts in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss) . . . . . . . . . . . . . . . . . . .   $        73,876    $       (30,400)   $      62,313
 Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
      Depreciation and amortization  . . . . . . . . . .            62,960             57,730           50,784
      Provision for loss on disposition of assets  . . .               -0-             29,430              -0-
      (Gain) on disposition of fixed assets  . . . . . .            (1,794)              (385)          (1,181)
      Patronage refunds received in equities   . . . . .            (2,171)            (2,241)          (2,320)
      Proceeds from redemption of patronage equities   .               573              1,731            7,727
      Equity in (income) loss of investees   . . . . . .           (10,878)            12,394            2,341
      Deferred income tax (benefit) expense  . . . . . .            (5,034)            (3,463)           1,752
      Other        . . . . . . . . . . . . . . . . . . .               770              7,604            3,786
      Changes in assets and liabilities (exclusive
         of assets and liabilities of businesses acquired):
            Accounts receivable  . . . . . . . . . . . .           (12,079)           (92,024)           9,095
            Inventories  . . . . . . . . . . . . . . . .            (4,692)           (65,402)         (27,483)
            Other assets . . . . . . . . . . . . . . . .           (45,990)           (30,154)          11,490
            Accounts payable . . . . . . . . . . . . . .            17,884             19,630          (48,425)
            Other liabilities  . . . . . . . . . . . . .            32,617            (17,981)          10,722

 Net cash provided by (used in) operating activities . .   $       106,042    $      (113,531)   $      80,601

 CASH FLOWS FROM INVESTING ACTIVITIES:
 Advances to borrowers by finance companies  . . . . . .   $           -0-    $      (624,618)   $    (733,403)
 Collections from borrowers by finance companies . . . .               -0-            631,668          685,383
 Acquisition of businesses . . . . . . . . . . . . . . .           (35,790)           (10,500)             -0-
 Proceeds from disposal of investments and
      notes receivable   . . . . . . . . . . . . . . . .            34,577             12,115           71,582
 Acquisition of investments and notes receivable . . . .           (22,117)           (50,378)         (58,979)
 Capital expenditures  . . . . . . . . . . . . . . . . .           (69,776)           (98,238)         (79,954)
 Proceeds from sale of fixed assets  . . . . . . . . . .            14,785             10,900            8,191
 Distribution from joint venture, net  . . . . . . . . .               -0-                -0-           29,324
 Proceeds from sale of assets to
      joint venture partner  . . . . . . . . . . . . . .             2,310                -0-           62,104
 Proceeds from disposition of subsidiary (note 2)  . . .               -0-             87,227              -0-
 Other             . . . . . . . . . . . . . . . . . . .             5,547             (2,140)             -0-

 Net cash used in investing activities . . . . . . . . .   $       (70,464)   $       (43,964)    $    (15,752)

 CASH FLOWS FROM FINANCING ACTIVITIES:
 Net decrease of demand loan certificates  . . . . . . .   $        (6,702)   $       (13,224)    $    (13,712)
 Proceeds from bank loans and notes payable  . . . . . .           888,088            916,799          669,608
 Payments of bank loans and notes payable  . . . . . . .          (924,731)          (777,268)        (711,101)
 Proceeds from issuance of subordinated
       debt certificates   . . . . . . . . . . . . . . .            57,636             72,423           57,780
 Payments for redemption of subordinated
       debt certificates   . . . . . . . . . . . . . . .           (33,034)           (16,490)         (22,557)
 Payments for redemption of equities . . . . . . . . . .            (3,244)           (13,505)          (8,046)
 Payments of patronage refunds and dividends . . . . . .               -0-            (17,946)         (12,204)
 Other             . . . . . . . . . . . . . . . . . . .             2,120                340           (3,853)

 Net cash provided by (used in) financing activities . .   $       (19,867)   $       151,129     $   (44,085)

 Net increase (decrease) in cash and
      cash equivalents   . . . . . . . . . . . . . . . .   $        15,711    $        (6,366)    $     20,764
 Cash and cash equivalents at beginning of year  . . . .            28,373             34,739           13,975
 Cash and cash equivalents at end of year  . . . . . . .   $        44,084    $        28,373     $     34,739

 SUPPLEMENTAL SCHEDULE OF CASH PAID 
      FOR INTEREST AND INCOME TAXES:

 Interest          . . . . . . . . . . . . . . . . . . .   $        38,425    $        41,136     $     35,626

 Income taxes (net of refunds) . . . . . . . . . . . . .   $         9,746    $         1,479     $     12,181

 SUPPLEMENTAL SCHEDULE OF NONCASH 
      INVESTING AND FINANCING ACTIVITIES:

 Equities and minority owners' interest
      called for redemption  . . . . . . . . . . . . . .   $        12,935    $           -0-     $     13,365
 Transfer of assets in exchange for
      investment in joint ventures   . . . . . . . . . .   $           309    $           -0-     $     63,911
 Issuance of Farmland equities to minority owners'
      of Foods     . . . . . . . . . . . . . . . . . . .   $           -0-    $           -0-     $     16,680
 Appropriation of current year's net income
      as patronage refunds   . . . . . . . . . . . . . .   $        70,612    $           -0-     $     18,956
 Acquisition of businesses:
      Fair value of net assets acquired  . . . . . . . .   $        35,539    $         1,414     $     30,321
      Goodwill     . . . . . . . . . . . . . . . . . . .             1,094             16,086           20,976
      Minority owners' investment  . . . . . . . . . . .              (843)            (7,000)             -0-
                                                           $        35,790    $        10,500     $     51,297
See accompanying notes to consolidated financial statements.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF CAPITAL SHARES AND EQUITIES
Years Ended August 31, 1994, 1993 and 1992
                                                                                           Earned       Total
                                                                             Associate      Surplus     Capital
                                                                               Member        And        Shares
                                                 Preferred        Common       Common       Other        And
                                                  Shares          Shares       Shares      Equities    Equities
                                                                        (Amounts in Thousands)
BALANCE AT AUGUST 31, 1991  . . . . . . . . .  $     3,733  $    330,646 $    7,680  $     155,305  $    497,364
 Issue, redemption and cancellation of equities         (20)       44,297        (15)            13        44,275
 Appropriation of current year's net income  .          -0-          -0-         -0-         62,313        62,313
 Transfers to current liabilities  . . . . . .          -0-       (12,045)        (6)       (19,329)      (31,380)
 Transfers from minority owners' equity  . . .          -0-         5,570        -0-         10,072        15,642
 Dividends on preferred stock  . . . . . . . .          -0-          -0-         -0-             (5)           (5)
 Distribution to farm supply patrons in common
      stock, associate member common stock
      and other equities   . . . . . . . . . .          -0-        15,807        873        (16,760)          (80)
 Exchange of common stock, associate member
      common stock and other equities  . . . .          -0-        (7,892)      (356)         8,248           -0-

 BALANCE AT AUGUST 31, 1992  . . . . . . . . .  $     3,713  $    376,383 $    8,176  $     199,857  $    588,129
 Issue, redemption and cancellation of equities          (5)        6,740        (49)        (1,058)        5,628
 Appropriation of current year's net loss  . .          -0-          -0-         -0-        (30,400)      (30,400)
 Transfers to current liabilities  . . . . . .          -0-          -0-         -0-         (1,650)       (1,650)
 Exchange of common stock, associate member
      common stock and other equities  . . . .          -0-        (3,127)        69          3,058           -0-

 BALANCE AT AUGUST 31, 1993  . . . . . . . . .  $     3,708  $    379,996 $    8,196  $     169,807  $    561,707
 Issue, redemption and cancellation of equities          (6)         (364)        17         (3,475)       (3,828)
 Appropriation of current year's net income  .          -0-           -0-        -0-         73,876        73,876
 Patronage refund payable in cash transferred                                     
      to current liabilities   . . . . . . . .          -0-           -0-        -0-        (26,552)      (26,552)
 Base capital redemptions transferred
      to current liabilities   . . . . . . . .          -0-        (8,628)      (112)           -0-        (8,740)
 Other equity redemptions transferred
      to current liabilities   . . . . . . . .          -0-          -0-         -0-         (3,362)       (3,362)
 Transferred to liabilities  . . . . . . . . .          -0-          -0-         -0-         (8,084)       (8,084)
 Dividends on preferred stock  . . . . . . . .          -0-          -0-         -0-             (4)           (4)
 Exchange of common stock, associate member
      common stock and other equities  . . . .          -0-        (7,442)     1,167          6,275          -0-

 BALANCE AT AUGUST 31, 1994  . . . . . . . . .  $     3,702  $    363,562 $    9,268  $     208,481  $    585,013
See accompanying notes to consolidated financial statements.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Farmland Industries, Inc. ("Farmland"), a Kansas corporation,  is organized
and operated as a cooperative and its mission is to be a producer-driven and
profitable agricultural supply to consumer foods cooperative system.

    Principles of Consolidation -- The consolidated financial statements
include the accounts of Farmland and all its majority-owned subsidiaries (the
"Company").  All significant intercompany accounts and transactions have been
eliminated.  

    Cash and Cash Equivalents -- Investments with maturities of less than three
months are included in "Cash and cash equivalents."

    Investments -- Investments in companies 20% to 50% owned are accounted for
by the equity method.  Other investments are stated at cost.

    Accounts Receivable -- The Company uses the allowance method to account for
doubtful accounts and notes.  Uncollectible accounts and notes receivable from
members are written off against the Farmland common stock held by members
before such uncollectible accounts are charged to operations.

    Inventories -- Grain inventories are valued at market adjusted for net
unrealized gains or losses on open commodity contracts.  Crude oil, refined
petroleum products, cattle and beef inventories are valued at the lower of
last-in, first-out cost or market.  Other inventories are valued at the lower
of first-in, first-out cost or market.  Supplies are valued at cost.  When
practicable, the Company hedges certain inventories, advance sales and purchase
contracts with fixed prices and anticipated purchases of raw materials.

    Property, Plant and Equipment -- These assets are stated at cost and
depreciated principally on a straight-line basis over the estimated useful life
of the individual assets (3 to 40 years).  Leasehold improvements are amortized
on a straight-line basis over the terms of the individual leases (15 to 21
years).

    Goodwill -- The excess of cost over the fair market value of assets of
businesses purchased is amortized on a straight-line basis over a period of 15
to 25 years.

    Sales -- The Company's policy is to recognize sales at the time product is
shipped.  Net margins on international grain merchandised and sales commissions
on brokered agricultural chemicals, rather than the value of such products, are
included in net sales.

    Environmental Costs -- Liabilities related to remediation of contaminated
properties are recognized when the related costs are considered probable and
can be reasonably estimated.  Estimates of these costs are based upon currently
available facts, existing technology, undiscounted site specific costs, and
currently enacted laws and regulations.  In reporting environmental
liabilities, no offset is made for potential recoveries.  All liabilities are
monitored and adjusted regularly as new facts or changes in law or technology
occur.  Environmental expenditures are capitalized when such costs provide
future economic benefits.

    Research and Development Costs -- Total research and development costs for
the Company for the years ended August 31, 1994, 1993 and 1992 were $2,702,000,
$3,303,000 and $3,338,000, respectively.

    Federal Income Taxes -- Farmland and its cooperative subsidiaries are
subject to income taxes on all income not distributed to patrons as patronage
refunds.  Farmland and all its subsidiaries file consolidated federal and state
income tax returns.  Effective September 1, 1993, the Company adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes."  The
Company accounted for income taxes using the deferred method under APB Opinion
11 for the year ended August 31, 1993 and 1992.

(2) ACQUISITIONS AND DISPOSITIONS

    Effective June 30, 1992, Farmland acquired substantially all the business
and assets of Union Equity Co-Operative Exchange ("Union Equity") in exchange
for 2,051,880 shares of Farmland common stock with a par value of $51,297,000
and Farmland's assumption of substantially all of Union Equity's liabilities. 
The acquisition has been accounted for as a purchase and, accordingly, the
results of operations of Union Equity have been included in the Company's
consolidated financial statements from June 30, 1992.  The excess of the
purchase price over the fair value of the net identifiable assets acquired
($20,976,000) has been recorded as goodwill and is being amortized on a
straight-line basis over 25 years.

    During 1993, Farmland and partners organized NBPC.  Farmland retained a 58%
ownership interest in NBPC by investing $10,500,000 in cash.  On April 15,
1993, NBPC acquired the business of Idle Wild Foods, Inc. ("Idle Wild"), a beef
packing plant and feedlot located in Liberal, Kansas.  NBPC acquired the assets
by assuming liabilities of Idle Wild with a fair value of approximately
$130,605,000 (including bank loans which are nonrecourse to NBPC's partners). 
The acquisition has been accounted for as a purchase and, accordingly, the
results of operations of NBPC have been included in the Company's consolidated
financial statements from April 15, 1993.  The liabilities assumed over the
fair value of the net identifiable assets acquired has been recorded as
goodwill. 

    To establish The Cooperative Finance Association ("CFA") as an independent
finance association for its members, on August 30, 1993 CFA purchased
10,113,000 shares of its voting common stock from Farmland for a purchase price
comprised of $1,541,000 in cash, equities of Farmland (with a par value of
$2,406,000) held by CFA and a $6,166,000 subordinated promissory note payable
to Farmland bearing interest of 5.3%.  In addition, during 1993, CFA: 
1) repaid its operating loan from Farmland ($25,181,000); and, 2) purchased the
lending operations and assets of Farmland Financial Services Company for a cash
payment of $60,505,000 and a $2,128,000, 6% subordinated note payable to
Farmland.  Farmland repaid $87,227,000 of its borrowings from the National Bank
for Cooperatives with the proceeds received from CFA.  As a result of CFA's
stock purchase and amendments to CFA's bylaws, Farmland's voting control in CFA
decreased to 25%.  Accordingly, effective August 31, 1993, CFA is not included
in the consolidated balance sheet of the Company.

    The following unaudited financial information, for the years ended August
31, 1993 and 1992, presents pro forma results of operations of the Company as
if the disposition of CFA and the acquisitions of Union Equity and NBPC had
occurred at the beginning of each period presented.  The pro forma financial
information includes adjustments for amortization of goodwill, additional
depreciation expense and increased interest expense on debt assumed in the
acquisitions.  The pro forma financial information does not necessarily reflect
the results of operations that would have occurred had the Company been a
single entity which excluded CFA and included Union Equity and NBPC for the
full years 1993 and 1992.
August 31 (Unaudited)
                                      1993           1992   
                                     (Amounts in Thousands)
Net sales                      $     5,357,867   $    5,441,303

   Income (loss) before 
     extraordinary item           $       (44,040)  $       47,225
In October 1993, the Company acquired approximately 53% of the common stock
of National Carriers, Inc. ("NCI") and increased its ownership of NCI to 79% in
August 1994.  NCI is a trucking company located in Liberal, Kansas.  NCI
provides substantially all the trucking service needs of NBPC.  The purchase
price of NCI ($4,423,000) was paid in cash.

    In December 1993, the Company acquired all the common stock of seven
international grain trading companies (collectively referred to as
"Tradigrain").  The purchase price for Tradigrain ($31,367,000) was paid in
cash.

    The acquisitions of NCI and Tradigrain have been accounted for by the
purchase method of accounting and, accordingly, the operating results of each
enterprise have been included in the Company's consolidated financial
statements from the respective dates of acquisition.  The excess of the cash
paid over the fair value of the net assets acquired has been recorded as
goodwill.  The pro forma effects of acquisitions of NCI and Tradigrain on the
consolidated financial statements are not significant.

(3) INVENTORIES

    Major components of inventories are as follows:
August 31   
                                          1994       1993   
                                       (Amounts in Thousands)
Grain  . . . . . . . . . . . . . . . $   136,353  $   91,990
   Beef   . . . . . . . . . . . . . . .      24,267      27,754
   Materials  . . . . . . . . . . . . .      51,428      43,857
   Supplies . . . . . . . . . . . . . .      39,885      41,388
   Finished and in-process products . .     286,381     291,701
                                        $   538,314  $  496,690
The carrying values of crude oil and refined petroleum inventories stated
under the lower of last-in, first-out ("LIFO") cost or market at August 31,
1994 and 1993 were $86,179,000 and $84,088,000, respectively.  Had the lower of
first-in, first-out ("FIFO") cost or market been used to value these products,
the carrying values of inventories at August 31, 1994 and 1993 would have been
lower by $4,145,000 and $5,754,000, respectively.

    Net income for 1994, 1993 and 1992 was $1,609,000 lower, $4,119,000 higher
and $1,935,000 lower, respectively, as a result of using LIFO as compared with
FIFO, including a $3,164,000 recovery in 1994 of an $8,346,000 lower of cost or
market adjustment in 1993.  Liquidation of prior year inventory layers in 1992
reduced income before income taxes and patronage refunds by $3,302,000.

    The carrying values of beef inventories stated under LIFO at August 31,
1994 and 1993 were $24,267,000 and $27,754,000, respectively.  The LIFO method
of accounting for beef inventories had no effect on the carrying value of
inventories or on the results reported in 1994 and 1993, as market value of
these inventories was lower than LIFO or FIFO cost.  

(4) INVESTMENTS AND LONG-TERM RECEIVABLES

    Investments and long-term receivables are as follows:
August 31          
                                                               1994               1993     
                                                               (Amounts in Thousands)
. . . . . . . . . . . . . . . . . .
Investments accounted for by the equity method   .  $       52,478     $       37,456
      Notes receivable from ventures, 20% to 50% owned            48,955             60,204
      National Bank for Cooperatives   . . . . . . . . .          28,786             31,824
      Investments in and advances to other cooperatives           42,662             37,690
      Other investments and long-term receivables  . . .          16,720             16,138
                                                          $      189,601     $      183,312
National Bank for Cooperatives ("CoBank") requires borrowers from the bank
to maintain an investment in stock of the bank.  The amount of investment
required is based on the average amount borrowed from CoBank during the
previous five years.  At August 31, 1994, Farmland's investment in CoBank
approximated its requirement.  This investment has been pledged to secure
borrowings from CoBank under the syndicated loan agreement.  

   Summarized financial information of investees accounted for by the equity
method is as follows:
August 31   
                                          1994       1993   
                                       (Amounts in Thousands)
Current Assets  . . . . . . . . . $   105,981  $   66,532
      Long-Term Assets  . . . . . . . .     252,704     223,937
         Total Assets . . . . . . . . . $   358,685  $  290,469

      Current Liabilities . . . . . . . $   111,077  $   79,224
      Long-Term Liabilities . . . . . .     144,255     141,991
         Total Liabilities  . . . . . . $   255,332  $  221,215

      Net Assets  . . . . . . . . . . . $   103,353  $   69,254
Year Ended August 31    
                              1994          1993            1992   
                                    (Amounts in Thousands)
Net sales              $    803,516  $   601,194   $    218,913
    Net income (loss)      $     24,285  $   (22,755)  $     (5,046)
    Farmland's equity 
     in net income (loss)  $     10,878  $   (12,394)  $     (2,341)
The Company's investments accounted for by the equity method consist
principally of 50% equity interests in Hyplains Beef, L.L.C. and in two
phosphate fertilizer manufacturing ventures (Farmland Hydro, L.P. and
SF Phosphates Limited Company).

    On November 15, 1991, Farmland and Norsk Hydro a.s. ("Hydro") formed a
joint venture company, Farmland Hydro, to manufacture phosphate fertilizer
products for distribution to international markets.  As part of the joint
venture agreement, Farmland sold a 50% interest in its Green Bay, Florida
phosphate fertilizer plant and certain phosphate rock reserves located in
Hardee County, Florida to Hydro for an amount approximately equal to Farmland's
carrying value of the assets.  Subsequently, Farmland and Hydro contributed the
assets to the joint venture.  Farmland operates the plant under a management
agreement with the joint venture and Hydro provides international marketing
services.  See note 15 of the notes to consolidated financial statements.

    Farmland and J. R. Simplot formed a joint venture (SF Phosphates, Limited
Company) to operate a phosphate mine located in Vernal, Utah, a fertilizer
plant located in Rock Springs, Wyoming, and a 96-mile pipeline that connects
the mine with the fertilizer plant.  The purchase of the mine, plant and
pipeline from Chevron Corporation was completed in April 1992.

    Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," was issued by the Financial
Accounting Standards Board ("FASB") in May 1993 and is effective for fiscal
years beginning after December 15, 1993 (the Company's 1995 fiscal year). 
Statement 115 expands the use of fair value accounting and the reporting for
certain investments in debt and equity securities.  In the opinion of
management, the adoption of Statement 115 will not have a significant impact on
the Company's consolidated financial statements.

(5) PROPERTY, PLANT AND EQUIPMENT

    A summary of cost for property, plant and equipment is as follows:
August 31   
                                               1994       1993   
                                             (Amounts in Thousands)
Land and improvements  . . . . . . . $     13,614  $    11,825
   Site improvements  . . . . . . . . .       28,647       26,877
   Buildings  . . . . . . . . . . . . .      224,767      215,420
   Machinery and equipment  . . . . . .      716,683      678,784
   Automotive equipment . . . . . . . .       65,986       46,807
   Furniture and fixtures . . . . . . .       48,613       45,405
   Livestock  . . . . . . . . . . . . .        3,926        4,373
   Mining properties  . . . . . . . . .        3,119        3,119
   Leasehold improvements . . . . . . .       15,085       12,149
   Capital lease  . . . . . . . . . . .       50,956       52,342
   Construction in progress . . . . . .       30,763       57,242
          . . . . . . . . . . . . . . . $  1,202,159  $ 1,154,343
For the years ended August 31, 1994, 1993 and 1992, the Company capitalized
construction period interest of $357,000, $1,611,000 and $330,000,
respectively.

(6) BANK LOANS, SUBORDINATED DEBT CERTIFICATES AND NOTES PAYABLE

    Bank loans, subordinated debt certificates and notes payable are as
follows:
August 31          
                                                          1994               1993     
                                                          (Amounts in Thousands)
National Bank for Cooperatives 
      --5.61% to 9.2%, maturing 1995 through 2001    $       74,278     $       66,098
 Other bank notes--5.74% to 7.75%, 
      maturing 1995 through 2001   . . . . . . . .          117,813            138,244
 Capital investment certificates
      --6% to 9.5%, maturing 1995 through 2014   .          210,054            192,857
 Subordinated monthly interest certificates
      --6.25% to 12%, maturing 1995 through 2014             70,057             62,913
 Industrial revenue bonds--5.75% to 8.0%, 
      maturing 1995 through 2007   . . . . . . . .           25,055             27,880
 Promissory notes--7% to 10%, 
      maturing 1995 through 2001   . . . . . . . .           18,684             13,805
 Other--5% to 13%  . . . . . . . . . . . . . . . .           29,705             16,011
                                                     $      545,646     $      517,808
 Less current maturities . . . . . . . . . . . . .           27,840             31,947
                                                     $      517,806     $      485,861
In 1994, Farmland entered into a $650,000,000 syndicated credit facility
provided by eight domestic and international banking institutions.  This
agreement provides short-term credit of up to $450,000,000 to finance seasonal
operations and inventory, and revolving term credit of up to $200,000,000.  At
August 31, 1994, short-term borrowings under this facility were $217,399,000,
revolving term borrowings were $95,000,000 and $62,600,000 was being utilized
to support letters of credit issued on behalf of Farmland by participating
banks.  

    Farmland pays commitment fees of 1/8 of 1% annually on the unused portion
of the short-term commitment and 1/4 of 1% annually on the unused portion of
the revolving term commitment.  In addition, Farmland must maintain
consolidated working capital of not less than $150,000,000, consolidated net
worth of not less than $475,000,000 and funded indebtedness and senior funded
indebtedness of not more than 52% and 43% of capitalization, respectively.  All
computations are based on consolidated financial data adjusted to exclude
nonrecourse subsidiaries (as defined in the credit agreement).  Computed in
accordance with the agreement, at August 31, 1994, working capital was
$207,383,000, net worth was $585,013,000 and funded indebtedness and senior
funded indebtedness were 47.03% and 23.34% of capitalization, respectively.

    Farmland and subsidiaries maintain other borrowing arrangements with banks
and financial institutions.  Under such agreements, at August 31, 1994,
$35,495,000 was borrowed from banks and letters of credit issued by banks
amounted to $2,200,000.  Financial covenants of these arrangements are not more
restrictive than the Company's syndicated credit facility.

    NBPC, 58%-owned by Farmland, maintains borrowing agreements with a bank
which provides financing support for its beef packing operations.  Borrowings
under this credit agreement are nonrecourse to Farmland or Farmland's other
affiliates.  At August 31, 1994, NBPC's available bank credit of $61,596,000
had been borrowed.  All assets of NBPC (carried at $150,409,000) are pledged to
support its borrowings.  At August 31, 1994, Farmland had issued letters of
credit in the amount of $15,000,000 to support NBPC's bank credit agreements.

    Tradigrain has borrowing agreements with various international banks which
provide financing and letters of credit to support current international grain
trading transactions.  Obligations of Tradigrain under these loan agreements
are nonrecourse to the Company.

    The subordinated debt certificates have been issued under several different
indentures.  Farmland may redeem subordinated certificates of investments and
capital investment certificates in advance of scheduled maturities.  Farmland
may redeem subordinated certificates of investments, capital investment
certificates and subordinated monthly interest certificates upon death of the
holder.  

    The outstanding subordinated debt certificates are subordinated to senior
indebtedness.  At August 31, 1994, senior indebtedness included $450,827,000
for money borrowed, and other instruments (principally long-term operating
leases) provide for aggregate payments over nine years of approximately
$126,505,000.

    Under industrial revenue bonds and other agreements, property, plant and
equipment with a carrying value of $29,267,000 have been pledged.

    Bank loans, subordinated debt certificates and notes payable mature during
the fiscal years ending August 31 in the following amounts:

                                     (Amounts in Thousands)
         1995 . . . . . . . . . . . . . . . $   27,840
         1996 . . . . . . . . . . . . . . .     44,884
         1997 . . .  . . . . . . . . . . .     182,996
         1998 . . . . . . . . . . . . . . .     54,057
         1999 . . . . . . . . . . . . . . .     32,921
         2000 and after . . .. . . . . . .     202,948
                                            $  545,646

(7) INCOME TAXES

    On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration and
production operations, and exited its oil and gas exploration and production
activities.  The gain from the sale of Terra amounted to $237,200,000 for tax
reporting purposes.  During 1983, and prior to the sale of the Terra stock,
Farmland received certain distributions from Terra totaling $24,800,000.  For
tax purposes, Farmland claimed intercorporate dividends-received deductions for
the entire amount of such distributions.

    On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
notice to Farmland asserting deficiencies in federal income taxes (exclusive of
statutory interest thereon) in the aggregate amount of $70,775,000.  The
asserted deficiencies relate primarily to the Company's tax treatment of the
sale of the Terra stock and the distributions received from Terra prior to the
sale.  The IRS asserts that Farmland incorrectly treated the Terra sale gain as
income against which certain patronage-sourced operating losses could be
offset, and that, as a nonexempt cooperative, Farmland was not entitled to an
intercorporate dividends-received deduction in respect of the 1983 distribution
by Terra.  It further asserts that Farmland incorrectly characterized gains for
tax purposes aggregating approximately $14,600,000, and a loss of approximately
$2,300,000, from the disposition of certain other assets.  On June 11, 1993,
Farmland filed a petition in the United States Tax Court contesting the
asserted deficiencies in their entirety.  Discovery and other pre-trial phases
of the litigation have since been ongoing.  The case is scheduled for trial on
March 6, 1995.

    If the IRS ultimately prevails on all of the adjustments asserted in the
statutory notice, Farmland would have additional federal and state income tax
liabilities aggregating approximately $85,800,000 plus accumulating statutory
interest thereon through October 31, 1994, of approximately $154,900,000
(before tax benefits of the interest deduction).  In addition, such adjustments
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $5,000,000 plus applicable statutory interest
thereon.

    No provision has been made in the consolidated financial statements for
federal or state income taxes (or interest thereon) in respect of the IRS
claims described above.  Farmland believes that it has meritorious positions
with respect to all of these claims and will continue to vigorously pursue
their favorable resolution through the pending litigation.

    In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
likely than not that the courts will ultimately conclude that (i) Farmland's
treatment of the Terra sale gain was substantially, if not entirely, correct;
and (ii) Farmland properly claimed a dividends-received deduction in respect of
the 1983 distributions which it received from Terra prior to the sale of the
Terra stock.  Counsel has further advised, however, that none of the issues
involved in these disputes is free from doubt, and that there can be no
assurance that the courts will ultimately rule in favor of Farmland on any of
these issues.

    Should the IRS ultimately prevail on all of its asserted claims, all
claimed federal and state income taxes as well as accrued interest would become
immediately due and payable, and would be charged to current operations.  In
such case, the Company would be required to renegotiate agreements with its
banks to maintain compliance with various requirements of such agreements,
including working capital and funded indebtedness provisions.  However, no
assurance can be given that such renegotiation would be successful. 
Alternatives could include other financing arrangements or the possible sale of
assets.

    The Company adopted FASB Statement 109 effective September 1, 1993.  The
cumulative effect of this change in accounting for income taxes was immaterial. 
Prior years' financial statements have not been restated to apply the
provisions of Statement 109.

    Income tax expense (benefit) attributable to income from continuing
operations is comprised of the following:
Year Ended August 31         
                                 1994              1993               1992   
                                        (Amounts in Thousands)
Federal:
            Current  . . . . $     10,076      $     (2,502)       $    6,600
            Deferred . . . .       (3,217)           (2,944)            1,490
                             $      6,859      $     (5,446)       $    8,090
         State:
            Current  . . . . $      1,965      $       (468)       $    1,106
            Deferred . . . .         (755)             (519)              262
                             $      1,210      $       (987)       $    1,368
         Foreign:
            Current  . . . . $     (2,117)     $       -0-         $      -0-
            Deferred . . . .       (1,062)             -0-                -0-
                             $     (3,179)     $       -0-         $      -0-
                             $      4,890      $     (6,433)       $    9,458
Income tax expense (benefit) attributable to income from continuing
operations differs from the "expected" income tax expense (benefit) using
statutory rate of 35% (34% for 1993 and 1992), as follows:
Year Ended August 31            
                                                                  1994           1993           1992
Computed "expected" income tax expense (benefit) 
      on income (loss) before income taxes   . . . . . . . . .   35.0  %       (34.0) %        34.0   %

 Increase (reduction) in income tax expense (benefit)
 attributable to:
      Patronage refunds  . . . . . . . . . . . . . . . . . . .  (33.3)          (4.0)          (9.2)
      Utilization of member-sourced losses   . . . . . . . . .    -0-             -0-         (11.4)
      Patronage-sourced items for 
            which no benefit is available  . . . . . . . . . .    -0-           26.5            -0-
      State income tax expense (benefit) net of
            federal income tax effect  . . . . . . . . . . . .    1.1           (2.2)           1.2
      Benefit associated with exempt income of
            foreign sales corporation  . . . . . . . . . . . .    -0-           (1.4)          (1.5)
      Other, net   . . . . . . . . . . . . . . . . . . . . . .    3.8           (2.7)            .3    
 Income tax expense (benefit)  . . . . . . . . . . . . . . . .    6.6  %       (17.8) %        13.4   %
The tax effect of temporary differences that give rise to significant
portions of deferred tax liabilities and deferred tax assets at August 31, 1994
is as follows:
                                          August 31, 1994
                                       (Amounts in Thousands)
   Deferred tax liabilities:
      Property, plant and equipment 
         principally due to 
         differences in depreciation  . . . $   20,242
      Prepaid pension cost  . . . . . . . .     21,124
      Other . . . . . . . . . . . . . . . .     14,021
         Total gross deferred 
         liabilities  . . . . . . . . . . . $   55,387

   Deferred tax assets:
      Safe harbor leases  . . . . . . . . . $    5,391
      Accrued expenses  . . . . . . . . . .     27,017
      Accounts receivable, principally due to
         allowance for doubtful accounts  .      4,394
      Other . . . . . . . . . . . . . . . .     12,245
         Total gross deferred assets  . . . $   49,047

   Net deferred tax liability . . . . . . . $    6,340

    A valuation allowance for deferred tax assets was not necessary at August
31, 1994.

    The significant components of deferred income tax benefit attributable to
income from continuing operations for the year ended August 31, 1994 are as
follows:

                                            August 31, 1994
                                     (Amounts in Thousands)
   Deferred tax benefit . . . . . . . . . . $   (8,044)

   Charge in lieu of taxes resulting 
      from initial recognition 
      of acquired tax benefits that 
      are allocated to reduce 
      goodwill related to the 
      acquired entity . . . . . . . . . . .      3,010
                                            $   (5,034)

    Deferred income taxes for the year ended August 31, 1993 and 1992 result
from timing differences in the recognition of income and expenses for financial
reporting and income tax reporting purposes.  The sources of these timing
differences and their tax effect are as follows:
Year Ended August 31
                                          1993          1992   
                                         (Amounts in Thousands)
Depreciation . . . . . . . . . . . . $    473      $   1,562
   Safe harbor lease rentals  . . . . .     (378)          (478)
   Provision for loss on proposed
      sale of assets  . . . . . . . . .    3,454)           -0-
   Unfunded pension expense . . . . . .     (355)          (129)
   Reinstatement of deferred income 
      taxes previously 
      offset by net operating 
      loss carryforward 
      for financial reporting 
      purposes  . . . . . . . . . . . .      -0-          1,294
   Other, net . . . . . . . . . . . . .      251           (497)
                                        $ (3,463)     $   1,752
At August 31, 1994, Farmland and its consolidated subsidiaries have
alternative minimum tax credit carryforwards of approximately $7,025,000.

    The tax benefit for the year ended August 31, 1993 results from the
carryback of nonpatronage-sourced losses to reduce the amount of federal and
state income taxes paid during prior years.

    During the year ended August 31, 1994, Farmland utilized nonmember-sourced
loss carryforwards amounting to $7,525,000 to reduce goodwill for financial
reporting purposes by $3,010,000. 

    During the year ended August 31, 1992, all of Foods' nonmember-sourced loss
carryforwards were utilized and deferred income taxes amounting to $1,294,000
were reinstated.  During the year ended August 31, 1992, Farmland utilized
nonmember-sourced loss carryforwards amounting to $3,168,000 to reduce income
tax expense for financial reporting purposes by $1,267,000.  Utilization of
these loss carryforwards has been presented as an extraordinary item in the
accompanying consolidated statement of operations for the year ended August 31,
1992.

    In connection with the acquisition of Union Equity, Farmland acquired
member-sourced and nonmember-sourced loss carryforwards from Union Equity
amounting to approximately $18,600,000 and $10,600,000, respectively.  For the
year ended August 31, 1992, Farmland was able to utilize member-sourced and
nonmember-sourced loss carryforwards amounting to $18,600,000 and $2,800,000,
respectively.  The benefit of the utilization of the nonmember-sourced loss
carryforward amounting to $1,134,000 was recorded as a reduction of goodwill. 
See note 2 of the notes to consolidated financial statements.

(8) MINORITY OWNERS' EQUITY IN SUBSIDIARIES

    A summary of the equity of subsidiaries owned by others is as follows:
August 31   
                                               1994       1993  
                                          (Amounts in Thousands)
Farmland Foods, Inc.                     $    5,618  $   6,401
   National Beef Packing Company, 
      L.P. and G.P.                              2,925      7,865
   Heartland Wheat Growers, L.P. and G.P.        2,100       -0-
   Other subsidiaries                            1,090      1,097
                                            $   11,733  $  15,363
(9) PREFERRED STOCK, EARNED SURPLUS AND OTHER EQUITIES

    A summary of preferred stock is as follows:
August 31   
                                               1994       1993  
                                          (Amounts in Thousands)
Preferred shares, $25 par value - 
     Authorized 8,000,000 shares:
     6% - 608 shares issued and outstanding
       (624 shares in 1993)   . . . . . . . . $   15    $    15
     5-1/2% - 2,592 shares issued and 
       outstanding
       (2,832 shares in 1993)   . . . . . . .     65         71
     Series F - 144,869 shares 
       issued and outstanding
       (144,869 shares in 1993)   . . . . . .  3,622      3,622
                                              $3,702     $3,708
The 5-1/2% and 6% preferred stocks have preferential liquidation rights
over the Series F preferred stock.  Dividends on the 5-1/2% and 6% preferred
stock are cumulative if declared by the Farmland Board of Directors and only to
the extent earned each year.  Series F preferred stock is nondividend bearing. 
Upon liquidation, holders of all preferred stock are entitled to the par value
thereof and, with respect to the 5-1/2% and 6% preferred stock, any declared or
unpaid earned dividends.

    A summary of earned surplus and other equities is as follows:
August 31   
                                               1994      1993   
                                          (Amounts in Thousands)
Earned surplus . . . . . . . . . . . . . $  130,250  $ 123,974
   Patronage refund payable in equities . .     44,032       -0-
   Nonmember capital  . . . . . . . . . . .        103        104
   Capital credits  . . . . . . . . . . . .     32,547     38,105
   Unallocated equity . . . . . . . . . . .      -0-        6,021
   Additional paid-in surplus . . . . . . .      1,603      1,603
   Currency translation adjustment  . . . .        (54)       -0-
                                            $  208,481  $ 169,807
In accordance with the bylaws of Farmland, the member-sourced portion of
its net income or loss and the resulting patronage refund payable to members
and patrons are determined annually.  The bylaws provide that the amount of the
patronage refund payable be reduced if immediately after the payment of such
patronage refund, the amount of earned surplus would be less than 30% of the
previous year-end balance of members' equity accounts (defined for this purpose
as the sum of common stock, associate member common stock, capital credits,
nonmember capital and patronage refunds payable in equities).  The reduction of
patronage refunds is limited to the lesser of 15% or the amount required to
increase the balance of the earned surplus account to the required 30%.  As of
August 31, 1994 and 1993, earned surplus exceeded the required amount by
approximately $2,329,000 and $3,874,000, respectively.  The patronage refund
payable for 1994 is $70,584,000.  The cash portion is $26,552,000 and is
included in "Other current liabilities" in the consolidated balance sheet at
August 31, 1994.  The balance ($44,032,000) of the patronage refund is payable
in equities of Farmland and is included in the consolidated balance sheet as
"Earned surplus and other equities."  No patronage refunds were paid by
Farmland for 1993.  The patronage refund for 1992 was $17,449,000, all of which
was paid in cash.

    Farmland maintains a base capital plan.  The plan's objectives are as
follows:  1) to achieve proportionality between the dollar amount of business a
member or associate member of Farmland ("Participant") transacts with Farmland
and the par value of Farmland equity which the Participant should hold
(hereinafter referred to as the Participants' "Base Capital Requirement"); and,
2) provide a method for the Board of Directors, in its discretion, to redeem
equities held by a Participant when the par value of the Participant's
investment exceeds the Participant's Base Capital Requirement.  This plan
provides that the relationship between the par value of a Participant's
investment in Farmland equity and the Participant's Base Capital Requirement
shall influence the cash portion of any patronage refund paid to the
Participant.

    The Base Capital Requirement shall be determined annually by the Farmland
Board of Directors at its sole discretion.  At August 31, 1994, common stock
and associate member common stock with a par value of $8,740,000 have been
approved for redemption by the Board of Directors under the base capital plan
and such amounts have been included in "Other current liabilities" in the
consolidated balance sheet at August 31, 1994.

    Farmland maintains an estate settlement plan for redemption of equities
held by estates of deceased individuals (except equities purchased and held
less than five years) and a special equity redemption plan to redeem equities
of holders who do not participate in the Farmland base capital plan.  Under
these plans,  the Board of Directors, in its discretion, may redeem equities
based on certain factors, including the financial position and consolidated net
income of the Company.  A priority for redeeming equities under these plans has
been established.  

    At August 31, 1994, certain equities of Farmland with a face amount of
$3,448,000 and capital equity fund certificates held by certain members of
Farmland Foods, Inc. in the amount of $747,000 have been approved by the Board
of Directors for redemption under the estate settlement and special equity
redemption plan.  Accordingly, such amounts have been included in "Other
current liabilities" in the consolidated balance sheet at August 31, 1994.

    Nonmember capital represents patronage refunds distributed in the form of
book credits.

    Capital credits are issued:  1) for payment of patronage refunds to patrons
who do not satisfy requirements for membership or associate membership; and,
2) upon conversion of common stock or associate member common stock held by
persons who do not meet qualifications for membership or associate membership
in Farmland.  

    Unallocated equity represents the cumulative difference between the amount
of member-sourced income for financial reporting and income tax reporting
purposes.  

    Additional paid-in surplus results from members donating Farmland equity to
Farmland.

    None of the aforementioned equities are held by or for the account of
Farmland or in any sinking or other special fund of Farmland and none have been
pledged by Farmland.

(10)    CONTINGENT LIABILITIES AND COMMITMENTS

    The Company leases various equipment and real properties under long-term
operating leases.  For the years ended August 31, 1994, 1993 and 1992, rental
expenses totaled $41,794,000, $41,104,000 and $43,300,000, respectively. 
Rental expense is reduced for mileage credits received on leased railroad cars
($1,866,000 in 1994, $1,939,000 in 1993 and $663,000 in 1992).

    The leases have various remaining terms ranging from one year to fifteen
years.  Some leases are renewable, at Farmland's option, for additional
periods.  The minimum amount Farmland must pay for these leases during the
fiscal years ending August 31 are as follows:

                                 (Amounts in Thousands)
               1995   . . . . . . . . .  $  49,883
               1996   . . . . . . . . .     40,275
               1997   . . . . . . . . .     36,154
               1998   . . . . . . . . .     29,440
               1999   . . . . . . . . .     22,209
               2000 and after   . . . .     69,008
                                         $ 246,969

    Farmland and its subsidiaries are involved in various lawsuits incidental
to the businesses.  In the opinion of management, the ultimate resolution of
these litigation issues will not have a material adverse effect on the
Company's consolidated financial statements.

    The Company has certain throughput agreements, take-or-pay agreements,
minimum quantity agreements, and minimum charge agreements for various raw
material supplies and services through 1996.  The Company's minimum obligations
under such agreements are $1,248,000 in 1995 and $924,000 in 1996.

    The Company has been designated by the Environmental Protection Agency as a
potentially responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), at various National
Priority List ("NPL") sites.  In addition, the Company is aware of possible
obligations associated with environmental matters at other sites, including
sites where no claim or assessment has been made.  The Company's probable and
reasonably determinable obligations for resolution of environmental matters at
NPL and other sites are estimated to be $7,164,000 and such amount has been
accrued.

    The ultimate costs of resolving environmental matters are not quantifiable
because many such matters are in preliminary stages and the timing and extent
of actions which governmental authorities may ultimately require are unknown. 
It is possible that the costs of such resolution may be greater than the
liabilities which, in the opinion of management, are probable and reasonably
determinable at August 31, 1994.  In the opinion of management, it is
reasonably possible for such costs to approximate $39,000,000 and to extend
over 30 years.

    CFA has loans receivable from customers engaged in pork production
operations and from cooperative associations which are guaranteed by Farmland. 
At August 31, 1994, such guarantees amounted to $5,868,000.  In addition,
Farmland has issued letters of credit to support borrowing arrangements of a
subsidiary as described in note 6.

    At August 31, 1994, the Company was committed to expenditures for
acquisition and completion of construction of plant and equipment aggregating
approximately $19,000,000.

(11)    EMPLOYEE BENEFIT PLANS

    The Farmland Industries, Inc. Employee Retirement Plan ("the Plan") is a
defined benefit plan covering substantially all employees of Farmland and its
subsidiaries who meet minimum age and length-of-service requirements.  Benefits
payable under the Plan are based on years of service and the employee's average
compensation during the highest four of the employee's last ten years of
employment.

    The assets of the Plan are maintained in a trust fund.  The majority of the
Plan's assets are invested in common stocks, corporate bonds, United States
Government securities and short-term investment funds.

    The Company's funding policy is to make the maximum annual contribution to
the Plan's trust fund that can be deducted for federal income tax purposes.  

    The Company charges pension cost as accrued based on actuarial valuation of
the Plan.

    Components of the Company's pension cost are as follows:
August 31            
                                                                  1994            1993            1992    
                                                                          (Amounts in Thousands)
Service cost - benefits earned during the period . . .   $     8,663     $     7,449     $     6,519
      Interest cost on projected benefit obligation  . . . .        15,292          12,134          11,332
      Actual return on Plan assets . . . . . . . . . . . . .       (10,949)        (15,842)        (20,591)
      Net amortization and deferral  . . . . . . . . . . . .        (7,860)           (374)          4,027
         Pension expense . . . . . . . . . . . . . . . . . .   $     5,146     $     3,367     $     1,287
The discount rate and the rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligations at August 31, 1994 were 8.0% and 4.5%, respectively (8.5% and 5% at
August 31, 1993, and 9% and 5% at August 31, 1992, respectively).  The expected
long-term rate of return on assets at August 31, 1994, 1993 and 1992 were 8.5%,
8.5% and 9%, respectively.  

    The following table sets forth the Plan's funded status and amounts
recognized in the Company's consolidated balance sheet at August 31, 1994 and
1993.  Such prepaid pension cost is based on the Plan's funded status as of May
31, 1994 and 1993.
August 31          
                                                                                  1994               1993     
                                                                                    (Amounts in Thousands)
Actuarial present value of benefit obligations:
      Vested benefits  . . . . . . . . . . . . . . . . . . . . . . . . . .   $      148,648     $      123,061
      Nonvested benefits   . . . . . . . . . . . . . . . . . . . . . . . .            9,163              7,102
      Accumulated benefit obligation   . . . . . . . . . . . . . . . . . .   $      157,811     $      130,163
      Increase in benefits due to future compensation increases  . . . . .           53,533             51,633
      Projected benefit obligation   . . . . . . . . . . . . . . . . . . .   $      211,344     $      181,796
      Estimated fair value of Plan assets  . . . . . . . . . . . . . . . .          226,681            212,647
      Plan assets in excess of projected benefit obligation  . . . . . . .   $       15,337     $       30,851
      Unrecognized net loss from past experience different
            from that assumed and effects of changes
            in assumptions . . . . . . . . . . . . . . . . . . . . . . . .           37,332             21,754
      Unrecognized net transition asset being 
            recognized over 10 years . . . . . . . . . . . . . . . . . . .             (933)            (1,866)
      Unrecognized prior service cost  . . . . . . . . . . . . . . . . . .            1,308              2,590
 Prepaid pension cost at end of year . . . . . . . . . . . . . . . . . . .   $       53,044     $       53,329
The Company provides group life insurance benefits for retired employees
who were hired before January 1, 1988 and reach normal retirement age while
working for the Company.  Prior to 1994, the Company charged operations for the
amount of an annual insurance premium paid for group life insurance covering
both retired and active employees.  In 1994, the cost of providing group life
insurance for retired employees was not separable from the cost of providing
group life insurance for active employees.  For the years ended August 31, 1993
and 1992, such insurance premium were $1,178,000 and $783,000, respectively.

    In fiscal year 1994, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" and the effect was insignificant.

    Statement of Financial Accounting Standards No. 112, "Employer's Accounting
for Postemployment Benefits," was issued by the FASB in November 1992 and is
effective for fiscal years beginning after December 15, 1993 (the Company's
1995 fiscal year).  Statement 112 establishes standards of accounting and
reporting for the estimated cost of benefits provided to former or inactive
employees.  Management expects that the adoption of Statement 112 will not have
a significant impact on the Company's consolidated financial statements.

(12)    INDUSTRY SEGMENT INFORMATION

    The Company's business is conducted within three general operating areas: 
cooperative farm supply operations, cooperative marketing operations and other
operations.  As a farm supply cooperative, the Company engages in manufacturing
and wholesale distribution of input products of agricultural production.  The
Company's principal farm supply products are petroleum, crop production and
feed.

    Petroleum products include gasoline, distillate, diesel fuel, propane, lube
oils, grease and automotive parts and accessories.  Products in the crop
production area include nitrogen, phosphate and potash fertilizers, herbicides,
insecticides and other farm chemicals.  Feed products include a complete line
of formulated feeds.  Supply products are sold primarily at wholesale to local
farm cooperatives.

    Marketing operations include pork and beef processing, marketing and the
distribution of fresh meat products, ham, bacon, sausage, deli meats, Italian
specialty meats and boxed beef, and the marketing and storage of grain.

    Other operations include convenience fuel and food stores, farm supply
stores, finance company operations and services such as accounting, financial,
management, environmental and safety, and transportation.  See note 2 of the
notes to consolidated financial statements.

    The operating income (loss) of each industry segment includes the revenue
generated on transactions involving products within that industry segment less
identifiable and allocated expenses.  In computing operating income (loss) of
industry segments none of the following items has been added or deducted: 
interest expense, interest income, other income (deductions) or corporate
expenses (included in the statements of operations as selling, general and
administrative expenses), which cannot practicably be identified or allocated
by industry segment.  Operating income (loss) of industry segments for the
years ended August 31, 1993 and 1992 have been restated for comparative
purposes to exclude certain costs which were not identified to business
segments in 1994 but which were identified to business segments in 1993 and
1992.  Corporate assets include cash, investments in other cooperatives, the
corporate headquarters of Farmland and certain other assets.

    Following is a summary of industry segment information as of and for the
years ended August 31, 1994, 1993 and 1992:
Unallocated
                                                             Cooperative                       Corporate
                         Cooperative Farm Supply             Marketing and                     Items and
                                  Crop                        Processing             Other    Inter-Segment
                    Petroleum   Production    Feed        Foods        Grain       Operations  Eliminations Consolidated
                                                         (Amounts in Thousands)
1994
 Sales to 
   unaffiliated 
   customers . . .  $  855,479  $ 1,163,357  $  527,864  $ 2,355,599  $ 1,627,156  $  148,478  $      -0-  $ 6,677,933
 Transfers 
   between 
   segments  . . .       4,843        9,513       2,072        3,007          -0-       -0-       (19,435)      -0-
 Total sales 
   and transfers .  $  860,322  $ 1,172,870  $  529,936  $ 2,358,606  $ 1,627,156  $  148,478  $  (19,435) $ 6,677,933
 Operating 
   income (loss) of
   industry 
   segments  . . .  $   27,172  $   126,047  $   17,019  $    20,634  $   (33,455) $   (2,368)             $   155,049
 Equity in 
   income (loss)
   of investees 
   (note 4)  . . .  $      (41) $    15,466  $      155  $    (4,404) $       -0-  $     (298)             $    10,878
 General corporate 
   expenses  . . .                                                                                             (66,479)
 Other corporate 
   income  . . . .                                                                                              26,281
 Interest expense                                                                                              (51,485)
 Minority interest                                                                                               4,522
 Income before income taxes and
   extraordinary item                                                                                      $    78,766
 Identifiable assets at
   August 31, 
   1994  . . . . .  $  306,366  $   357,178  $   92,767  $   395,159  $   341,367  $   62,301              $ 1,555,138
 Investment in and advances to
   investees . . .  $      746  $    76,439  $    1,761  $    13,927  $       -0-  $    8,560  $      -0-  $   101,433
 Corporate assets                                                                                              270,060
 Total assets  . .                                                                                         $ 1,926,631
 Provision for depreciation and
   amortization  .  $    9,911  $    14,700  $    3,815  $    16,776  $     4,011  $    7,982  $    5,765  $    62,960
 Capital expenditures 
   (including
   $16,888,000 of 
   capital assets
   of business 
   acquired) . . .  $   14,399  $    14,136  $    4,508  $    19,040  $     6,256  $   26,051  $    2,274  $    86,664

 1993
 Sales to 
   unaffiliated 
   customers . . .  $  887,389  $   884,811  $  479,205  $ 1,412,634  $   953,521  $  105,380  $      -0-  $ 4,722,940
 Transfers between 
   segments  . . .       5,591        7,970       2,330        3,496          -0-         -0-     (19,387)         -0-
 Total sales 
   and transfers .  $  892,980  $   892,781  $  481,535  $ 1,416,130  $   953,521  $  105,380  $  (19,387) $ 4,722,940
 Operating income 
   (loss) of
   industry 
   segments  . . .  $   (4,602) $    51,654  $   20,676  $    16,485  $       104  $    2,262              $    86,579
 Equity in income (loss)
   of investees 
   (note 4)  . . .  $        2  $    (8,223) $      (35) $    (3,306) $       -0-  $     (832)             $   (12,394)
 Provision for 
   loss on disposition
   of assets 
   (note 17) . . .     (20,022)      (6,155)                  (3,253)                                          (29,430)
 General corporate expenses                                                                                    (57,721)
 Other corporate income                                                                                         13,725
 Interest expense                                                                                              (36,764)
 Minority interest                                                                                                (828)
 (Loss) before income taxes and
   extraordinary item                                                                                      $   (36,833)
 Identifiable assets at
   August 31, 
   1993  . . . . .  $   308,731 $   324,956  $   94,948  $   391,152  $   254,734  $   35,986              $ 1,410,507
 Investment in 
   and advances to
   investees . . .  $      526  $    72,166  $    1,572  $    18,686           -   $    3,553  $    1,606  $    98,109
 Corporate assets                                                                                              211,365
 Total assets  . .                                                                                         $ 1,719,981
 Provision for 
   depreciation and
   amortization  .  $   13,546  $    13,843  $    4,487  $    10,807  $     2,637  $    3,369  $    9,041  $    57,730
 Capital expenditures 
   (including
   $48,362,000 
   of capital assets
   of business 
   acquired) . . .  $   35,629  $    17,972  $    6,590  $    73,561  $     1,894  $    3,613  $    7,341  $   146,600

 1992
 Sales to 
   unaffiliated 
   customers . . .  $  979,542  $   897,820  $  445,338  $   850,103  $   155,169  $  101,335  $      -0-  $ 3,429,307
 Transfers 
   between segments      5,727        9,744       2,531        4,064          -0-         -0-     (22,066)         -0-
 Total sales 
   and transfers .  $  985,269  $   907,564  $  447,869  $   854,167  $   155,169  $  101,335  $  (22,066) $ 3,429,307
 Operating 
   income (loss)
   of industry 
   segments  . . .  $    8,241  $   111,907  $   21,346  $    25,162  $      (726) $   (5,018)             $   160,912
 Equity in 
   loss of investees
   (note 4)  . . .  $      (31) $    (1,362) $       15                            $     (963)             $    (2,341)
 General corporate expenses                                                                                    (66,982)
 Other corporate income                                                                                          6,880
 Interest expense                                                                                              (27,965)
 Income before income taxes
   and extraordinary item                                                                                  $    70,504
 Identifiable assets at
   August 31, 
   1992  . . . . .  $  289,021  $   313,943  $   76,300  $   201,726  $   173,376  $  207,274              $ 1,261,640
 Investment in and advances 
   to investees  .  $      139  $    66,899  $    1,143  $     6,004  $     1,197  $    4,408              $    79,790
 Corporate assets                                                                                              184,962
 Total assets  . .                                                                                         $ 1,526,392
 Provision for 
   depreciation and 
   amortization  .  $   12,269  $    14,888  $    3,013  $     9,051  $       613  $    4,513  $    6,437  $    50,784
 Capital expenditures 
   (including 
   $47,977,000 of 
   capital assets 
   of business 
   acquired) . . .  $   25,089  $    17,119  $    5,115  $    14,862  $    48,440  $   11,141  $    6,165  $   127,931
(13)    SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK

    Farmland extends credit to its customers on terms no more favorable than
standard terms of the industries it serves.  A substantial portion of
Farmland's receivables are concentrated in the agricultural industry. 
Collections on these receivables may be dependent upon economic returns from
farm crop and livestock production.  The Company's credit risks are continually
reviewed and management believes that adequate provisions have been made for
doubtful accounts.

    Farmland maintains investments in and advances to cooperatives, cooperative
banks and joint ventures from which it purchases products or services.  A
substantial portion of the business of these investees is dependent upon the
agribusiness economic sector.  See note 4 of the notes to consolidated
financial statements. 

(14)    DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

    Estimates of fair values are subjective in nature and involve uncertainties
and matters of significant judgment and therefore cannot be determined with
precision.  Changes in assumptions could affect the estimates.  Except as
follows, the fair market value of the Company's financial instruments
approximates the carrying value:
August 31, 1994                     August 31, 1993   
                                              Carrying            Fair            Carrying            Fair
                                               Amount             Value            Amount             Value   
                                                                    (Amounts in Thousands)
FINANCIAL ASSETS:
      Investment and long-term receivables:
          Notes receivable from investees,
           20% to 50% owned  . . . . . . .   $    48,955       $    45,414       $    60,204       $    58,111
          National Bank for Cooperatives .        28,786              ****            31,824              ****
          Other cooperatives:
              Equities . . . . . . . . . .        28,132              ****            22,877              ****
              Notes receivable . . . . . .        14,530            13,385            14,813            13,408
 FINANCIAL LIABILITIES:
      Long-term debt:
          Subordinated certificates of investment,
          capital investment certificates and
          subordinated monthly
          interest certificates  . . . . .   $   280,111       $   284,523       $   255,770       $   287,168
The estimated fair value of notes receivable has been determined by
discounting future cash flows using a market interest rate.

    The estimated fair value of the subordinated debt certificates was
calculated using the discount rate for subordinated debt certificates with
similar maturities currently offered for sale.

****Investments in National Bank for Cooperatives and other cooperatives'
equities which have been purchased are carried at cost and securities received
as patronage refunds are carried at par value, less provisions for other than
temporary impairment.  The Company believes it is not practicable to estimate
the fair value of these securities because there is no established market for
these securities and it is inappropriate to estimate future cash flows which
are largely dependent on future patronage earnings of the cooperatives.

(15)    RELATED PARTY TRANSACTIONS

    Farmland Hydro, L.P., Hyplains Beef, L.C. (50%-owned investees) and
National Beef Packing Company, L.P. (a 58%-owned consolidated limited
partnership) have credit agreements with various banks.  Borrowings under these
agreements are nonrecourse to Farmland and its other affiliates.  Cash
distributions by these entities to their owners are restricted by these credit
agreements.  To support the efforts of these entities to meet compliance
provisions of their credit agreements, Farmland advances funds and provides
management and administrative services to these entities, in certain instances,
on terms less advantageous to Farmland than transactions conducted by Farmland
in the ordinary course of its business.  At August 31, 1994, Farmland's equity
investments in and advances to these entities amounted to $132,613,000.

(16)    OTHER INCOME 

    In June 1993, the Company filed a lawsuit against 43 insurance carriers and
other parties (the "Defendants") seeking declaratory judgments regarding
Defendants' insurance coverage obligations for environmental remediation costs.
In fiscal year 1994, the Company negotiated settlements with 20 insurance
companies and as part of the settlements, the Company provided Defendants with
releases of various possible environmental obligations.  As a result of these
settlements, the Company received cash payments of $13,566,000 in 1994 and has
included such amount in the caption "Other income" in the consolidated
statement of operations for the year then ended. 

(17)    PROVISION FOR LOSS ON DISPOSITION OF ASSETS

    At August 31, 1993, management was negotiating to sell the Company's
refinery at Coffeyville, Kansas.  Based on the progress of negotiation and the
transactions contemplated, operations for the year ended August 31, 1993
included a $20,022,000 provision for loss on the sale of the refinery. 
Accordingly, the net carrying value of property, plant and equipment has been
reduced by $20,022,000 in the consolidated balance sheets at August 31, 1993. 
 The transactions contemplated were subject to certain conditions, including
negotiation of final agreements.  During 1994, management determined that final
sale terms anticipated by the potential purchaser were not in the Company's
best interest.  Accordingly, negotiations were terminated and the sale was not
consummated.

    In 1993, the Company entered discussions with a potential purchaser of a
dragline.  Based on these discussions, the Company estimated a loss of
$6,155,000 from the sale.  Accordingly, at August 31, 1993, the carrying value
of the dragline was written down by $6,155,000 and a provision for this loss
was included in the Company's consolidated statement of operations for the year
then ended.  In 1994, this sale was consummated on terms substantially as
expected.

    At August 31, 1993, the carrying value of a pork processing plant at Iowa
Falls, Iowa was written down by $3,253,000 to an estimated disposal value.

                     SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected consolidated financial data as of the end of, and
for each of the years in the five-year period ended August 31, 1994 are derived
from the consolidated financial statements of the Company, which consolidated
financial statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants.  The consolidated financial statements as of
August 31, 1994 and 1993 and for each of the years in the three-year period
ended August 31, 1994, and the independent auditors' report thereon, are
included elsewhere herein.  The information set forth below should be read in
conjunction with information included elsewhere herein:   Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
consolidated financial statements and related notes, and the independent
auditors' report which contains an explanatory paragraph concerning income tax
adjustments proposed by the Internal Revenue Service on the gain on sale of and
certain distributions by Terra Resources, Inc.
Year Ended August 31                         
                                          1994           1993           1992           1991          1990     
                                                                 (Dollars in Thousands)
Summary of Operation:  (1)(2)(3)
 Net Sales . . . . . . . . . . . . .  $  6,677,933  $   4,722,940  $   3,429,307  $   3,638,072  $   3,377,603
 Interest Expense (net of
   interest capitalized)   . . . . .  $     51,485  $      36,764  $      27,965  $      36,951  $      30,090
 Income (Loss) Before 
   Income Taxes and
   extraordinary item    . . . . . .  $     78,766  $     (36,833) $      70,504  $      50,166  $      58,184
 Net income (Loss) . . . . . . . . .  $     73,876  $     (30,400) $      62,313  $      42,693  $      48,580

 Distribution of Net Income:
 Patronage Refunds:
   Equity Reinvestments  . . . . . .  $     44,032  $       1,155  $       1,038  $      17,837  $      24,403
 Cash or Equivalent  . . . . . . . .        26,580            495         17,918         12,571          8,800
 Earned Surplus and 
   Other Equities  . . . . . . . . .         3,264        (32,050)        43,357         12,285         15,377
                                      $     73,876  $     (30,400) $      62,313  $      42,693  $      48,580
 Ratio of Earnings (Loss) to
   Fixed Charges (4)   . . . . . . .           2.2         Note 4            2.5            1.9            2.2

 Balance Sheets:
 Working Capital . . . . . . . . . .  $    290,704  $     260,519  $     208,629  $     122,124  $     121,518
 Property, Plant and 
   Equipment, Net  . . . . . . . . .  $    501,290  $     504,378  $     446,002  $     490,712  $     469,710
 Total Assets  . . . . . . . . . . .  $  1,926,631  $   1,719,981$     1,526,392  $   1,369,231  $   1,352,889
 Long-Term Debt  . . . . . . . . . .  $    517,806  $     485,861  $     322,377  $     291,192  $     273,071
 Capital Shares and Equities . . . .  $    585,013  $     561,707  $     588,129  $     497,364  $     476,011
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for details.
(1) On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
    ("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration and
    production operations, and exited its oil and gas exploration and
    production activities.  The gain from the sale of Terra amounted to
    $237,200,000 for tax reporting purposes.  During 1983, and prior to the
    sale of the Terra stock, Farmland received certain distributions from Terra
    totaling $24,800,000.  For tax purposes, Farmland claimed intercorporate
    dividends-received deductions for the entire amount of such distributions.

    On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
    notice to Farmland asserting deficiencies in federal income taxes
    (exclusive of statutory interest thereon) in the aggregate amount of
    $70,775,000.  The asserted deficiencies relate primarily to the Company's
    tax treatment of the sale of the Terra stock and the distributions received
    from Terra prior to the sale.  The IRS asserts that Farmland incorrectly
    treated the Terra sale gain as income against which certain
    patronage-sourced operating losses could be offset, and that, as a
    nonexempt cooperative, Farmland was not entitled to an intercorporate
    dividends-received deduction in respect of the 1983 distribution by Terra. 
    It further asserts that Farmland incorrectly characterized gains for tax
    purposes aggregating approximately $14,600,000, and a loss of approximately
    $2,300,000, from the disposition of certain other assets.  On June 11,
    1993, Farmland filed a petition in the United States Tax Court contesting
    the asserted deficiencies in their entirety.  Discovery and other pre-trial
    phases of the litigation have since been ongoing.  The case is scheduled
    for trial on March 6, 1995.

    If the IRS ultimately prevails on all of the adjustments asserted in the
    statutory notice, Farmland would have additional federal and state income
    tax liabilities aggregating approximately $85,800,000 plus accumulating
    statutory interest thereon through October 31, 1994, of approximately
    $154,900,000 (before tax benefits of the interest deduction).  In addition,
    such adjustments would affect the computation of Farmland's taxable income
    for its 1989 tax year and, as a result, could increase Farmland's federal
    and state income taxes for that year by approximately $5,000,000 plus
    applicable statutory interest thereon.

    No provision has been made in the consolidated financial statements for
    federal or state income taxes (or interest thereon) in respect of the IRS
    claims described above.  Farmland believes that it has meritorious
    positions with respect to all of these claims and will continue to
    vigorously pursue their favorable resolution through the pending
    litigation.

    In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
    likely than not that the courts will ultimately conclude that (i)
    Farmland's treatment of the Terra sale gain was substantially, if not
    entirely, correct; and (ii) Farmland properly claimed a dividends-received
    deduction in respect of the 1983 distributions which it received from Terra
    prior to the sale of the Terra stock.  Counsel has further advised,
    however, that none of the issues involved in these disputes is free from
    doubt, and that there can be no assurance that the courts will ultimately
    rule in favor of Farmland on any of these issues.

    Should the IRS ultimately prevail on all of its asserted claims, all
    claimed federal and state income taxes as well as accrued interest would
    become immediately due and payable, and would be charged to current
    operations.  In such case, the Company would be required to renegotiate
    agreements with its banks to maintain compliance with various requirements
    of such agreements, including working capital and funded indebtedness
    provisions.  However, no assurance can be given that such renegotiation
    would be successful.  Alternatives could include other financing
    arrangements or the possible sale of assets.

(2) During the year ended August 31, 1991, the Company changed its method for
    inventory pricing of certain petroleum inventories from the first-in, first
    out (FIFO) method previously used to the last-in, first out (LIFO) method
    because the LIFO method better matches current costs with current revenues. 
    Pro forma effects of retroactive application of the LIFO method are not
    determinable.

(3) Acquisitions and Dispositions:

    (a) In October 1993, the Company acquired approximately 53% of the common
        stock of National Carriers, Inc. ("NCI") and increased its ownership of
        NCI to 79% in August 1994.  NCI is a trucking company located in
        Liberal, Kansas.  NCI provides substantially all the trucking service
        needs of NBPC.  The purchase price of NCI ($4,423,000) was paid in
        cash.  See note 2 of the notes to consolidated financial statements.

    (b) In December 1993, the Company acquired all the common stock of seven
        international grain trading companies (collectively referred to as
        "Tradigrain").  The purchase price for Tradigrain ($31,367,000) was
        paid in cash.  See note 2 of the notes to consolidated financial
        statements.

    (c) During 1993, Farmland obtained a 58% interest in National Beef Packing
        Company, L.P. ("NBPC"), a limited partnership.  Effective April 15,
        1993, NBPC acquired Idle Wild Food's beef packing plant and feedlot
        located in Liberal, Kansas.  See note 2 of the notes to consolidated
        financial statements.

    (d) On August 30, 1993, Farmland reduced its ownership interest in The
        Cooperative Finance Association, Inc. ("CFA") to 49%.  In addition, CFA
        purchased the assets and operations of Farmland Financial Services
        Company ("FFSC").  Effective December 1, 1993, CFA owners approved a
        recapitalization plan which limits the voting rights of any owner
        (including Farmland) to 25% or less regardless of the number of voting
        shares held.  Effective August 31, 1993, CFA is not included in the
        consolidated balance sheet of the Company and Farmland is no longer
        engaged in commercial lending operations.

    (e) Effective June 30, 1992, the Company acquired the grain marketing
        assets of Union Equity Co-Operative Exchange ("Union Equity").  See
        note 2 of the notes to consolidated financial statements.
    
    (f) The following unaudited financial information for the year ended August
        31, 1993 and 1992 presents pro forma results of operations of the
        Company as if the disposition of CFA and the acquisition of NBPC had
        occurred at the beginning each period presented.  The pro forma
        financial information includes adjustments for amortization of
        goodwill, additional depreciation expense, and increased interest
        expense on debt assumed in the acquisitions.  The pro forma financial
        information does not necessarily reflect the results of operations that
        would have occurred had the Company been a single entity which excluded
        CFA and included Union Equity and NBPC for the full years 1993 and
        1992.  See note 2 of the notes to consolidated financial statements.
August 31 (Unaudited)
                                         1993        1992   
                                      (Amounts in Thousands)
Net sales  . . . . . . . . $    5,357,867  $  5,441,303

         Income (loss) before 
           extraordinary item . . . $      (44,040) $     47,225
(4)   In computing the ratio of earnings to fixed charges, income (loss)
      represents pretax income (loss) for the enterprise as a whole including
      100% of such income (loss) of minority-owned subsidiaries which have
      fixed charges, the registrant's share of 50%-owned persons and any
      distributed earnings (but not losses or undistributed earnings) of
      less-than-fifty percent-owned persons plus fixed charges.  Fixed charges
      consist of interest and finance charges on all indebtedness plus that
      portion of rentals considered to be the interest factor.  Income was
      inadequate to cover fixed charges for the year ended August 31, 1993. 
      The dollar amount of the coverage deficiency was $36,609,000.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                           OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

    The Company maintains two primary sources for debt capital:  a continuous
public offering of its debt securities and bank lines of credit.

    The Company's debt securities are offered through a wholly-owned
broker/dealer subsidiary on a best-efforts basis.  The types of securities
offered include certificates payable on demand and five- and ten-year
subordinated debt certificates.  The total amount of such debt outstanding and
the flow of funds to, or from, the Company as a result of this public offering
is influenced by the rate of interest which Farmland establishes for each type
of debt certificate offered and by options of Farmland to call for redemption
certain of its outstanding debt certificates.  During 1994, the outstanding
balance of demand loan and subordinated debt certificates increased $17.6
million.

    In 1994, Farmland entered into a $650,000,000 syndicated credit facility
provided by eight domestic and international banking institutions.  This
agreement provides short-term credit of up to $450,000,000 to finance seasonal
operations and inventory, and revolving term credit of up to $200,000,000.  In
addition, this credit facility supports letters of credit issued by
participating banks on behalf of Farmland.  At August 31, 1994, short-term
borrowings under this facility were $217,399,000, revolving term borrowings
were $95,000,000 and $62,600,000 was being utilized to support letters of
credit. 

    Farmland pays commitment fees of 1/8 of 1% annually on the unused portion
of the short-term commitment and 1/4 of 1% annually on the unused portion of
the revolving term commitment.  In addition, Farmland must maintain
consolidated working capital of not less than $150,000,000, consolidated net
worth of not less than $475,000,000 and funded indebtedness and senior funded
indebtedness of not more than 52% and 43% of capitalization, respectively.  All
computations are based on consolidated financial data adjusted to exclude
nonrecourse subsidiaries (as defined in the credit agreement).  Computed in
accordance with the agreement, at August 31, 1994, working capital was
$207,383,000, net worth was $585,013,000 and funded indebtedness and senior
funded indebtedness were 47.03% and 23.34% of capitalization, respectively.

    In addition to the syndicated credit facility, Farmland has credit
facilities with various commercial banks.  At August 31, 1994, Farmland's
available credit from commercial banks under committed and uncommitted
arrangements was $26.2 million and $37.2 million, respectively.  Borrowings
under these committed and uncommitted credit facilities were $26.2 million and
$25.0 million, respectively, at August 31, 1994.  In addition, $2.2 million was
used to support letters of credit issued by such banks on Farmland's behalf. 
Financial covenants of these arrangements are not more restrictive than
Farmland's syndicated credit facilities.

    In the opinion of management, these arrangements for debt capital are
adequate for the Company's present operating and capital plans.  However,
alternative financing arrangements are continuously evaluated.

    National Beef Packing Company ("NBPC"), 58%-owned by Farmland, maintains
borrowing agreements with a bank which provides financing support for its beef
packing operations.  Borrowings under this credit agreement are nonrecourse to
Farmland or Farmland's other affiliates.  At August 31, 1994, NBPC's available
bank credit of $61,596,000 had been borrowed.  All assets of NBPC (carried at
$150,409,000) are pledged to support its borrowings.  At August 31, 1994,
Farmland had issued letters of credit in the amount of $15,000,000 to support
NBPC's bank credit agreements.

    Tradigrain has borrowing agreements with various international banks which
provide financing and letters of credit to support current international grain
trading transactions.  Obligations of Tradigrain under these loan agreements
are nonrecourse to the Company.

    Leveraged leasing has been utilized to finance data processing equipment,
railcars, and a substantial portion of nitrogen fertilizer production
equipment.  Under the most restrictive covenants of its leases, the Company has
agreed to maintain working capital of at least $75 million, consolidated funded
indebtedness not greater than 65% of consolidated capitalization, and
consolidated senior funded indebtedness not greater than 50% of consolidated
capitalization.

    As a cooperative, a portion of Farmland's annual net income is distributed
to its members, associate members and patrons with which it is a party to a
currently effective patronage refund agreement.  For this purpose, annual net
income or loss shall be determined in accordance with income tax regulations in
1994 and in accordance with generally accepted accounting principles in 1995
and after.  Such income is identified to transactions with members eligible to
receive patronage refunds ("member-sourced income") or to transactions with
parties not entitled to receive patronage refunds ("nonmember-sourced income"). 
The annual nonmember-sourced income or loss is adjusted for the amount of
applicable income tax expense or benefit thereon and the amount remaining is
transferred to retained earnings.  The member-sourced income is distributed to
members as patronage refunds unless the earned surplus account, after such
distribution, would be lower than 30% of the sum of the prior year-end balance
of outstanding common stock, associate member stock, capital credits, nonmember
capital and patronage refunds for reinvestment.  In such cases, member-sourced
income shall be reduced by the lesser of 15% or an amount required to increase
the earned surplus account to the required 30%.  The amount by which the
member-sourced income is so reduced is treated as nonmember-sourced income. 
The member-sourced income remaining is distributed to members as patronage
refunds.  For the years ended August 31, 1994, 1993 and 1992, the earned
surplus account exceeded the required amount by $2.3 million, $3.8 million and
$49.5 million, respectively.  

    Generally, a portion of the patronage refund is distributed in cash and the
balance (the "invested portion") is distributed in common stock, associate
member common stock, or capital credits (depending on the membership status of
the recipient), or the Board of Directors may determine to distribute the
invested portion in any other form or forms of equities.  The invested portion
of the patronage refund is determined annually by the Board of Directors but
such invested portion shall not, for any year, exceed 80% of the total
patronage refunds.  The invested portion of the patronage refund is a source of
funds from operations which is retained for use in the business and increases
Farmland's equity base.  Common stock and associate member common stock
representing the invested portion of patronage refunds may be redeemed by cash
payments from Farmland to holders thereof who participate in Farmland's base
capital plan.  Capital credits and other equities of Farmland and Farmland
Foods, Inc. may be redeemed under other equity redemptions.  The base capital
plan and other equity redemption plans are explained under the heading "Equity
Redemption Plans."

    In 1994, operations generated a net cash inflow of $106.0 million.  Other
major cash sources include $34.6 million from dispositions of investments and
notes receivables, $17.6 million (net) from investors in demand loan and
subordinated debt certificates and $17.1 million from sales of property, plant
and equipment.

    The primary uses of cash include $69.8 million for capital additions or
improvements, $36.6 million (net) for repayment of bank loans and other notes
payable, $35.8 million for acquisition of businesses (Tradigrain and National
Carriers, Inc.) and $22.1 million for investments and notes receivables.

    On July 28, 1983, Farmland sold the stock of Terra Resources, Inc.
("Terra"), a wholly-owned subsidiary engaged in oil and gas exploration and
production operations, and exited its oil and gas exploration and production
activities.  The gain from the sale of Terra amounted to $237,200,000 for tax
reporting purposes.  During 1983, and prior to the sale of the Terra stock,
Farmland received certain distributions from Terra totaling $24,800,000.  For
tax purposes, Farmland claimed intercorporate dividends-received deductions for
the entire amount of such distributions.

    On March 24, 1993, the Internal Revenue Service ("IRS") issued a statutory
notice to Farmland asserting deficiencies in federal income taxes (exclusive of
statutory interest thereon) in the aggregate amount of $70,775,000.  The
asserted deficiencies relate primarily to the Company's tax treatment of the
sale of the Terra stock and the distributions received from Terra prior to the
sale.  The IRS asserts that Farmland incorrectly treated the Terra sale gain as
income against which certain patronage-sourced operating losses could be
offset, and that, as a nonexempt cooperative, Farmland was not entitled to an
intercorporate dividends-received deduction in respect of the 1983 distribution
by Terra.  It further asserts that Farmland incorrectly characterized gains for
tax purposes aggregating approximately $14,600,000, and a loss of approximately
$2,300,000, from the disposition of certain other assets.  On June 11, 1993,
Farmland filed a petition in the United States Tax Court contesting the
asserted deficiencies in their entirety.  Discovery and other pre-trial phases
of the litigation have since been ongoing.  The case is scheduled for trial on
March 6, 1995.

    If the IRS ultimately prevails on all of the adjustments asserted in the
statutory notice, Farmland would have additional federal and state income tax
liabilities aggregating approximately $85,800,000 plus accumulating statutory
interest thereon through October 31, 1994, of approximately $154,900,000
(before tax benefits of the interest deduction).  In addition, such adjustments
would affect the computation of Farmland's taxable income for its 1989 tax year
and, as a result, could increase Farmland's federal and state income taxes for
that year by approximately $5,000,000 plus applicable statutory interest
thereon.

    No provision has been made in the consolidated financial statements for
federal or state income taxes (or interest thereon) in respect of the IRS
claims described above.  Farmland believes that it has meritorious positions
with respect to all of these claims and will continue to vigorously pursue
their favorable resolution through the pending litigation.

    In the opinion of Bryan Cave, Farmland's special tax counsel, it is more
likely than not that the courts will ultimately conclude that (i) Farmland's
treatment of the Terra sale gain was substantially, if not entirely, correct;
and (ii) Farmland properly claimed a dividends-received deduction in respect of
the 1983 distributions which it received from Terra prior to the sale of the
Terra stock.  Counsel has further advised, however, that none of the issues
involved in these disputes is free from doubt, and that there can be no
assurance that the courts will ultimately rule in favor of Farmland on any of
these issues.

    Should the IRS ultimately prevail on all of its asserted claims, all
claimed federal and state income taxes as well as accrued interest thereon
would become immediately due and payable, and would be charged to current
operations.  In such case, the Company would be required to renegotiate
agreements with its banks to maintain compliance with various requirements of
such agreements, including working capital and funded indebtedness provisions. 
However, no assurance can be given that such renegotiation would be successful. 
Alternatives could include other financing arrangements or the possible sale of
assets.

RESULTS OF OPERATIONS

    The Company's revenues depend to a large extent on conditions in
agriculture and may be volatile due to factors beyond the Company's control,
such as weather, crop failures, federal agricultural programs, production
efficiencies, and direct imports or exports.  In addition, global variables
which affect supply, demand and price of crude oil and refined fuels impact the
Company's petroleum operations.  Management cannot determine the extent to
which future operations of the Company may be impacted by these factors.  The
Company's cash flow and net income may continue to be volatile as conditions
affecting agriculture and markets for the Company's products change.

    The increase (decrease) in sales and operating profit by business segment
in each of the years in the three-year period ended August 31, 1994, compared
with the prior year is presented in the table below.  Management's discussion
of business segment sales, operating profit or loss and other factors affecting
the Company's income before income taxes and extraordinary item during 1994,
1993 and 1992 follows the table.
Income Before Income Taxes and
                                                Sales-Increase (Decrease)  Extraordinary Item-Increase (Decrease)
                                              1994       1993       1992        1994       1993      1992
                                            Compared    Compared   Compared   Compared   Compared  Compared
                                            with 1993  with 1992   with 1991  with 1993 with 1992  with 1991
                                                    (Amounts in Millions)                   (Amounts in Millions)
Sales and Operating Profit of 
   Business Segments:
       Petroleum . . . . . . . . . . . . .  $    (32) $     (92) $    (210)  $     32  $     (13) $     17
       Crop Production . . . . . . . . . .       278        (13)      (138)        74        (60)      (13)
       Feed  . . . . . . . . . . . . . . .        49         34        (21)        (4)        (1)       (3)
       Food Processing and  Marketing  . .       943        563         21          4         (8)       14
       Grain Marketing*  . . . . . . . . .       674        798        155        (34)         1        (1)
       Other . . . . . . . . . . . . . . .        43          4        (16)        (4)         7       (10)
                                            $  1,955  $   1,294  $    (209)  $     68  $     (74) $      4
Corporate Expenses and Other:
   General corporate expenses (increase) decrease  . . . . . . . . . . . .         (9)         9        13
   Other income and deductions (net) increase (decrease)   . . . . . . . .         14          7        (5)
   Interest expense (increase) decrease  . . . . . . . . . . . . . . . . .        (14)        (9)        9
   Equity in income (loss) of investees  . . . . . . . . . . . . . . . . .         23        (10)       (1)
   Minority owners' interest in loss
       (income) of subsidiaries  . . . . . . . . . . . . . . . . . . . . .          5         (1)      -0-
   Provision for (loss) on disposition of assets   . . . . . . . . . . . .         29        (29)      -0-
   Income before income taxes and extraordinary item   . . . . . . . . . .   $    116  $    (107) $     20
* Grain marketing operations were acquired in 1992
In computing the operating profit (loss) of a business segment, none of the
following have been added or deducted: corporate, general and administrative
expenses which cannot practicably be identified or allocated to a business
segment, interest expense, equity in income (loss) of investees, and
miscellaneous income or deductions.

PETROLEUM

  SALES

    Sales of petroleum products reflect a decrease of $31.9 million in 1994
compared with 1993 primarily due to lower prices of refined fuels and propane. 
The effect of lower prices was to reduce reported sales by approximately
$62.4 million.  Part of this decrease was offset by the effect of a 6% increase
of refined fuels and propane unit sales.

    Sales of the petroleum segment decreased $92.2 million in 1993 compared
with 1992, primarily a result of 12% lower unit sales of refined fuels
(gasoline, diesel and distillates) and a 2% decline of the average selling
price.  Unit sales decreased principally because the Company sold its
investment in National Cooperative Refinery Association ("NCRA") in June 1992. 
The refined fuels unit sales decrease in 1993 reduced sales by approximately
$92.2 million compared with 1992 and lower prices of refined fuels reduced
sales by $17.7 million.  Sales of other products (principally asphalt and coke)
decreased $12.4 million.  Propane sales increased approximately $30.1 million
in 1993 due to 27% higher unit sales and 18% higher prices.

    In 1992, sales of petroleum products declined $209.7 million compared with
1991.  This decrease resulted primarily because unit sales of refined products
(gasoline, distillate and diesel) and the average price of these products were
lower in 1992 than 1991 by 19% and 16%, respectively.  The unit sales and price
declines reduced sales of these products by approximately $37.3 million and
$154.2 million, respectively.  In addition, propane prices in 1992 averaged
approximately 82% of the prior year's level, which reduced sales by
approximately $13.5 million.

  OPERATING PROFIT

    Results from petroleum operations increased $31.7 million primarily because
unit margins on diesel fuels with low levels of sulfur (required by the
Environmental Protection Agency for diesel fuel sold after September 30, 1993)
were higher than the corresponding period of the prior year.  These margins
were significantly higher immediately after the crossover to the low sulfur
level diesel.  In addition, margins on other refined fuels improved because the
cost per barrel of crude oil decreased and because production at the
Coffeyville, Kansas refinery was substantially higher than in the prior year.

    Operating profit of the petroleum segment decreased $12.8 million in 1993
compared with 1992.  The favorable effects of improved margins in propane and
lower marketing and administrative expenses were more than offset by the
unfavorable effects of lower income from distributing fuels produced by NCRA
and the write-down to market value of certain petroleum inventories.

    Operating profit of the petroleum segment was $8.2 million in 1992 compared
with a loss of $9.3 million loss in 1991.  Most of this improvement resulted
from elimination in 1992 of losses experienced in 1991 on petroleum futures
contracts.  The Company changed its hedging practice in March 1991.

CROP PRODUCTION

  SALES

    Crop production sales in 1994 increased $278.5 million compared with 1994
due to higher plant nutrient prices and unit sales.  The average price per ton
of nutrient increased approximately 13.3% and unit sales increased
approximately 1.1 million tons or 18%.

    Sales of the crop production segment decreased $13.0 million in 1993
compared with 1992.  Nitrogen fertilizer sales increased $54.1 million due to
8% higher unit sales and because the average selling price increased 3%. 
Phosphate fertilizer sales decreased $67.1 million.  This decrease is primarily
a result of the sale of the Green Bay, Florida phosphate plant to a 50%-owned
joint venture.  Subsequent to this sale (on November 15, 1991) export sales
from the Green Bay plant have not been reported in the Company's operations. 
In 1992, the Company's sales included export sales from the Green Bay plant of
$60.9 million.

    The crop production segment's sales declined $137.7 million in 1992
compared with 1991.  Substantially all of this decrease resulted from lower
unit sales and prices for phosphate fertilizers.  The Company reported 30%
lower phosphate unit sales in 1992 which reduced sales approximately $117.3
million.  This decrease resulted principally from the sale on November 15, 1991
of the Green Bay, Florida phosphate plant to a 50%-owned joint venture.  In
addition, sales of phosphate fertilizer decreased approximately $18.2 million,
because the average price was 7% lower.  Sales of turf and garden products were
approximately $2.9 million lower.

  OPERATING PROFIT

    Operating profits of the crop production business in 1994 increased $74.4
million compared with 1993.  This increase resulted from higher unit sales and
unit margins.  Unit margins in 1994 were approximately twice the level of 1993
which increased operating profit in this segment approximately $66.8 million. 
Unit sales increased over one million tons (18%) which increased operating
profit approximately $10.8 million.  In addition, included in the statement of
operations in the caption, "Equity in income (loss) of investees", is $15.3
million in 1994 representing the Company's share of net income from fertilizer
joint ventures.  This is an increase of $23.4 million compared with 1993. 
Demand for plant nutrients in 1994 was stronger than in 1993 due to an increase
in the number of acres under cultivation, principally corn acreage (corn
acreage harvested was relatively low in 1993 due to wet weather and the
resulting floods in the Company's trade territory).  In addition, demand for
plant nutrients was stimulated by favorable weather conditions during the fall
and spring application seasons.  The increased demand for plant nutrients
translated into higher unit sales and margins and contributed significantly to
the Company's increased net income in 1994.

    Operating profit of the crop production segment decreased $60.3 million in
1993 compared with 1992, primarily because of 29% higher natural gas cost (the
principal raw material consumed in producing nitrogen fertilizer) which was not
recovered through selling prices.  Fertilizer margins decreased approximately
$43.2 million because of higher gas cost.  In addition, phosphate fertilizer
margins decreased approximately $7.1 million because decreased phosphate
fertilizer selling prices more than offset decreased cost.  In addition, the
Company's share of the net loss of fertilizer ventures (included in the
Company's statement of operations in the caption, "Equity in loss of
investees"), was $8.2 million in 1993 compared with a loss of $1.3 million in
1992.

    The crop production segment's operating profit of $111.9 million decreased
$13.4 million in 1992 compared with 1991.  The decrease resulted primarily from
lower phosphate fertilizer selling prices and from realignment of the Company's
phosphate fertilizer production operations into two 50%-owned ventures.

FEED

  SALES

    Sales of feed products increased $48.7 million in 1994 compared with 1993.
Unit sales of formula feed and feed ingredients each increased approximately
10% which generated a $39.6 million increase in sales.  The balance of the
sales increase resulted primarily from higher feed ingredient prices.

    Sales of the feed segment increased $33.9 million in 1993 compared with
1992, primarily because of higher unit sales.  Formula feed unit sales
increased approximately 9% which increased sales $20.3 million.  Feed
ingredients unit sales increased approximately 12% which increased sales by
$18.0 million.  In addition, sales of animal health products increased $2.5
million.  Lower formula feed selling prices partly offset the effect of higher
unit sales.

    The feed segment's sales for 1992 decreased $20.9 million compared with
1991, principally because feed ingredients unit sales decreased 22%.  Unit
sales of feed ingredients decreased because sales efforts were directed from
products with near break-even margins to products with higher margins.  Feed
ingredient sales decreased approximately $41.7 million because of the unit
sales decline.  Feed ingredient prices increased an average of 8% which
increased sales by approximately $11.2 million and formula feed sales increased
$6.8 million, principally due to higher unit sales.

  OPERATING PROFIT

    Operating profit of the feed business segment decreased $3.7 million in
1994 compared with 1993.  Gross margins decreased approximately $.5 million
reflecting lower margins on feed ingredients and pet food of $.8 million and
$.4 million, respectively, partly offset by $.7 million higher margins on
animal health products.  In addition, sales marketing and feed administration
expenses increased $3.2 million primarily due to higher commissions and other
variable compensation plans.

    Operating profit of the feed segment of $20.7 million in 1993 decreased
slightly compared with 1992.  The decrease was due to the impact of lower
selling prices.

    Operating profit of the feed segment for 1992 of $21.3 million decreased
$3.2 million compared with 1991.  The decrease resulted from $1.3 million lower
patronage refund income on purchases from other cooperatives and from $2.2
million higher expenses partly offset by $.4 million higher gross margins.

FOOD PROCESSING AND MARKETING

  SALES

    Sales of the food marketing and processing business increased $943.0
million in 1994 compared with 1993.  Sales of beef increased $735.5 million
principally because National Beef Packing Company, L.P. ("NBPC") has been
included in the Company's 1994 results for the full year.  NBPC was acquired in
April 1993.  Pork sales increased $207.5 million, due mostly to including
operations of the Monmouth, Illinois plant in the Company's results for a full
year in 1994.  This plant was acquired in February 1993.  In addition, sales of
specialty meats of the Carando division increased $13.0 million.

    Food marketing sales increased $562.5 million in 1993 compared with 1992,
primarily due to business acquisitions.  In April 1993, the Company and
partners organized National Beef Packing Company, L.P. ("NBPC").  Farmland
obtained a 58% ownership interest in NBPC which acquired a beef packing plant
and feedlot located in Liberal, Kansas.  As a result of this acquisition, the
Company's sales included beef sales of $442.1 million in 1993.  In February
1993, Foods, a 99%-owned subsidiary, purchased a pork processing plant located
at Monmouth, Illinois.  As a result of this acquisition, sales of pork products
increased approximately $90.0 million.  Sales of fabricated pork products at
the Company's other plants increased $17.0 million and sales of specialty meats
of the Carando division increased $8.3 million.

    Sales of the food marketing segment in 1992 increased $21.1 million
compared with 1991.  Sales of specialty meats increased $50.3 million primarily
because these products were not included in sales for 1991 prior to April 1,
when the Company acquired three specialty meats plants.  Fresh and processed
pork sales were lower than in 1991 because the effect of lower wholesale prices
was greater than the effect of higher unit sales.

  OPERATING PROFIT

    Operating profit in the Food Marketing and Processing business segment of
$20.6 million in 1994 reflects an increase of $4.1 million compared with 1993. 
The increase includes $13.0 million higher operating profit of the pork
business partly offset by an $8.9 million decrease of operating profit of the
beef business.  Operating profit from pork marketing and processing operations
increased primarily due to higher volume and higher margins on fresh pork,
branded pork, hams and specialty meats of the Carando division.  Operating
profit of the beef business decreased owing to weak consumer demands for beef
and industry price competition.

    Operating profit of the food marketing segment decreased $8.7 million in
1993 compared with 1992.  The decrease is primarily due to 4.6% higher live hog
cost.  Margins on fabricated products and hams increased $3.6 million and $4.4
million, respectively, and margins on beef products (not included in the
Company's operations in 1992) were $4.2 million.  These increases resulted from
acquisitions which increased sales as discussed above.  However, these
increases were more than offset by the effects of 4.6% higher cost of live hogs
which could not be fully recovered through increased wholesale prices of fresh
and processed pork products and by higher selling and administrative expenses.

    Operating profits of the food marketing segment for 1992 increased $13.8
million compared with 1991.  The improvement includes higher gross margins of
approximately $26.8 million, partially offset by approximately $13.4 million
higher selling, general and administrative expenses.  The gross margin increase
includes $9.9 million higher margins on specialty meats attributable to
ownership of specialty meats plants during all of 1992, compared with only five
months of 1991.  Additional improvements of gross margins resulted from a more
favorable spread between the costs of live hogs and wholesale pork prices, from
higher unit sales, and from a shift of sales to value-added products with
higher unit margins.  Selling, general and administrative expenses of this
segment increased, primarily due to expenses incurred in connection with the
specialty meats plants which were operated by the Company for only five months
in the prior year.

GRAIN MARKETING

  SALES AND OPERATING PROFIT

    Grain sales increased $673.6 million in 1994 compared with 1993 primarily
due to the acquisition of Wells-Bowman Trading Company and from operating
elevators in Utah and Idaho which were leased to the Company in 1994.

    The grain marketing business had an operating loss of $33.5 million in 1994
compared with near break-even operations in 1993.  The operating loss in 1994
includes an operating loss of $14.4 million in the international operations of
Tradigrain and an operating loss of $19.1 million in the Company's Union Equity
division.  The loss in 1994 resulted primarily from negative unit margins on
international grain transactions and higher domestic operating expenses.

    Grain operations which were acquired in July 1992, reported sales for the
full year in 1993 of $953.5 million.  Sales for the two months ended August 31,
1992 were $155.2 million.

    In 1993, operating profit of the grain business was $.1 million compared
with a loss of $.7 million for  the two months ended August 31, 1992.  In 1993,
grain marketing operations were relocated to Kansas City from Enid, Oklahoma,
an export elevator at Houston, Texas was sold and certain duplicative
administrative assets costs were eliminated.  As a result, cost reductions were
realized in 1993.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses ("SG & A") increased $81.5
million in 1994 compared with 1993.  However, as a percent of sales, these
expenses were slightly lower in 1994 than in 1993.  Approximately $17.6 million
of the increase resulted from acquisition of Tradigrain and National Carriers,
Inc. and from including NBPC in the Company's financial statements for the full
year in 1994.  Approximately $29.0 million of the increase was in pork
marketing and processing and resulted primarily from including the Monmouth,
Illinois pork plant in the Company's operations for a full year, and from
higher sales of pork.  Farm supply businesses and the grain marketing business
had higher SG & A of $13.1 million and $3.4 million, respectively.  The balance
of the SG & A increase was primarily variable compensation plans.

    These expenses decreased $12.3 million in 1993 compared with 1992 primarily
due to SG & A directly connected to business segments.  Corporate, general and
administrative expenses, not identified to business segments (see note 12 of
the notes to consolidated financial statements), decreased $6.3 million in 1993
compared with 1992.

    In 1992, corporate general and administrative expenses not identified to
business segments decreased $5.2 million compared with 1991.  This decrease was
mostly lower retirement plan costs, reduced corporate advertising and reduced
coverage and cost of liability insurance.  

OTHER INCOME (DEDUCTIONS)

  INTEREST EXPENSE

    Interest expense reflects an increase of $14.7 million in 1994 compared
with 1993.  The increase is primarily attributable to including the interest
costs of NBPC's beef operations in the Company's financial statements for a
full year in 1994, the acquisition of National Carriers, Inc. and Tradigrain in
May 1994 and by higher interest rates.

    Interest expense increased $8.8 million in 1993 compared with 1992 due to
an increase of the average level of borrowings, partly offset by lower interest
rates.  Interest expense decreased $8.9 million in 1992 compared with 1991. 
The decrease results from lower borrowings and lower interest rates.  

  PROVISION FOR LOSS ON DISPOSITION OF ASSETS

    At August 31, 1993, management was negotiating to sell the Company's
refinery at Coffeyville, Kansas.  Based on the progress of negotiation and the
transactions contemplated, operations for the year ended August 31, 1993
included a $20,022,000 provision for loss on the sale of the refinery. 
Accordingly, the net carrying value of property, plant and equipment has been
reduced by $20,022,000 in the consolidated balance sheets at August 31, 1993. 
 The transactions contemplated were subject to certain conditions, including
negotiation of final agreements.  During 1994, management determined that final
sale terms anticipated by the potential purchaser were not in the Company's
best interest.  Accordingly, negotiations were terminated and the sale was not
consummated.

    In 1993, the Company entered discussions with a potential purchaser of a
dragline.  Based on these discussions, the Company estimated a loss of
$6,155,000 from the sale.  Accordingly, at August 31, 1993, the carrying value
of the dragline was written down by $6,155,000 and a provision for this loss
was included in the Company's consolidated statement of operations for the year
then ended.  In 1994, this sale was consummated on terms substantially as
expected.

    At August 31, 1993, the carrying value of a pork processing plant at Iowa
Falls, Iowa was written down by $3,253,000 to an estimated disposal value.

  OTHER, NET

    In June 1993, the Company filed a lawsuit against 43 insurance carriers and
other parties (the "Defendants") seeking declaratory judgments regarding
Defendants' insurance coverage obligations for environmental remediation costs. 
In fiscal year 1994, the Company negotiated settlements with 20 insurance
companies and as part of the settlements, the Company provided Defendants with
releases of various possible environmental obligations.  As a result of these
settlements, the Company received cash payments of $13,566,000 in 1994 and has
included such amount in the caption "Other income" in the consolidated
statement of operations for the year then ended. 

RECENT ACCOUNTING PRONOUNCEMENTS

    Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," was issued by the Financial
Accounting Standards Board ("FASB") in May 1993 and is effective for fiscal
years beginning after December 15, 1993 (the Company's 1995 fiscal year). 
Statement 115 expands the use of fair value accounting and the reporting for
certain investments in debt and equity securities.  Management expects the
adoption of Statement 115 will not have a significant impact on the Company's
consolidated financial statements.

    Statement of Financial Accounting Standards No. 112, "Employer's Accounting
for Postemployment Benefits," was issued by the FASB in November 1992 and is
effective for fiscal years beginning after December 15, 1993 (the Company's
1995 fiscal year).  Statement 112 establishes standards of accounting and
reporting for the estimated cost of benefits provided to former or inactive
employees.  Management expects that the adoption of Statement 112 will not have
a significant impact on the Company's consolidated financial statements.
 
 
                                  MANAGEMENT

    The directors of Farmland are as follows:
Total
                                         Expiration  Years of
                  Age as of   Positions  of Present Service as
                  August 31,  Held With   Term as     Board
         Name        1994     Farmland    Director    Member           Business Experience During Last Five Years
Albert J. Shivley     51      Chairman of    1995       10      General Manager--American Pride Co-op Association,
                               the Board                        Brighton, Colorado, a local cooperative association of
                                                                farmers and ranchers.
H. D. Cleberg         55       President     1997        4      Mr. Cleberg has been with Farmland since 1968.  He was
                               and Chief                        named as president-elect in February 1991 and became
                               Executive                        President in April 1991.  From September 1990 to January
                                Officer                         1991 he served as Senior Vice President and Chief
                                                                Operating Officer, Agricultural Group.  From April 1989 to
                                                                August 1990 he served as Executive Vice President,
                                                                Operations.  

Otis H. Molz          63         Vice        1997       11      Producer--Deerfield, Kansas.  Mr. Molz has served as
                               Chairman and                     Chairman of the Board of the National Bank for
                                  Vice                          Cooperatives since January 1993.  He served as Chairman of
                                President                       the Board of Directors of Farmland Industries, Inc. from
                                                                December 1991 to December 1992.  He served as First Vice
                                                                President of the National Bank for Cooperatives from
                                                                January 1990 to January of 1993.  He was Second Vice
                                                                Chairman from January 1, 1989 to January 1, 1990. 
Lyman Adams, Jr.      43                     1995        2      General Manager--Cooperative Grain and Supply, Hillsboro,
                                                                Kansas, a local cooperative association of farmers and
                                                                ranchers.
                         
Ronald J. Amundson    50                     1997        6      General Manager--Central Iowa Cooperative, Jewell, Iowa, a
                                                                local cooperative association of farmers and ranchers.

Baxter Ankerstjerne   58                     1996        4      Producer--Peterson, Iowa.  Since December 1988 Mr.
                                                                Ankerstjerne has served as Chairman of the Board of
                                                                Directors of Farmers Cooperative, Association, Marathon,
                                                                Iowa, a local cooperative association of farmers and
                                                                ranchers.

Jody Bezner           53                     1997        3      Producer--Texline, Texas.
Richard L. Detten     60                     1996        7      Producer--Ponca City, Oklahoma.

Steven Erdman         44                     1995        2      Producer--Bayard, Nebraska

Warren Gerdes         46                     1995        1      General Manager--Farmers Cooperative Elevator Company,
                                                                Buffalo Lake, Minnesota, a local cooperative association
                                                                of farmers and ranchers.
Ben Griffith          45                     1995        5      General Manager--Central Cooperatives, Inc., Pleasant
                                                                Hill, Missouri, a local cooperative association of farmers
                                                                and ranchers.

Gail D. Hall          52                     1997        6      General Manager--Lexington Cooperative Oil Company,
                                                                Lexington, Nebraska, a local cooperative association of
                                                                farmers and ranchers.
Jerome Heuertz        53                     1997        *      General Manager--Farm Service Cooperative, Council Bluffs,
                                                                Iowa, a local cooperative association of farmers and
                                                                ranchers.

Barry Jensen          49                     1996        4      Producer--White River, South Dakota.  Since May 1989 Mr.
                                                                Jensen has served as President of Farmers Co-op Oil
                                                                Association, Winner, South Dakota, a local cooperative
                                                                association of farmers and ranchers.

Greg Pfenning         45                     1997        2      Producer--Hobart, Oklahoma.  Director of Hobart &
                                                                Roosevelt Cooperative, a local cooperative association of
                                                                farmers and ranchers.
Vonn Richardson       61                     1996        7      Producer--Plains, Kansas.  President of The Plains Equity
                                                                Exchange and Cooperative Union, Plains, Kansas, a local
                                                                cooperative association of farmers and ranchers.

Monte Romohr          41                     1996        4      Producer--Gresham, Nebraska.  In March 1988, Mr. Romohr
                                                                became President of Farmers Co-op Business Association,
                                                                Shelby, Nebraska, a local cooperative association of
                                                                farmers and ranchers. 
Joe Royster           42                     1996        1      General Manager--Dacoma Farmers Cooperative, Inc., Dacoma,
                                                                Oklahoma, a local cooperative association of farmers and
                                                                ranchers. 

Paul Ruedinger        64                     1995       11      Producer--Van Dyne, Wisconsin.  

Raymond J. Schmitz    63                     1996        7      Producer--Baileyville, Kansas

Theodore J. Wehrbein  49                     1995        8      Producer--Plattsmouth, Nebraska.  Past Director of Nehawka
                                                                Farmers Cooperative Company, Nehawka, Nebraska, a local
                                                                cooperative association of farmers and ranchers.
Robert Zinkula        64                     1996        4      Producer--Mount Vernon, Iowa.  Secretary and Treasurer of
                                                                Linn Cooperative Oil Company, Marion, Iowa, a local
                                                                cooperative association of farmers and ranchers.
*Mr. Heuertz was elected to the Farmland Industries, Inc. Board of Directors in
December 1994.
Directors are elected for a term of three years by the shareholders of
Farmland at its annual meeting.  The expiration dates for such three-year terms
are sequenced so that about one-third of Farmland's Board of Directors is
elected each year.  H. D. Cleberg is serving as director-at-large; the
remaining twenty-one directors were elected from nine geographically defined
districts in Farmland's territory.  The executive committee consists of Ronald
Amundson, Ben Griffith, Otis Molz, Monte Romohr, Albert Shivley and
H. D. Cleberg.  With the exception of H.D. Cleberg, President and Chief
Executive Officer, members of the executive committee serve as chairman of
standing committees of the Board of Directors as follows:  Ronald Amundson,
corporate responsibility committee; Ben Griffith, audit committee; Otis Molz,
compensation committee; Monte Romohr, finance committee; and Albert Shivley,
nominating committee.

    The executive officers of Farmland are:
Age as of
          August 31,
Name       1994         Principal Occupation and Other Positions
J. F.       51        Executive Vice President and Chief
Berardi                 Financial Officer - Mr. Berardi joined
                        Farmland March 1, 1992 to serve in his
                        present position.  Mr. Berardi served as
                        Executive Vice President and Treasurer of
                        Harcourt Brace Jovanovich, Inc., a
                        diversified Fortune 200 company, and was
                        a member of its Board of Directors from
                        1988 until 1990.  From 1986 to 1989
                        Mr. Berardi served as Senior Vice
                        President and Chief Financial Officer of
                        Harcourt Brace Jovanovich, Inc.

H. D.       55        President and Chief Executive Officer - Mr.
Cleberg                 Cleberg has been with Farmland since
                        1968.  He was appointed to his present
                        position effective April 1991.  From
                        September 1990 to March 1991 he served as
                        Senior Vice President and Chief Operating
                        Officer.  From April 1989 to August 1990
                        he served as Executive Vice President,
                        Operations.  From October 1987 to March
                        1989 he served as Vice President and
                        General Manager, Fertilizer and Ag
                        Chemicals Operations, and from July 1986
                        to September 1987 he served as President,
                        Farmland Foods.  Prior to July 1986 he
                        held several executive management
                        positions, most recently Vice President,
                        Field Services and Operations Support.

S. P.       51        Executive Vice President, Farmland and
Dees                    Director General of Farmland Industrias,
                        S.A. de C.V. - Mr. Dees was appointed to
                        his present position in September 1993. 
                        From October 1990 to September 1993 he
                        served as Executive Vice President,
                        Administrative Group and General Counsel. 
                        Mr. Dees joined Farmland in October 1984,
                        serving as Vice President and General
                        Counsel, Law and Administration until
                        September 1990.  He was a partner in the
                        law firm of Stinson, Mag and Fizzell,
                        Kansas City, Missouri, from 1971 until
                        his employment by Farmland.

G. E.       50        Senior Vice President, Agricultural
Evans                   Production Marketing/Processing -
                        Mr. Evans has been with Farmland since
                        1971.  He was appointed to his present
                        position in January 1992.  From April
                        1991 to January 1992 he served as Senior
                        Vice President, Agricultural Inputs.  He
                        served as Executive Vice President,
                        Agricultural Marketing from October 1990
                        to March 1991.  He served as Executive
                        Vice President, Operations from January
                        1990 to September 1990.  He served as
                        Vice President, Farmland Industries and
                        President, Farmland Foods from October
                        1987 to December 1989.  He served as Vice
                        President and General Manager, Feed
                        Operations from June 1986 to September
                        1987, and from May 1983 to June 1986 he
                        served as Vice President, Feed
                        Operations.

R. W.       51        Executive Vice President, Agricultural
Honse                   Inputs Operations - Mr. Honse has been
                        with Farmland since September 1983.  He
                        was appointed to his present position in
                        January 1992, and served as Executive
                        Vice President, Agricultural Operations
                        from October 1990 to January 1992.  From
                        April 1989 to September 1990, he served
                        as Vice President and General Manager,
                        Crop Production Operations.  From July
                        1986 to March 1989 he served as General
                        Manager of the Florida phosphate
                        fertilizer complex.

B. L.       53        Vice President and Corporate Secretary -
Sanders                 Dr. Sanders has been with Farmland since
                        1968.  He was appointed to his present
                        position in September 1991.  From April
                        1990 to September 1991 he served as Vice
                        President, Strategic Planning and
                        Development.  From October 1987 to March
                        1990 he served as Vice President,
                        Planning.  From July 1986 to September
                        1987 he served as Director, Management
                        Information Services.  From July 1984 to
                        June 1986 he served as Executive
                        Director, Corporate Strategy and Research
                        and from 1968 to June 1984, as Executive
                        Director, Economic and Market Research.
EXECUTIVE COMPENSATION

    The following table sets forth the annual compensation awarded to, earned
by, or paid to the Chief Executive Officer and the Company's next four most
highly compensated executive officers for services rendered to the Company in
all capacities during 1994, 1993 and 1992.
Annual Compensation                   
                                                                                Employee
                                         Year                                   Variable          Other
 Name and                               Ending                                Compensation       Annual
 Principal Position                   August 31             Salary               Plan          Compensation
H. D. Cleberg,    . . . . . . . . . .  1994              $     439,728       $    338,481
 President and     . . . . . . . . . .  1993              $     433,506
 Chief Executive Officer                1992              $     408,972       $    185,745

 G. E. Evans,      . . . . . . . . . .  1994              $     278,304       $    217,761
 Senior Vice President                  1993              $     278,304
 Agricultural Production                1992              $     255,900       $    114,257
 Marketing/Processing

 R. W. Honse,      . . . . . . . . . .  1994              $     251,532       $    205,206
 Executive Vice President               1993              $     231,964
 Agricultural Inputs Operations         1992              $     204,686       $     94,433
                                         
 J. F. Berardi,    . . . . . . . . . .  1994              $     216,252       $    146,576
 Executive Vice President               1993              $     206,016
 and Chief Financial Officer            1992              $     100,008       $     28,075

 S. P. Dees,       . .  . . . . . .     1994              $     205,066       $    119,093   $     124,138(a)
 Executive Vice Preside                 1993              $     205,366
 Farmland and Director                  1992              $     195,738       $    51,521
 General of Farmland
 Industrias, S.A. de C.V.
(a)   Mr. Dees received a differential remuneration and reimbursements for
      taxes in connection with foreign assignments.
An Annual Employee Variable Compensation Plan, a Long-Term Management
Incentive Plan, and an Executive Deferred Compensation Plan have been
established by the Company to meet the competitive salary programs of other
companies, and to provide a method of compensation which is based on the
Company's performance.

    Under the Company's Annual Employee Variable Compensation Plan, all regular
salaried employees total compensation is based on a combination of base and
variable pay.  The variable compensation payment is dependent upon the
employee's position, the performance of the Company for the fiscal year or
other performance criteria of the individual's operating unit.  Variable
compensation is awarded only in years that the Company achieves a performance
level, approved each year by the Board of Directors.  The Company intends for
its total cash compensation (base plus variable) to be competitive, recognizing
that in the event the Company fails to achieve a predetermined threshold level
of performance, the base pay alone will place the employees well under market
rates.  This system of variable compensation allows the company to keep its
fixed costs (base salaries) lower, and only increase payroll costs consistent
with the Company's ability to pay.  Amounts accrued under this plan for the
years ended August 31, 1994, 1993 and 1992 amounted to $17,779,000, $-0- and
$10,033,000, respectively.  Distributions under this plan are made annually
after the close of each fiscal year.

    Under the Long-Term Management Incentive Plan, the Company's executive
management employees are paid cash bonus amounts determined by a formula which
takes into account the level of management and the average annual net income of
the Company over a three-year period.  The current Long-Term Management
Incentive Plan is effective September 1, 1994 through August 31, 1996.  For the
year ended August 31, 1994, the Company accrued $1,607,000 under this plan. 
The Company's performance did not reach a level where incentive was earned
under the Long-Term Management Incentive Plan that covered the three-year
period ended August 31, 1993.  As a result, operations in 1993 were credited by
$2,463,000 to reverse provisions for management incentive awards previously
charged against operations in 1992 and 1991 ($1,171,000 and $1,292,000,
respectively).

    The Company's Executive Deferred Compensation Plan permits executive
employees to defer part of their salary and/or part or all of their bonus
compensation.  The amount to be deferred and the period for deferral is
specified by an election made semi-annually.  Payments of deferred amounts
shall begin at the earlier of the end of the specified deferral period,
retirement, disability or death.  The employee's deferred account balance is
credited annually with interest at the highest rate of interest paid by the
Company on any subordinated debt certificate sold during the year.  Payment of
an employee's account balance shall, at the employee's election, be a lump sum
or in ten annual installments.  Amounts deferred pursuant to the plan for the
accounts of the named individuals during the fiscal years 1994, 1993 and 1992
are included in the cash compensation table.

    The Company established the Farmland Industries, Inc. Employee Retirement
Plan ("Plan") in 1986 for all employees whose customary employment is at the
rate of at least 1000 hours per year.  Participation in the Plan is optional
prior to age 34, but mandatory thereafter.  Approximately 6,560 active and
6,540 inactive employees were participants in the Plan on August 31, 1994.  The
Plan is funded by employer and employee contributions to provide lifetime
retirement income at normal retirement age 65, or a reduced income beginning as
early as age 55.  The Plan also contains provisions for death and disability
benefits.  The Plan has been determined qualified under the Internal Revenue
Code.  The Plan is administered by a committee appointed by the Board of
Directors of Farmland, and all funds of the Plan are held by a bank trustee in
accordance with the terms of the trust agreement.  It is the present intent to
continue this plan indefinitely.  The Company's funding policy is to make the
maximum annual contributions to the Plan's trust fund that can be deducted for
federal income tax purposes.  Company contributions made to the Plan for the
year ended August 31, 1994 were $2,885,000.  No contributions were made to the
Plan in 1993 and 1992.  

    Payments to participants in the Plan are based upon length of participation
and compensation (limited to $150,000 annually for any employee) reported to
the Plan for the four highest of the last ten years of employment.  See note 11
of the notes to consolidated financial statements.  

    In 1982, the Tax Equity and Fiscal Responsibility Act (TEFRA) imposed a
maximum retirement benefit which may be paid by a qualified retirement plan. 
At the present time, that limit is $118,000.

    The following table sets forth the estimated annual benefits payable at age
65 for members of the Retirement Plan, which benefits are not reduced by virtue
of Social Security payments:
Remuneration                                Years of Service                
     Salaries             15             20                   25         30
$     100,000. .  $     26,250    $    35,000     $    43,750    $    52,500
         125,000. .        32,812         43,750          54,687         65,625
         150,000. .        39,375         52,500          65,625         78,750
         175,000. .        45,937         61,250          76,562         91,875
         200,000. .        52,500         70,000          87,500        105,000
         225,000. .        59,062         78,750          98,437        118,125*
         250,000. .        65,625         87,500         109,375        131,250*
         275,000. .        72,187         96,250         120,312*       144,375*
         300,000. .        78,750        105,000         131,250*       157,500*
*Exceeds the actual amount which can be paid pursuant to the present
limitations of TEFRA.
Subject to the $150,000 maximum limit on annual compensation which may be
covered by a qualified pension plan, amounts included in the cash compensation
table do not vary substantially from the compensation covered by the pension
plan. 

    The following table sets forth the credited years of service for the
executive officers of the Company at August 31, 1994.

                Name              Years of Creditable Service

             H. D. Cleberg  . . . . . . . . . . 29
             G. E. Evans  . . . . . . . . . . . 20
             R. W. Honse  . . . . . . . . . . . 20
             J. F. Berardi  . . . . . . . . . .  1
             S. P. Dees   . . . . . . . . . . .  9

    The Company established the Farmland Industries, Inc. Supplemental
Executive Retirement Plan ("SERP") effective January 1, 1994.  The SERP is
intended to supplement the retirement income of executive participants in the
Farmland Industries, Inc. Employee Retirement Plan whose retirement benefit
would otherwise be reduced because of the limitation of the Internal Revenue
Code on the amount of salary which can be included in the computation of
retirement income ($150,000) or the amount of retirement benefit which may be
paid by a qualified retirement plan ($118,000).

    The Company's Board of Directors has appointed an Administrative Committee
to administer the SERP.  To fund the SERP, the Company purchased cash value
life insurance polices on the lives of plan participants.  The Company owns
these insurance policies and has the sole right to name policy beneficiaries. 
The total SERP premiums for all participants for the eight months ended August
31, 1994 was $621,012 of which $383,736 was charged to operations.

    The Company's obligation to pay supplemental retirement benefits under the
SERP is limited to the aggregate cash value of the life insurance policies
designated by the Administrative Committee as policies of the SERP.  If the
benefits under the plan for a year would exceed the total cash value of the
policies, each participant's payment will be reduced.

                             CERTAIN TRANSACTIONS

    The Company transacts business in the ordinary course with its directors
and with its local cooperative members with which the directors are associated
on terms no more favorable than those available to its other local cooperative
members.                            PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

    The expenses (excluding commissions) to be incurred in connection with  the
issuance and distribution of the securities to be offered are estimated as
follows and will be borne by the Company:

                                               Estimated
       Item                                     Expense   

   Federal and state registration fees  . . .  $   106,000
   State taxes and fees . . . . . . . . . . .        8,000
   Printing and engraving . . . . . . . . . .      211,000
   Accounting and legal . . . . . . . . . . .       54,000
   Trustee fee  . . . . . . . . . . . . . . .       13,000
   Advertising and administration . . . . . .      973,000
                                               $ 1,365,000

ITEM 14.    INDEMNIFICATION OF DIRECTORS AND OFFICERS

    Section 6002(b) of Chapter 17 of the Kansas Statutes (1987), permits the
following provision to be included in the articles of incorporation of the
Company:  a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders, policyholders or members for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (A) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, policyholders or members, (B) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(C) under the provision of K.S.A. 17-6424 and amendments thereto or (D) for any
transaction from which the director derived an improper personal benefit.  No
such provision shall eliminate or limit the liability of a director for any act
or omission occurring prior to the date when such provision becomes effective. 
All references in this subsection to a director shall be deemed also to refer
to a member of the governing body of a corporation which is not authorized to
issue capital stock.  Section 6002(c) provides that "It shall not be necessary
to set forth in the articles of incorporation any of the powers conferred on
corporations by this act."

    Farmland Industries, Inc.'s Board of Directors, and shareholders at their
regularly scheduled meeting on September 15, 1987 and December 4, 1987,
respectively, adopted the following resolution:

        RESOLVED, That the Board of Directors hereby approves and
    recommends for adoption by the members, the amendment of Article VII of
    the Association by the addition thereto of a new section to read as
    follows:

                         ARTICLE VII - INDEMNIFICATION

        Section 1.  Indemnification.  The Association may agree to the
    terms and conditions upon which any director, officer, employee or
    agent accepts his office or position and in its bylaws, by contract or
    in any other manner may agree to indemnify and protect any director,
    officer, employee or agent of the Association, or any person who serves
    at the request of the Association as a director, officer, employee or
    agent of another corporation, partnership, joint venture, trust or
    other enterprise, to the fullest extent permitted by the laws of the
    State of Kansas.

        Section 2.  Limitation of Liability.  Without limiting the
    generality of the foregoing provisions of this ARTICLE VII, to the
    fullest extent permitted or authorized by the laws of the State of
    Kansas, including without limitation the provisions of subsection
    (b)(8) of Kan. Stat. Ann. Sec. 17-6002 (1981) as now in effect and as
    it may from time to time hereafter be amended, no person who is
    currently or shall hereinafter become a director of the Association
    shall have personal liability to the Association for monetary damages
    for breach of fiduciary duty as a director for any act or omission
    occurring subsequent to the date this provision becomes effective.  If
    the Kansas General Corporation Code is amended after approval of this
    provision by the shareholders of the Association, to authorize
    corporate action further limiting or eliminating the personal liability
    of directors, then the liability of a director of the Association shall
    be limited or eliminated to the fullest extent permitted by the Kansas
    General Corporation Code, as so amended.

ITEM 15.    RECENT SALES OF UNREGISTERED SECURITIES

   Unregistered equities issued by Farmland during each of the years in the
three-year period ended August 31, 1994 were as follows:
Associate Member
                           Common Stock                     Common Stock
                         Nondividend Bearing)            (Nondividend Bearing)         Capital
      Year Ended            Par Value $25                    Par Value $25             Credits
       August 31        Shares             Amount        Shares          Amount         Amount
1994         32,202     $       805,050       83,273     $    2,081,825   $     7,740,453
          1993         46,993     $     1,174,825       11,348     $      283,700   $     1,947,119
          1992         50,614     $     1,265,350       25,829     $      645,725   $    12,967,039
Farmland issues common stock, associate member common stock and capital
credits:  1) to satisfy one of the requirements of eligible persons for
membership in the cooperative; 2) as the form of payment of the portion of
patronage refunds not paid with cash; and, 3) upon conversion (to common stock,
associate member common stock or capital credits) by holders of other types of
these equities.  Such conversions result from a change of membership status.

   See "The Company - Membership."

   In addition, in 1992, capital credits, exceeding the amount registered by
$4,610,653 were issued in accordance with provisions of an exchange offer to
other owners of Farmland Foods, Inc.

   Registration of such common stock, associate member common stock and capital
credits issued to qualify eligible persons for membership in the cooperative
and for payment of patronage refunds is not required under the Securities Act
of 1933 (the "Act") under the provisions of Section 2(3) thereof, as there is
"no sale" or "offer to sell" a security for value as those terms are used in
Section 2(3).

   An exemption from registration under the Act of common stock, associate
member common stock and capital credits issued upon conversion of other types
of these equities is claimed under Section 3(a) 9 thereof for an exchange of
securities by an issuer with its own security holders exclusively where no
commission or other remuneration is paid or given directly or indirectly for
soliciting such exchange.

ITEM 16.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

The following exhibits and financial statement schedules are filed as a part of
this Registration Statement.

Exhibit No.                      Exhibit

      UNDERWRITING AGREEMENT:

  1.A Underwriting Agreement between Farmland Industries, Inc. and Farmland
      Securities Company, dated December 6, 1989.  

      1.A(1)   Amendment, dated December 5, 1994, to the agreement, dated
               December 6, 1989 between Farmland Industries, Inc. and Farmland
               Securities Company.  

  1.B Sales Agency Agreement between Farmland Industries, Inc. and American
      Heartland  Investment, Inc., dated December 29, 1993.

      ARTICLES OF INCORPORATION AND BYLAWS:

  3.A Articles of Incorporation and Bylaws of Farmland Industries, Inc.
      effective December 1, 1993.  (Incorporated by Reference - Form 10-K,
      filed November 29, 1994)

      INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES:

  4.(i)A  Trust Indenture dated November 20, 1981, as amended January 4, 1982,
          including specimen of Demand Loan Certificates.  (Incorporated by
          Reference - Form S-1, No.2-75071, effective January 7, 1982)

  4.(i)B  Trust Indenture dated November 8, 1984, as amended January 3, 1985,
          including specimen of 10-year Subordinated Capital Investment
          Certificates.  (Incorporated by Reference - Form S-1, No. 2-94400,
          effective December 31, 1984)

      4.(i)B(1)    Amendment Number 2, dated December 3, 1991, to Trust
                   Indenture dated November 8, 1984 as amended January 3, 1985
                   covering Farmland Industries, Inc.'s 10-Year Subordinated
                   Capital Investment Certificates.  (Incorporated by
                   Reference - Form SE, dated December 3, 1991)

  4.(i)C  Trust Indenture dated November 8, 1984, as amended January 3, 1985,
          including specimen of 5-year Subordinated Capital Investment
          Certificates.  (Incorporated by Reference - Form S-1, No. 2-94400,
          effective December 31, 1984)

      4.(i)C(1)    Amendment Number 2, dated December 3, 1991, to Trust
                   Indenture dated November 8, 1984 as amended January 3, 1985
                   covering Farmland Industries, Inc.'s 5-Year Subordinated
                   Capital Investment Certificates.  (Incorporated by
                   Reference - Form SE, dated December 3, 1991)

  4.(i)D  Trust Indenture dated November 8, 1984, as amended January 3, 1985
          and November 20, 1985, including specimen of 10-year Subordinated
          Monthly Income Capital Investment Certificates.  (Incorporated by
          Reference - Form S-1, No. 2-94400, effective December 31, 1984)

  4.(i)E  Trust Indenture dated November 11, 1985 including specimen of the
          5-year Subordinated Monthly Income Capital Investment Certificates. 
          (Incorporated by Reference - Form S-1, No. 33-1970, effective
          December 31, 1985) 

      INSTRUMENTS DEFINING RIGHTS OF OWNERS OF INDEBTEDNESS NOT REGISTERED:

  4.(ii)A Trust Indenture dated November 8, 1984, as amended January 3, 1985,
          including specimen of 20-year Subordinated Capital Investment
          Certificates.  (Incorporated by Reference - Form S-1, No. 2-94400,
          effective December 31, 1984)

      4.(ii)A(1)   Amendment Number 2, dated December 3, 1991, to Trust
                   Indenture dated November 8, 1984 as amended January 3, 1985
                   covering Farmland Industries, Inc.'s 20-Year Subordinated
                   Capital Investment Certificates.  (Incorporated by
                   Reference - Form SE, dated December 3, 1991)

  4.(ii)B Credit Agreement among Farmland Industries, Inc., as Borrower, ABN
          Amro Bank N.V., The Bank of Nova Scotia, Boatmen's First National
          Bank of Kansas City, The Chase Manhattan Bank, N.A., Commerce Bank
          of Kansas City, N.A., NBD Bank, N.A., as Banks and The National Bank
          for Cooperatives, Cooperatieve Centrale Raiffeisen-Boerenleenbank
          B.A. "Rabobank Nederland", New York Branch, as Banks and as Co-
          Agents, dated May 19, 1994, (the "Syndicated Credit Facility"). 
          (Incorporated by Reference - Form 10-Q filed July 14, 1994)

      4.(ii)B(1)   List identifying contents of all omitted schedules
                   referenced in and not filed with, the Syndicated Credit
                   Facility, dated May 19, 1994.  (Incorporated by Reference -
                   Form 10-Q, filed July 14, 1994)

  5.  Opinion re Legality

      MATERIAL CONTRACTS:

          LEASE CONTRACTS:

 10.(i)A  The First National Bank of Chicago, not individually but solely as
          Trustee for AT&T Commercial Finance Corporation, The Boatmen's
          National Bank of St. Louis, Firstier Bank, N.A. and Norwest Bank
          Minnesota, National Association and Farmland Industries, Inc.
          consummated a leveraged lease in the amount of $73,153,000 dated
          September 6, 1991. (Incorporated by Reference - Form SE, filed
          December 3, 1991)

 10.(i)B  The First National Bank of Commerce as Trustee for General Electric
          Credit Corporation as Beneficiary and Farmland Industries, Inc.
          consummated a leveraged lease in the amount of $51,909,257.90 dated
          March 17, 1977.  (Incorporated by Reference - Form S-1, No.2-60372,
          effective December 22, 1977)

      MANAGEMENT REMUNERATIVE PLANS:

 10.(ii)(A)(1)     Annual Employee Variable Compensation Plan (September 1,
                   1994 - August 31, 1995).  (Incorporated by Reference - Form
                   10-K, filed November 29, 1994)

 10.(ii)(A)(2)     Farmland Industries, Inc. Management Long-Term Incentive
                   Plan (Effective September 1993) (Incorporated by Reference
                   - Form 10-K, filed November 29, 1993).

 12.  Computation of Ratios

 21.  Subsidiaries of the Registrant

      CONSENTS OF EXPERTS AND COUNSEL:

 23.A Independent Auditors' Consent and Report on Schedules

 23.B Consent of Legal Counsel

 23.C Consent of Special Tax Counsel

 23.D Consent of Qualified Independent Underwriter

 24   Power of Attorney  (Incorporated by Reference - Form 10-K, filed
      November 29, 1994)

 25.A Statement of Eligibility of Trustee and Qualification of UMB Bank,
      National Association Trustee, Form T-1.

 25.B Statement of Eligibility of Trustee and Qualification of Commerce Bank
      of Kansas City, National Association as Trustee, Form T-1.

                                                       EXHIBIT 5

Farmland Industries, Inc.
3315 North Oak Trafficway
Kansas City, Missouri 64116

Gentlemen:

    I have reviewed your Demand Loan Certificates bearing the Certificate
Interest Rate; your 10-year Subordinated Capital Investment Certificates and
your 5-year Subordinated Capital Investment Certificates each bearing the
Certificate Interest Rate; your 10-year Subordinated Monthly Income Capital
Investment Certificates and your 5-year Subordinated Monthly Income Capital
Investment Certificates each bearing the Certificate Interest Rate.  It is my
opinion that all such Demand Loan Certificates, Subordinated Capital Investment
Certificates and Subordinated Monthly Income Capital Investment Certificates,
and the issuance thereof, have been duly authorized; that said Demand Loan
Certificates are covered by that certain Trust Indenture dated November 20,
1981, between your Association and UMB Bank, National Association, as successor
trustee to Commerce Bank of Kansas City, National Association; that said
10-year and 5-year Subordinated Capital Investment Certificates bearing the
Certificate Interest Rate are covered by those certain Trust Indentures dated
November 8, 1984, between your Association and Commerce Bank of Kansas City,
National Association; that said 10-year Subordinated Monthly Income Capital
Investment Certificates bearing interest at the Certificate Interest Rate are
covered by that certain Trust Indenture dated November 8, 1984, between your
Association and Commerce Bank of Kansas City, National Association, and that
said 5-year Subordinated Monthly Income Capital Investment Certificates bearing
interest at the Certificate Interest Rate are covered by that certain Trust
Indenture dated November 11, 1985 between your Association and Commerce Bank of
Kansas City, National Association.  That said Certificates, when issued and
sold in accordance with Registration Statement No.________, presently to be
filed with the Securities and Exchange Commission, Washington, D.C., and
registered in accordance with the laws of the States in which the Certificates
are and will be sold, will constitute valid and binding obligations according
to their tenor and effect.

                              Respectfully submitted,

                              ROBERT B. TERRY
                              
                              Robert B. Terry
                              Vice President,
                              and General Counsel
December 12, 1994

                                                                  EXHIBIT 12

                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

              COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

                       FIVE YEARS ENDED AUGUST 31, 1994
For the Year Ended August 31          
                                                   1994         1993         1992         1991        1990    
                                                                        (Amounts in Thousands)
Income (Loss) before Extraordinary Item . . .  $    73,876  $   (30,400) $    61,046 $     42,693 $    48,580

 Income Tax Expense (Benefit)  . . . . . . . .  $     4,890  $    (6,433) $     9,458        7,473       9,604

 Minority Interest in Income of
   Subsidiary that has Fixed Charges   . . . .          333          865         -0-          -0-          -0-

 Minority Interest in Loss of
   Subsidiary  . . . . . . . . . . . . . . . .       (4,855)         (37)        -0-          -0-          -0-

 Equity Interest in Loss (Earnings) of 
   Less-than-fifty Percent Owned
   Investees   . . . . . . . . . . . . . . . .          603        1,007        2,341          856         113

 Total Fixed Charges 
   (excluding interest capitalized)  . . . . .       64,383       55,268       47,719       54,443      47,000

 Earnings  . . . . . . . . . . . . . . . . . .  $   139,230  $    20,270  $   120,564 $    105,465 $   105,297

 Fixed Charges:
   Interest (including amounts
       capitalized)  . . . . . . . . . . . . .  $    51,842  $    43,873  $    34,426 $     42,481 $    37,226
   Estimated Interest Component 
       of Rentals  . . . . . . . . . . . . . .       12,898       13,006       13,293       12,290      11,652

       Total Fixed Charges . . . . . . . . . .  $    64,740  $    56,879  $    47,719 $     54,771 $    48,878

 Ratio of Earnings to Fixed Charges  . . . . .          2.2          0.4          2.5          1.9         2.2

 Earnings Inadequate to Cover
   Fixed Charges   . . . . . . . . . . . . . .               $    36,609
EXHIBIT 21

                        SUBSIDIARIES OF THE REGISTRANT

Farmland Foods, Inc., a 99%-owned subsidiary, was incorporated under the laws
of the State of Kansas.  Farmland Foods, Inc. has been included in the
consolidated financial statements filed in this registration.

Farmland Insurance Agency, a wholly-owned subsidiary, was incorporated under
the laws of the State of Missouri.  Farmland Insurance Agency has been included
in the consolidated financial statements filed in this registration.

Farmers Chemical Company, a wholly-owned subsidiary, was incorporated under the
laws of the State of Kansas.  Farmers Chemical Company has been included in the
consolidated financial statements filed in this registration.

Farmland Securities Company, a wholly-owned subsidiary, was incorporated under
the laws of the State of Delaware.  Farmland Securities Company has been
included in the consolidated financial statements filed in this registration.

Cooperative Service Company, a wholly-owned subsidiary, was incorporated under
the laws of the State of Nebraska.  Cooperative Service Company has been
included in the consolidated financial statements filed in this registration.

Double Circle Farm Supply Company, a wholly-owned subsidiary, was incorporated
under the laws of the State of Nevada.  Double Circle Farm Supply Company has
been included in the consolidated financial statements filed in this
registration.

National Beef Packing Company, L.P., a 58%-owned subsidiary, was formed under
the laws of the State of Delaware.  National Beef Packing Company has been
included in the consolidated financial statements filed in this registration.

NBPCo, L.L.C., a wholly-owned subsidiary, was formed under the laws of the
State of Kansas.  NBPCo has been included in the consolidated financial
statements filed in this registration.

Farmland Financial Services Company, a wholly-owned subsidiary, was
incorporated under the laws of the State of Kansas.  Farmland Financial
Services Company has been included in the consolidated financial statements
filed in this registration.

Farmland Transportation, Inc., a wholly-owned subsidiary, was incorporated
under the laws of the State of Missouri.  Farmland Transportation, Inc. has
been included in the consolidated financial statements filed in this
registration.

Environmental and Safety Services, Inc., a wholly-owned subsidiary, was
incorporated under the laws of the State of Missouri.  Environmental and Safety
Services, Inc. has been filed in the consolidated financial statements included
in this registration.

Penterra, Inc., a 81%-owned subsidiary, was incorporated under the laws of the
State of Kansas.  Penterra, Inc. has been included in the consolidated
financial statements filed in this registration.

Farmland Industries, Ltd., a wholly-owned subsidiary, was incorporated under
the laws of the United States Virgin Islands.  Farmland Industries, Ltd. has
been included in the consolidated financial statements filed in this
registration.

Heartland Data Services, Inc., a wholly-owned subsidiary, was incorporated
under the laws of the State of Kansas.  Heartland Data Services, Inc. has been
included in the consolidated financial statements filed in this registration.

Yuma Feeder Pig, Inc., a 72%-owned subsidiary, was incorporated under the laws
of the state of Colorado.  Yuma Feeder Pig, Inc. has been included in the
consolidated financial statements filed in this registration.

Equity Country, Inc., a wholly-owned subsidiary, was incorporated under the
laws of the State of Delaware.  Equity Country, Inc. has been included in the
consolidated financial statements filed in this registration.

Equity Export Oil and Gas Company, Inc., a wholly-owned subsidiary, was
incorporated under the laws of the State of Oklahoma.  Equity Export Oil and
Gas Company, Inc. has been included in the consolidated financial statements
filed in this registration.

Ceres Realty Corporation, a wholly-owned subsidiary, was incorporated under the
laws of the State of Missouri.  Ceres Realty Corporation has been included in
the consolidated financial statements filed in this registration.

Heartland Wheat Growers, L.P., a 79%-owned subsidiary, was formed under the
laws of the State of Kansas.  Heartland Wheat Growers has been included in the
consolidated financial statements filed in this registration.

Heartland Wheat Growers, Inc., a 79%-owned subsidiary, was incorporated under
the laws of the State of Kansas.  Heartland Wheat Growers has been included in
the consolidated financial statements filed in this registration.

Farmland Industrias S.A. de C.V., a wholly-owned subsidiary, was formed under
the laws of Mexico.  Farmland Industrias has been included in the consolidated
financial statements filed in this registration.

National Carriers, Inc., a 79%-owned subsidiary, was incorporated under the
laws of the State of Kansas.  National Carriers has been included in the
consolidated financial statements filed in this registration.

Supreme Land, Inc., a wholly-owned subsidiary, was incorporated under the laws
of the State of Kansas.  Supreme Land has been included in the consolidated
financial statements filed in this registration.

Tradigrain, Inc., a wholly-owned subsidiary, was incorporated under the laws of
the State of Tennessee.  Tradigrain, Inc. has been included in the consolidated
financial statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of
Switzerland.  Tradigrain S.A. of Switzerland has been included in the
consolidated financial statements filed in this registration.

Tradigrain Shipping S.A., a wholly-owned subsidiary, was formed under the laws
of Switzerland.  Tradigrain Shipping S.A. has been included in the consolidated
financial statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of
France.  Tradigrain S.A. of France has been included in the consolidated
financial statements filed in this registration.

Tradigrain GmbH, a wholly-owned subsidiary, was formed under the laws of
Germany.  Tradigrain GmbH has been included in the consolidated financial
statements filed in this registration.

Tradigrain LTD., a wholly-owned subsidiary, was formed under the laws of Great
Britain.  Tradigrain LTD. has been included in the consolidated financial
statements filed in this registration.

Tradigrain S.A., a wholly-owned subsidiary, was formed under the laws of
Argentina.  Tradigrain S.A. of Argentina has been included in the consolidated
financial statements filed in this registration.

                                                                EXHIBIT 23.A

             INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES

The Board of Directors
Farmland Industries, Inc.:

    The audits referred to in our report dated October 21, 1994 included the
related financial statement schedules as of August 31, 1994, and for each of
the years in the three-year period ended August 31, 1994, included in the
Registration Statement in the accompanying index.  These financial statement
schedules are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.  In our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.

    Our report dated October 21, 1994 contains an explanatory paragraph
concerning income tax adjustments proposed by the Internal Revenue Service on
the gain on sale of and certain distributions by Terra Resources, Inc.

    We consent to the use of our reports included herein and to the references
to our firm under the headings "Selected Consolidated Financial Data", and
"Experts" in the Prospectus.

                                        KPMG PEAT MARWICK LLP

Kansas City, Missouri
December 12, 1994

                                                               EXHIBIT 23.B

                           CONSENT OF LEGAL COUNSEL

Farmland Industries, Inc.:

    The undersigned consents to the use herein of his opinion, dated December
12, 1994, relating to the legality of Subordinated Capital Investment
Certificates, Subordinated Monthly Income Capital Investment Certificates, and
Demand Loan Certificates being registered, and of all other statements and
opinions attributed to him appearing in this Registration Statement No. .

                                        ROBERT B. TERRY

                                        Robert B. Terry
                                        Vice President,
                                        and General Counsel

Kansas City, Missouri
December 12, 1994

                                                               EXHIBIT 23.C

                        CONSENT OF SPECIAL TAX COUNSEL

Farmland Industries, Inc.:

We consent to the references to our firm in the Prospectus filed as part of
this Registration Statement.

                                        BRYAN CAVE

December 12, 1994                                           

                                                                EXHIBIT 23.D

                 CONSENT OF QUALIFIED INDEPENDENT UNDERWRITER

Farmland Industries, Inc.:

We consent to the references to our firm under the caption "Qualified
Independent Underwriter" in the Prospectus.

                               JAMES H. GLEN, JR.

                              James H. Glen, Jr.
                              INTERSTATE/JOHNSON LANE CORPORATION

December 12, 1994

(B) FINANCIAL STATEMENT SCHEDULES

        Farmland Industries, Inc. and Subsidiaries for each of the years in the
    three-year period ended August 31, 1994:
                                                            Page

        II--Amounts Receivable from Related Parties         S-14

        V--Property, Plant and Equipment                    S-15

        VI--Accumulated Depreciation and Amortization of 
           Property, Plant and Equipment                    S-18

        IX--Short-term Borrowings                           S-21

        X--Supplementary Income Statement Information       S-21

    All other schedules are omitted as the required information is inapplicable
or the information is presented in the consolidated financial statements or
related notes.

                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

             SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES

              FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
Balance at                      Deductions           Balance at
                             the Beginning                Amounts      Amounts       the End
   Name of Debtor            of the Period  Additions    Collected   Written Off  of the Period
                                                      (Amounts in Thousands)
AUGUST 31, 1994
   S.F. Industries (a) . .   $         450  $    2,000  $     2,450  $       -0-  $        -0-
   Hyplains Beef (b)   . .   $       6,126  $   17,744  $       -0-  $       -0-  $     23,870

 AUGUST 31, 1993
   S.F. Industries   . . .   $         950  $      -0-  $       500  $       -0-  $        450
   Hyplains Beef   . . . .   $       4,348  $    1,778  $       -0-  $       -0-  $      6,126

 AUGUST 31, 1992
   S.F. Industries   . . .   $         -0-  $    3,950  $     3,000  $       -0-  $        950
   Hyplains Beef   . . . .   $         -0-  $    4,348  $       -0-  $       -0-  $      4,348
(a)      Farmland has a $5,000,000 commitment to S.F. Industries, L.L.C. to
         fund working capital requirements, interest on the working capital
         loan, calculated at the LIBOR rate plus .50% is payable on the last
         day of September, December, March and June.

(b)      Farmland purchases cattle for the day-to-day operations of its 50%
         owned venture, Hyplains Beef L.C.  This receivable is non-interest
         bearing.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                   SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1994
Other
                                    Balance                              Charges     Balance
                                 September 1,  Additions   Retirements    Add/      August 31,
      Classification                 1993       at Cost     or Sales     (Deduct)      1994     
                                                   (Amounts in Thousands)
Land and Land Improvements  . . $      11,825  $    2,214  $        16  $      (409) $     13,614
Site Improvements . . . . . . .        26,877       1,524          129          375        28,647
Buildings         . . . . . . .       215,420       7,814        1,523        3,056       224,767
Machinery and Equipment . . . .       678,784      61,997       12,976      (11,122)      716,683
Automotive Equipment  . . . . .        46,807       8,349        8,617       19,447        65,986
Furniture and Fixtures  . . . .        45,405       7,982        4,236         (538)       48,613
Livestock         . . . . . . .         4,373       1,968        1,639         (776)        3,926
Mining Properties . . . . . . .         3,119         -0-          -0-          -0-         3,119
Leasehold Improvements  . . . .        12,149       2,716          -0-          220        15,085
Capital Lease     . . . . . . .        52,342       1,691        2,955         (122)       50,956
Construction and Acquisitions
     in Progress (a)  . . . . .        57,242     (26,479)       -0-            -0-        30,763
      Total Property, Plant
           and Equipment  . . . $   1,154,343  $   69,776 $     32,091  $    10,131  $  1,202,159
(a) Construction and acquisitions in progress reflects the net change for the
period after transfers to other classifications.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                   SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1993
Other
                                                Balance                                Charges       Balance
                                             September 1,    Additions  Retirements      Add/      August 31,
      Classification                             1992         at Cost     or Sales     (Deduct)       1993     
                                                               (Amounts in Thousands)
Land and Land Improvements  . . . . . . .   $      11,437  $      880  $     1,043  $       551  $     11,825
 Site Improvements . . . . . . . . . . . .          15,308      10,087           96        1,578        26,877
 Buildings         . . . . . . . . . . . .         193,215      34,531        9,806       (2,520)      215,420
 Machinery and Equipment . . . . . . . . .         593,014      77,998       11,409       19,181       678,784
 Automotive Equipment  . . . . . . . . . .          46,324       6,459        2,032       (3,944)       46,807
 Furniture and Fixtures  . . . . . . . . .          37,850       7,251        1,491        1,795        45,405
 Livestock         . . . . . . . . . . . .             -0-         -0-          -0-        4,373         4,373
 Mining Properties . . . . . . . . . . . .          26,569         217          -0-      (23,667)        3,119
 Leasehold Improvements  . . . . . . . . .          10,215       5,745          158       (3,653)       12,149
 Fertilizer Properties . . . . . . . . . .          48,695         -0-          -0-      (48,695)          -0-
 Capital Lease     . . . . . . . . . . . .             -0-         -0-          -0-       52,342        52,342
 Construction and Acquisitions
      in Progress(a)   . . . . . . . . . .          53,812       3,432          -0-           (2)       57,242

      Total Property, Plant 
            and Equipment  . . . . . . . .   $   1,036,439  $  146,600  $    26,035  $    (2,661) $   1,154,343
(a)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                   SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1992
Other
                                               Balance                                 Charges     Balance
                                             September 1,   Additions    Retirements     Add/      August 31,
      Classification                             1991         at Cost     or Sales     (Deduct)       1992     
                                                                      (Amounts in Thousands)
Land and Land Improvements  . . . . . . .   $      12,560  $    2,618  $     3,534  $      (207) $     11,437
 Site Improvements . . . . . . . . . . . .          19,751         425        6,146        1,278        15,308
 Buildings         . . . . . . . . . . . .         154,062      50,132       10,217         (762)      193,215
 Machinery and Equipment . . . . . . . . .         711,751      35,653      151,368       (3,022)      593,014
 Automotive Equipment  . . . . . . . . . .          44,328       8,071        5,852         (223)       46,324
 Furniture and Fixtures  . . . . . . . . .          37,166       5,462        5,264          486        37,850
 Mining Properties . . . . . . . . . . . .          82,672         -0-       54,826       (1,277)       26,569
 Leasehold Improvements  . . . . . . . . .           9,465         749          -0-            1        10,215
 Fertilizer Properties . . . . . . . . . .          49,544         -0-          849          -0-        48,695
 Construction and Acquisitions
      in Progress(a)   . . . . . . . . . .          35,207      24,821        4,574       (1,642)       53,812

      Total Property, Plant 
            and Equipment  . . . . . . . .   $   1,156,506  $  127,931  $   242,630  $    (5,368) $  1,036,439
(a)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND
EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1994
Additions
                                                            Charged to                    Other
                                              Balance       Profit and    Retirements,   Charges     Balance
                                             September 1,    Loss of      Renewals and      Add/     August 31,
      Classification                             1993        Income       Replacements    (Deduct)     1994
                                                                      (Amounts in Thousands)
Land Improvements . . . . . . . . . . . .   $         154  $        1  $       -0-  $       -0-   $       155
 Site Improvements . . . . . . . . . . . .          12,707       1,337           91           (7)       13,946
 Buildings         . . . . . . . . . . . .          76,426       8,950          820        2,740        87,296
 Machinery and Equipment . . . . . . . . .         453,705      28,449        4,472       (2,215)      475,467
 Automotive Equipment  . . . . . . . . . .          36,062       4,356        3,623        9,626        46,421
 Furniture and Fixtures  . . . . . . . . .          27,855       7,361        3,227          162        32,151
 Livestock         . . . . . . . . . . . .           1,768       1,396        1,013         (362)        1,789
 Mining Properties . . . . . . . . . . . .             192          19          -0-          -0-           211
 Leasehold Improvements  . . . . . . . . .           3,847       1,323          -0-          213         5,383
 Capital Lease     . . . . . . . . . . . .          37,249       3,350        2,429         (120)       38,050
 Construction and Acquisitions
      in Progress (a)  . . . . . . . . . .             -0-         -0-          -0-          -0-          -0-

      Totals       . . . . . . . . . . . .   $     649,965  $   56,542  $    15,675  $    10,037   $   700,869
(a)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
NOTE:  The following percentages are used for computing depreciation:

                 Land Improvements  . . . 6 to 10%
                 Site Improvements  . . . 3 to 30%
                 Buildings  . . . . . . . 2 to 10%
                 Machinery and Equipment  3 to 20%
                 Automotive Equipment .  10 to 33%
                 Furniture and Fixtures  10 to 20%
                 Livestock  . . . . . .  25 to 50%
                 Mining Properties  . . . 4 to 21%
                 Leasehold Improvements .  4 to 6%
                 Capital Lease  . . . . .  6 to 7%

                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

 SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND
EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1993
Additions
                                                            Charged to                  Other
                                                Balance     Profit and   Retirements,   Charges     Balance
                                             September 1,    Loss of     Renewals and     Add/     August 31,
      Classification                             1992         Income    Replacements     (Deduct)     1993     
                                                                    (Amounts in Thousands)
Land Improvements . . . . . . . . . . . .   $         153  $        1  $       -0-  $       -0-  $         154
 Site Improvements . . . . . . . . . . . .          10,377       2,439           94          (15)        12,707
 Buildings         . . . . . . . . . . . .          69,907       7,832          875         (438)        76,426
 Machinery and Equipment(a)  . . . . . . .         418,331      28,720       10,499       17,153        453,705
 Automotive Equipment  . . . . . . . . . .          32,827       4,366        1,474          343         36,062
 Furniture and Fixtures  . . . . . . . . .          21,537       6,398        1,333        1,253         27,855
 Livestock         . . . . . . . . . . . .                                                 1,768          1,768
 Mining Property . . . . . . . . . . . . .                                                   192            192
 Leasehold Improvements  . . . . . . . . .           3,211         872           11         (225)         3,847
 Fertilizer Properties . . . . . . . . . .          34,094       3,199           78      (37,215)           -0-
 Capital Lease     . . . . . . . . . . . .                                                37,249         37,249
 Construction and Acquisitions
      in Progress (b)  . . . . . . . . . .             -0-         -0-          -0-          -0-            -0-

      Totals       . . . . . . . . . . . .   $     590,437  $   53,827  $    14,364  $    20,065  $     649,965
(a)   Based on negotiations with potential purchasers, the carrying values of
      the Coffeyville, Kansas refinery and a dragline were reduced by adjusting
      accumulated depreciation by $17,622,000 and $6,155,000, respectively.

(b)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
NOTE:  The following percentages are used for computing depreciation:

                 Land Improvements  . . . 6 to 10%
                 Site Improvements  . . . 3 to 30%
                 Buildings  . . . . . . . 2 to 10%
                 Machinery and Equipment  3 to 20%
                 Automotive Equipment .  10 to 33%
                 Furniture and Fixtures  10 to 20%
                 Livestock  . . . . . .  25 to 50%
                 Mining Properties  . . . 4 to 21%
                 Leasehold Improvements .  4 to 6%
                 Fertilizer Properties  .  6 to 7%
                 Capital Lease  . . . . .  6 to 7%
                 
                 
                 
                 FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND
EQUIPMENT

                      FOR THE YEAR ENDED AUGUST 31, 1992
Additions
                                                            Charged to                  Other
                                               Balance     Profit and   Retirements,   Charges     Balance
                                             September 1,   Loss of     Renewals and     Add/     August 31,
      Classification                             1991       Income      Replacements   (Deduct)      1992     
                                                                     (Amounts in Thousands)
Land Improvements . . . . . . . . . . . .   $         153  $        1  $       -0-   $       (1)  $        153
 Site Improvements . . . . . . . . . . . .          13,666         676        3,968            3         10,377
 Buildings         . . . . . . . . . . . .          72,369       5,810        8,261          (11)        69,907
 Machinery and Equipment . . . . . . . . .         488,684      29,592       98,262       (1,683)       418,331
 Automotive Equipment  . . . . . . . . . .          32,293       3,149        2,626           11         32,827
 Furniture and Fixtures  . . . . . . . . .          22,075       3,738        5,486        1,210         21,537
 Leasehold Improvements  . . . . . . . . .           2,375         836          -0-          -0-          3,211
 Fertilizer Properties . . . . . . . . . .          34,066       3,591        3,563          -0-         34,094
 Construction and Acquisitions in 
      Progress(a)    . . . . . . . . . . .             113         -0-          -0-         (113)           -0-

      Totals       . . . . . . . . . . . .   $     665,794  $   47,393  $    122,166   $    (584)  $    590,437
(a)   Construction and acquisitions in progress reflects the net change for the
      period after transfers to other classifications.
NOTE:  The following percentages are used for computing depreciation:

                 Land Improvements  . . . 6 to 10%
                 Site Improvements  . . . 3 to 30%
                 Buildings  . . . . . . . 2 to 10%
                 Machinery and Equipment  3 to 20%
                 Automotive Equipment .  10 to 33%
                 Furniture and Fixtures  10 to 20%
                 Leasehold Improvements .  4 to 6%
                 Fertilizer Properties  .  6 to 7%

                  FARMLAND INDUSTRIES, INC. AND SUBSIDIARIES

                      SCHEDULE IX--SHORT-TERM BORROWINGS
Weighted
                                                                            Maximum      Average      Average
                                                                             Amount       Amount      Interest
                                                Balance     Weighted      Outstanding  Outstanding     Rate
      Category of Aggregate                     End of      Average          During       During     During the
      Short-Term Borrowings                     Period    Interest Rate    the Period   the Period   Period (1)
                                                                      (Amounts in Thousands)
August 31, 1994:
 Demand Loan Certificates  . . . . . . . .   $      23,158     4.3%     $     39,873 $      28,299    3.9%
 Bank Debt         . . . . . . . . . . . .   $     281,886     5.2%     $    417,446 $     302,500    4.2%

 August 31, 1993:
 Demand Loan Certificates  . . . . . . . .   $      29,860     3.8%     $     46,403 $      35,002    4.3%
 Bank Debt         . . . . . . . . . . . .   $     268,783     4.1%     $    370,726 $     348,230    4.2%

 August 31, 1992:
 Demand Loan Certificates  . . . . . . . .   $      43,084     5.5%     $     58,684 $      50,516    6.3%
 Bank Debt         . . . . . . . . . . . .   $     200,072     4.5%     $    200,822 $     174,397    5.3%
(1)The weighted average interest rate was calculated by dividing an interest
   amount on short-term borrowings by the average daily balance of short-term
   borrowings during the period.
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
Charged to Costs and Expenses
                                For the Year Ended August 31
                                 1994       1993       1992  
                                   (Amounts in Thousands)
1. Maintenance and repairs  $   58,730   $   61,273  $   50,252
NOTE: All other items required by Schedule X are excluded as such items are
         less than one (1) percent of total sales for each of the years
         presented.
ITEM 17.    UNDERTAKINGS

    The undersigned registrant hereby undertakes:

    (a) To file, during any period in which offers or sales are being made, a
        post-effective amendment to this registration statement:

        (i) To include any prospectus required by section 10(a)(3) of the
            Securities Act of 1933;

        (ii)    To reflect in the prospectus any facts or events arising after
                the effective date of the registration statement (or the most
                recent post-effective amendment thereof) which, individually or
                in the aggregate, represent a fundamental change in the
                information set forth in the registration statement;

        (iii)   To include any material information with respect to the plan of
                distribution not previously disclosed in the registration
                statement or any material change to such information in the
                registration statement;

    (b) That, for the purpose of determining any liability under the Securities
        Act of 1933, each such post-effective amendment shall be deemed to be a
        new registration statement relating to the securities offered therein,
        and the offering of such securities at that time shall be deemed to be
        the initial bona fide offering thereof.

    (c) To remove from registration by means of a post-effective amendment any
        of the securities being registered which remain unsold at the
        termination of the offering.

    (d) Insofar as indemnification for liabilities arising under the Securities
        Act of 1933 may be permitted to directors, officers and controlling
        persons of the registrant pursuant to the foregoing provisions, or
        otherwise, the registrant has been advised that in the opinion of the
        Securities and Exchange Commission such indemnification is against
        public policy as expressed in the Act, and is, therefore,
        unenforceable.  In the event that a claim for indemnification against
        such liabilities (other than the payment by the registrant of expenses
        incurred or paid by a director, officer or controlling person in
        connection with the securities being registered), the registrant will,
        unless in the opinion of its counsel the matter has been settled by
        controlling precedent, submit to a court of appropriate jurisdiction
        the question whether such indemnification by it is against public
        policy as expressed in the Act and will be governed by the final
        adjudication of such issue.

                                  SIGNATURES

    PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FARMLAND
INDUSTRIES, INC. HAS DULY CAUSED THIS FORM S-1 TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY OF KANSAS CITY, STATE OF
MISSOURI ON DECEMBER 12, 1994.

                              FARMLAND INDUSTRIES, INC.

                              BY         H. D. CLEBERG          
                                         H. D. Cleberg
                             President and Chief Executive Officer

                              BY        JOHN F. BERARDI
                                        John F. Berardi
                                  Executive Vice President and
                                    Chief Financial Officer

    PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED FOR THE FOLLOWING PERSONS ON THE DATE
INDICATED PURSUANT TO VALID POWER OF ATTORNEY EXECUTED ON OCTOBER 19, 1994. 

           Signature               Title             Date

       ALBERT J. SHIVLEY         Chairman of       December 12, 1994
       Albert J. Shivley         Board
                                 Director

          OTIS H. MOLZ           Vice Chairman of  December 12, 1994
          Otis H. Molz            Board
                                  Director

          LYMAN ADAMS             Director         December 12, 1994
          Lyman Adams

       RONALD J. AMUNDSON         Director         December 12, 1994
       Ronald J. Amundson

      BAXTER ANKERSTJERNE         Director         December 12, 1994
      Baxter Ankerstjerne

          JODY BEZNER             Director         December 12, 1994
          Jody Bezner

       RICHARD L. DETTEN          Director         December 12, 1994
       Richard L. Detten

         STEVEN ERDMAN            Director         December 12, 1994
         Steven Erdman

         WARREN GERDES            Director         December 12, 1994
         Warren Gerdes

          BEN GRIFFITH            Director         December 12, 1994
          Ben Griffith

          GAIL D. HALL            Director         December 12, 1994
          Gail D. Hall

                                  Director         December 12, 1994
         Jerome Heuertz

          BARRY JENSEN            Director         December 12, 1994
          Barry Jensen

         GREG PFENNING            Director         December 12, 1994
         Greg Pfenning

        VONN RICHARDSON           Director         December 12, 1994
        Vonn Richardson

    
          MONTE ROMOHR            Director         December 12, 1994
          Monte Romohr

                                  Director         December 12, 1994
          Joe Royster

         PAUL RUEDINGER           Director         December 12, 1994
         Paul Ruedinger

       RAYMOND J. SCHMITZ         Director         December 12, 1994
       Raymond J. Schmitz

      THEODORE J. WEHRBEIN        Director         December 12, 1994
      Theodore J. Wehrbein

         ROBERT ZINKULA           Director         December 12, 1994
         Robert Zinkula