10-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)

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

     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                       OR

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

     FOR THE TRANSITION PERIOD FROM ________________ TO ________________.

                        COMMISSION FILE NUMBER 333-84486

                               LAND O'LAKES, INC.
             (Exact name of Registrant as Specified in Its Charter)

                                                          
               MINNESOTA                                         41-0365145
    (State or Other Jurisdiction of                           (I.R.S. Employer
     Incorporation or Organization)                          Identification No.)



                                                              
      4001 LEXINGTON AVENUE NORTH
         ARDEN HILLS, MINNESOTA                                     55112
(Address of Principal Executive Offices)                         (Zip Code)



                                 (651) 481-2222
              (Registrant's Telephone Number, Including Area Code)
        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

     Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

     Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 of Section 15(d) of the Act. Yes [X] No [ ]

     Indicate by check mark whether the registrant (1) has filed all report
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Not applicable.

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

     Indicate by check mark whether the registrant is a shell company (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

     Land O'Lakes, Inc. is a cooperative. Our voting and non-voting common
equity can only be held by our members. No public market for voting and
non-voting common equity of Land O'Lakes, Inc. is established and it is
unlikely, in the foreseeable future that a public market for our voting and
non-voting common equity will develop.

     The number of shares of the registrant's common stock outstanding as of
March 1, 2006: 1,000 shares of Class A common stock, 4,050 shares of Class B
common stock, 174 shares of Class C common stock, and 1,004 shares of Class D
common stock.

     Documents incorporated by reference: None.



                                      INDEX

                                                                           
                                     PART I.
         Forward Looking Statements .......................................    3
Item 1.  Business .........................................................    3
         Business Segments ................................................    3
         Description of the Cooperative ...................................   11
Item 1A  Risk Factors .....................................................   17
Item 2.  Properties .......................................................   27
Item 3.  Legal Proceedings ................................................   28
Item 4.  Submission of Matters to a Vote of Security Holders ..............   28

                                    PART II.
Item 5.  Market for Registrant's Common Equity, Related Stockholder
         Matters, and Issuer Purchases of Equity Securities ...............   28
Item 6.  Selected Financial Data ..........................................   29
Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations ............................................   32
Item 7A. Quantitative and Qualitative Disclosures About Market Risk .......   55
Item 8.  Financial Statements and Supplementary Data ......................   56
Item 9.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosure .............................................   56
Item 9A. Controls and Procedures ..........................................   56
Item 9B. Other Information ................................................   57

                                    PART III.
Item 10. Directors and Executive Officers of the Registrant ...............   57
Item 11. Executive Compensation ...........................................   61
Item 12. Security Ownership of Certain Beneficial Owners and Management ...   65
Item 13. Certain Relationships and Related Transactions ...................   66
Item 14. Principal Accountant Fees and Services ...........................   66

                                    PART IV.
Item 15. Exhibits, Financial Statement Schedules ..........................   66
         Signatures .......................................................   69




                                       2


                           FORWARD-LOOKING STATEMENTS

     The information presented in this Annual Report on Form 10-K under the
headings "Item 1. Business" and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation" contains forward-looking
statements. The forward-looking statements are based on the beliefs of our
management as well as on assumptions made by and information currently available
to us at the time the statements were made. When used in the Form 10-K, the
words "anticipate", "believe", "estimate", "expect", "may", "will", "could",
"should", "seeks", "pro forma" and "intend" and similar expressions, as they
relate to us are intended to identify the forward-looking statements. All
forward-looking statements attributable to persons acting on our behalf or us
are expressly qualified in their entirety by the cautionary statements set forth
here and in "Item 1A.- Risk Factors" on pages 17 to 26. We undertake no
obligation to publicly update or revise any forward-looking statements whether
as a result of new information, future events or for any other reason. Although
we believe that these statements are reasonable, you should be aware that actual
results could differ materially from those projected by the forward-looking
statements. For a discussion of factors that could cause actual results to
differ materially from the anticipated results or other expectations expressed
in our forward-looking statements, see the discussion of risk factors set forth
in "Item 1A - Risk Factors" on pages 17 to 26. Because actual results may
differ, readers are cautioned not to place undue reliance on forward-looking
statements.

WEBSITE

     We maintain a website on the Internet through which additional information
about Land O'Lakes, Inc. is available. Our website address is
www.landolakesinc.com. Our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports of Form 8-K, press releases and earnings releases are
available, free of charge, on our website as soon as practicable after they are
released publicly or filed with the SEC.

                                     PART I

ITEM 1. BUSINESS.

     Unless context requires otherwise, when we refer to "Land O'Lakes," the
"Company," "we," "us", or "our," we mean Land O'Lakes, Inc. together with its
consolidated subsidiaries.

OVERVIEW

     In 1921, we were formed as a cooperative designed to meet the needs of
dairy farmers located in the Midwest. We have expanded our business through
acquisitions and joint ventures to diversify our product portfolio, to leverage
our portfolio of brand names, to achieve economies of scale and to extend our
geographic coverage. We operate our business through five segments: Dairy Foods,
Feed, Seed, Agronomy and Layers. Dairy Foods develops, produces, markets and
sells a variety of premium butter, spreads, cheese and other related dairy
products. Feed develops, produces, markets and distributes animal feed to both
the lifestyle and livestock animal markets. Seed develops, markets and sells
seed for a variety of crops, including alfalfa, corn, soybeans and forage and
turf grasses. Agronomy primarily consists of an investment in Agriliance LLC,
which manufactures, markets and distributes crop nutrient and crop protection
products. As of August 2005, the Company sold its entire ownership interest in
CF Industries, Inc., a domestic manufacturer of crop nutrients which was a part
of Agronomy. Layers produces and markets shell and liquid egg products through
MoArk, LLC. On February 25, 2005, we also sold substantially all the assets
related to our swine production business. The Swine assets are reflected as
discontinued operations in our consolidated financial statements. We have
additional operations and interests in a group of joint ventures and investments
that are not consolidated in our five operating segments.

BUSINESS SEGMENTS

     We operate our business in five reportable segments: Dairy Foods, Feed,
Seed, Agronomy, and Layers. For financial information by reportable segment, see
the "Notes to Consolidated Financial Statements" included in this annual report
on Form 10-K.

DAIRY FOODS

     Overview. We produce, market, and sell butter, spreads, cheese and other
related dairy products. We sell our products under our national brand names and
trademarks, including LAND O LAKES, the Indian Maiden logo and Alpine Lace, as
well as under our regional brands such as New Yorker. Our network of 12 dairy
manufacturing facilities is geographically diverse and allows us to support our
customers on a national scale. Our customer base includes national supermarket
and super-center chains, industrial customers, including major food processors,
and major foodservice customers, including restaurants, schools, hotels and
airlines.


                                        3



     Products. We manufacture over 300 dairy-based food products. Our principal
     dairy products include:

          Butter. We produce and market branded butter under our proprietary
     LAND O LAKES brand name for retail and foodservice customers. In addition,
     we produce non-branded butter for our private label and industrial
     customers. Our butter products include salted butter, unsalted butter,
     spreadable butter with canola oil, light butter, whipped butter and
     flavored butter.

          Spreads. We produce and market a variety of spreads, including
     margarine, non-butter spreads and butter blends. These products are
     primarily marketed under the LAND O LAKES brand and are sold to our retail,
     foodservice and industrial customers.

          Cheese. We produce and sell cheese for retail sale in deli and dairy
     cases, to foodservice businesses and to industrial customers. Our deli case
     cheese products are marketed under the LAND O LAKES, Alpine Lace and New
     Yorker brand names. Our dairy case cheese products are sold under the LAND
     O LAKES brand name. We also sell cheese products to private label
     customers. We offer a broad selection of cheese products including cheddar,
     monterey jack, mozzarella, provolone, American and other processed cheeses.

          Other. We manufacture nonfat dry milk and whey for sale to our
     industrial customers. We produce nonfat dry milk by drying the nonfat milk
     byproduct of our butter manufacturing process. It is used in processed
     foods, such as instant chocolate milk. Whey is a valued protein-rich
     byproduct of the cheese-making process which is used in processed foods,
     sports drinks and other nutritional supplements.

          Raw Milk Wholesaling. We purchase raw milk from our members and sell
     it directly to other dairy manufacturers, particularly fluid milk
     processors. We generate substantial revenues but negligible margins on
     these sales. See "Item 7: Management's Discussion and Analysis of Financial
     Condition and Results of Operation -- Wholesaling and Brokerage
     Activities."

          New Products. In February 2005, we introduced LAND O LAKES Light
     Butter with Canola Oil. This new product has 60 percent less cholesterol
     and 50 percent less fat and calories per serving than regular butter.
     Introduced in August 2005 was the FlavorProtect Wrapper for our flagship
     branded butter. We also responded to our Foodservice customers' needs in
     2005 and introduced a full line of reduced-fat school lunch products and a
     reduced-fat blend of butter and margarine.

     Sales, Marketing and Advertising. In order to meet the needs of our retail,
foodservice and industrial customers, sales efforts are specifically designed to
service each of these customer bases. Our retail customers are serviced through
direct sales employees and independent national food brokers. Our retail sales
force consists of approximately 60 employees that service our larger retail
customers, such as supermarket and super-center chains, and manage our national
food broker relationships. We spent $26.4 million on advertising and promotion
for the year ended December 31, 2005.

     Our foodservice products are primarily sold through independent regional
food brokers and food distributors. In addition, we employ approximately 25
salespeople who are responsible for maintaining these regional food broker
relationships and marketing to our large foodservice customers directly.

     We market our products to our industrial customers through five dedicated
salespeople. Our industrial customers generally maintain a direct relationship
with our facility managers in order to coordinate delivery and ensure that our
products meet their specifications

     Distribution. We contract with third-party trucking companies to distribute
our dairy products throughout the United States in refrigerated trucks. Our
dairy products are shipped to our customers either directly from the
manufacturing facilities or from one of our five regional distribution centers
located in New Jersey, Georgia, Illinois, California and Ohio. As most of our
dairy products are perishable, our distribution facilities are designed to
provide necessary temperature controls in order to ensure the quality and
freshness of our products. The combination of our strategically located
manufacturing and distribution facilities and our logistics capabilities enables
us to provide our customers with a highly efficient distribution system.


                                        4



     Production. We produce our dairy products at 11 manufacturing facilities,
including a facility the Company anticipates closing in the first quarter of
2006, strategically located throughout the United States. We also have
contractual arrangements whereby we engage other dairy processors to produce
some of our products. We believe the geographic distribution of our plants
allows us to service our customers in a timely and efficient manner. In 2005, we
processed approximately 7.9 billion pounds of milk, primarily into butter and
cheese. Butter is produced by separating the cream from milk, pasteurizing it
and churning the cream until it hardens into butter. Butter production levels
fluctuate due to the seasonal availability of milk and butterfat. The cheese
manufacturing process involves adding a culture and a coagulant to milk. Over a
period of hours, the milk mixture hardens to form cheese. At that point, whey is
removed and separately processed. Finally, the cheese is salted, shaped and
aged.

     Our largest facility is Cheese and Protein International LLC ("CPI"), a
wholly owned, consolidated subsidiary which produces mozzarella cheese and whey
in Tulare, California. Commercial production commenced in May 2002, and a phase
II expansion that doubled plant capacity was completed during 2004. Through
2004, Land O'Lakes and a subsidiary of Mitsui & Co. (USA) were parties to a
joint venture agreement which gave Mitsui participation interest of
approximately 2.6% of the venture. Mitsui did not have significant control of
the joint venture, but retained a put option allowing Mitsui to sell its
remaining interest to us at original cost, with no interest thereon. In December
2005 Mitsui exercised this put and we paid $3.2 million for the remaining
minority interest in CPI.

     Supply and Raw Materials. Our principal raw material for production of
dairy products is milk. During 2005, we sourced approximately 93% of our raw
milk from our members. We enter into milk supply agreements with all of our
dairy members to ensure our milk supply. These contracts typically provide that
we will pay the producer an advance for the milk during the month of delivery
and then will settle the final price in the following month for an amount
determined by us which typically includes a premium over Federal market order
prices. These contracts provide that we will purchase all of the milk produced
by our members for a fixed period of time, generally one year or less. As a
result, we often purchase more milk from our members than we require for our
production operations. There are three principal reasons for doing this: first,
we need to sell a certain percentage (which is not less than 10% of the amount
procured and depends on which Federal market order the milk is subject to) of
our raw milk to fluid dairy processors in order to participate in the Federal
market order system, which enables us to have a lower input cost for our milk;
second, it decreases our need to purchase additional supply during periods of
low milk production in the United States (typically August, September and
October); and third, it ensures that our members have a market for the milk they
produce during periods of high milk production. We enter into fixed-price
forward sales contracts with some of our large industrial cheese customers which
historically represented 10-15% of our processed milk volume. We simultaneously
enter into milk supply agreements with a fixed price in order to ensure our
margins on these contracts. We also purchase cream, bulk cheese and bulk butter
as raw materials for production of our dairy products. We typically enter into
annual agreements with fluid processors to purchase all of their cream
production. We typically purchase bulk cheese and butter pursuant to annual
contracts. These cheese and butter contracts provide for annual targets and
delivery schedules and are based on market prices. In isolated instances, we
purchase these commodities on the open market at current market prices. We refer
to this type of transaction as a spot market purchase.

     Customers. We sell our dairy products directly and indirectly to over 500
customers. Our products are sold in over 5,000 retail locations, including
supermarkets and super-centers, convenience stores, warehouse club stores and
military commissaries. In addition, we sell our products through food brokers
and distributors to foodservice providers such as major restaurant chains,
schools, hotels and airlines.

     Research and Development. We seek to offer our customers product
innovations designed to meet their needs. In addition, we work on product and
packaging innovations to increase overall demand for our products and improve
product convenience. In 2005, we spent $10.7 million on dairy research and
development, and we employ approximately 65 individuals in research capacities
at our dedicated dairy foods research facility.

     Competition. The bulk of the dairy industry consists of national and
regional competitors. Our branded cheese products compete with products from
national competitors such as Kraft, Borden and Sargento as well as several
regional competitors. For butter, our competition comes primarily from regional
brands, such as Challenge and Kellers, and from private label products. We face
increased competitive pressures because our retail customers are consolidating.
We rely on the strength of our brands to help differentiate our products from
our competition. We believe our branded products compete on the basis of brand
name recognition, product quality and reputation and customer support. Products
in the private label and industrial markets compete primarily based on price. We
believe our product quality and consistency of supply distinguishes our products
in these markets.


                                        5



FEED

     Overview. Through Land O'Lakes Purina Feed, we manufacture and market feed
for both the commercial and lifestyle sectors of the animal feed market in the
United States. Our commercial feed products are used by farmers and specialized
livestock producers who derive income from the sale of milk, eggs, poultry and
livestock. Our lifestyle feed products are used by customers who own animals
principally for non-commercial purposes. Margins on our lifestyle feed products
are significantly higher than those on our commercial feed products. We market
our lifestyle animal feed products, other than dog and cat food, under the
brands Purina, Chow and the "Checkerboard" Nine Square logo. We also market our
animal feed products under the LAND O LAKES Feed label. We operate a
geographically diverse network of 76 feed mills, which permits us to distribute
our animal feed nationally through our network of approximately 1,430 local
member cooperatives, approximately 3,300 independent dealers operating under the
Purina brand name and directly to customers.

     We believe we are a leader among feed companies in animal feed research and
development with a focus on enhancing animal performance, productive capacity
and early stage development. For example, we developed and introduced milk
replacer products for young animals, and our patented product formulations make
us the only supplier of certain milk replacer products. These products allow
dairy cows to return to production sooner after birthing and increase the annual
production capacity of cows. Other than certain insignificant investments and
sales, we operate our feed business entirely through our Land O'Lakes Purina
Feed entity.

     Products. We sell commercial and lifestyle animal feed which are based upon
proprietary formulas. We also produce commercial animal feed to meet our
customers' specifications. We sell feed for a wide variety of animals, such as
dairy cattle, beef cattle, swine, poultry, horses and other specialty animals
such as laboratory and zoo animals. Our principal feed products and activities
include:

          Complete Feed. These products provide a balanced mixture of grains,
     proteins, nutrients and vitamins which meet the entire nutritional
     requirement of an animal. They are sold as ground meal, in pellets or in
     extruded pieces. Sales of complete feeds typically represent the majority
     of net sales. We generally sell our lifestyle animal feed as complete feed.
     We market our lifestyle animal feed through the use of our trademarks,
     namely, Purina, Chow and the "Checkerboard" Nine Square logo.

          Supplements. These products provide a substantial part of a complete
     ration for an animal, and typically are distinguished from complete feed
     products by their lack of the bulk grain portion of the feed. Commercial
     livestock producers typically mix our supplements with their own grain to
     provide complete animal nutrition.

          Premixes. These products are concentrated additives for use in
     combination with bulk grain and a protein source, such as soybean meal.
     Premixes consist of a combination of vitamins and minerals that are sold to
     commercial animal producers and to other feed mill operators for mixing
     with bulk grains and proteins.

          Simple Blends. These products are a blend of processed commodities,
     generally steam-rolled corn or barley that are mixed at the producer's
     location with a feed supplement to meet the animal's nutritional
     requirements. These products are highly price competitive and generally
     have low margins. These products are primarily used by large dairies in the
     Western United States.

          Milk Replacers. Milk replacers are sold to commercial livestock
     producers to meet the nutritional requirements of their young animals while
     increasing their overall production capability by returning the parent
     animal to production faster. We market these products primarily under our
     Maxi Care, Cow's Match and Amplifier Max brand names. We have patents that
     cover certain aspects of our milk replacer and other products and processes
     which have expirations through 2018.

          Ingredient Merchandising. In addition to selling our own products, we
     buy and sell or broker for a fee soybean meal and other feed ingredients.
     We market these ingredients to our local member cooperatives and to other
     feed manufacturers, which use them to produce their own feed. Although this
     activity generates substantial revenues, it is a very low-margin business
     with a minimal capital investment. We are generally able to obtain feed
     inputs at a lower cost as a result of our ingredient merchandising business
     because of lower per unit costs associated with larger purchases and volume
     discounts.


                                        6



     Sales, Marketing and Advertising. We employ approximately 400 direct
salespeople in regional territories. In our commercial feed business, we provide
our customers with information and technical assistance through trained animal
nutritionists whom we either employ or have placed with our local member
cooperatives. Our advertising and promotional expenditures are focused on higher
margin products, specifically our lifestyle animal feed and milk replacers. We
advertise in recreational magazines to promote our lifestyle animal feed
products. To promote our horse feed products, we have dedicated promoters who
travel to rodeos and other horse related events. We promote our milk replacers
with print advertising in trade magazines. We spent $18.2 million on advertising
and promotion for the year ended December 31, 2005.

     Distribution. We distribute our animal feed nationally primarily through
our network of approximately 1,430 local member cooperatives and approximately
3,300 Purina-branded dealers or directly to customers. We deliver our products
primarily by truck using independent carriers, supplemented by our own fleet.
Deliveries are made directly from our feed mills to delivery locations within
each feed mill's geographic area.

     Production. The basic feed manufacturing process consists of grinding
various grains and protein sources into meal and then mixing these materials
with certain nutritional additives, such as vitamins and minerals. The resulting
products are sold in a variety of forms, including meal, pellets, blocks and
liquids. Our products are formulated based upon proprietary research pertaining
to nutrient content. As of December 31, 2005 we operated 76 feed mills across
the United States. Consistent with current industry capacity utilization, many
of our facilities operate below their capacity.

     Supply and Raw Materials. We purchase the bulk components of our products
from various suppliers. These bulk components include corn, soybean meal and
grain byproducts. In order to reduce transportation costs, we arrange for
delivery of these products to occur at our feed mill operations throughout the
United States. We purchase vitamins and minerals from multiple vendors,
including vitamin, pharmaceutical and chemical companies.

     Customers. Our customers primarily include large commercial corporations,
local cooperatives, private feed dealers and individual producers. In the case
of local cooperatives, the cooperative either uses these products in their own
feed manufacturing operations or resells them to their customers. Our customers
purchase animal feed products from us for a variety of reasons, including our
ability to provide products that fulfill some or all of their animals'
nutritional needs, our knowledge of animal nutrition, our ability to maintain
quality control and our available capacity.

     Research and Development. Our animal feed research and development focuses
on enhancing animal performance, productive capacity and early stage
development. Additionally, we dedicate significant resources to developing
proprietary formulas that allow us to offer our commercial customers alternative
feed formulations using lower cost ingredients. We employ 90 people in various
animal feed research and development functions at our research and development
facilities. In 2005, we spent $11.0 million on research and development.

     Competition. The animal feed industry is highly fragmented. Our competitors
consist of many small local manufacturers, several regional manufacturers and a
limited number of national manufacturers. The available market for commercial
feed may become smaller and competition may increase as meat processors and
livestock producers become larger and integrate their business by acquiring or
constructing their own feed production facilities. In addition, purchasers of
commercial feed tend to select products based on price and performance and some
of our feed products are purchased from other third parties. As a result of
these factors, the barriers to entry in the feed industry are low. Distribution
for lifestyle feed is also consolidating as major national chain retailers enter
this market. We believe we distinguish ourselves from our competitors through
our high-performance, value-added products, which we research, develop and
distribute on a national basis. Our brands, Purina, Chow and the "Checkerboard"
Nine Square logo, provide us with a competitive advantage, as they are
well-recognized, national brands for lifestyle animal feed. We also compete on
the basis of service by providing training programs, using animal nutritionists
with advanced technical qualifications to consult with local member
cooperatives, independent dealers and livestock producers, and by developing and
manufacturing customized products to meet customer needs.

SEED

     Overview. We sell seed for a variety of crops, including alfalfa, soybeans
and corn, under our CROPLAN GENETICS brand. We also distribute certain crop seed
products under third- party brands, including Northrop King, Asgrow and Dekalb,
and under private labels. We distribute our seed products through our network of
local member cooperatives, to other seed companies, to retail distribution
outlets and under private labels. We have strategic relationships with Syngenta
and Monsanto, two crop seed producers in the United States, to which we provide
distribution and research and development services.


                                        7



     Products. We develop, produce and distribute seed products including seed
for alfalfa, soybeans, corn and forage and turf grasses. We also market and
distribute seed products produced by other crop seed companies, including seed
for corn, soybeans, sunflowers, canola, sorghum and sugar beets. Seed products
are often genetically engineered through selective breeding or gene splicing to
produce crops with specific traits. These traits include resistance to
herbicides and pesticides and enhanced tolerance to adverse environmental
conditions. As a result of our relationships with certain life science
companies, we believe we have access to one of the most diverse genetic
databases of any seed company in the industry. We also license some of our
proprietary alfalfa seed traits to other seed companies for use in their seed
products. In 2005, RoundUp Ready Alfalfa received US regulatory approval and was
introduced into the market shortly thereafter. This product was the result of
over 10 years of research in collaboration with Monsanto.

     Sales, Marketing and Advertising. We have a sales force of approximately
130 employees who promote the sale of our seed products throughout the country,
particularly in the Midwest. Our sales and marketing strategy is built upon the
relationships we have established with our local member cooperatives and our
ability to purchase and distribute quality seed products at a low cost. We
market our crop seed products under our brand name CROPLAN GENETICS. We also
distribute certain crop seed products under third-party brands, including
Northrop King, Asgrow and DeKalb, and under private labels. We engage in a
limited amount of advertising, primarily utilizing marketing brochures and field
signs. We are a leader in online customer communications and order processing.
We also participate in the Total Farm Solutions program with our affiliate,
Agriliance. Through this program, trained agronomists are placed at local
cooperatives to provide advisory services regarding crop seed and agronomy
products. We do not have any long-term commitments associated with this program.
We spent $5.6 million on advertising and promotion for the year ended December
31, 2005.

     Distribution. We distribute our seed products through our network of local
member cooperatives, to other seed companies and to retail distribution outlets.
We have strategic relationships with Syngenta and Monsanto, two leading crop
seed producers in the United States, to which we provide distribution and
research and development services. We also sell our proprietary products under
private labels to other seed companies for sale through their distribution
channels. Additionally, several of our product lines (particularly turf grasses)
are sold to farm supply retailers and home and garden centers. We use
third-party trucking companies for the nationwide distribution of our seed
products.

     Supply and Production. Our alfalfa, soybeans, corn and forage and turf
grass seed are produced to our specifications and under our supervision on farms
owned by us and by geographically diverse third-party producers. We maintain a
significant inventory of corn and alfalfa seed products in order to mitigate
negative effects caused by weather or pests. Our alfalfa and corn seed products
can be stored for up to four years after harvesting. Our seed segment has
foreign operations in Argentina and Canada.

     Customers. We sell our seed products to over 6,000 customers, none of which
represented more than 4% of our crop seed net sales in 2005. Our customers
consist primarily of our local member cooperatives and other seed companies
across the United States and internationally. Our customer base also includes
retail distribution outlets.

     Research and Development. We focus our research efforts on crop seed
products for which we have a significant market position, particularly alfalfa
seed. We also work with other seed companies to jointly develop beneficial crop
seed traits. In 2005, we spent $8.3 million on crop seed research and
development.

     Competition. Our competitors include Pioneer, Monsanto and Syngenta as well
as many small niche seed companies. We differentiate our seed business by
supplying a branded, technologically advanced, high quality product, and by
providing farmers with access to agronomists through our joint Total Farm
Solutions program with Agriliance. These Agronomists provide crop production
consultation to farmers who may or may not be our customers. Such services are
increasingly important as the seed industry becomes more dependent upon
biotechnology and crop production becomes more sophisticated. Due to the added
cost involved, our competitors, with the exception of Pioneer, generally do not
provide such services. We can provide these services at a relatively low cost
because we often share the costs of an agronomist with Agriliance or with a
local cooperative.


                                        8



AGRONOMY

     Historically, our agronomy segment has consisted primarily of our joint
venture in Agriliance and our investment in CF Industries, Inc. In 2005,
however, we sold our entire interest in CF Industries, Inc., a domestic
manufacturer of crop nutrients, for $315.5 million in cash, which resulted in a
gain on sale of investment of $102.4 million. Our investment in Agriliance is
accounted for under the equity method, and accordingly, our Agronomy segment has
no net sales, but we allocate overhead to selling and administrative expense and
may recognize patronage as a reduction in cost of sales. Additional information
regarding Agriliance is provided below under the caption in "Item 1. Business --
Joint Ventures and Investments -- Agriliance LLC". For a discussion of our
agronomy accounting and results see "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of
Operation--Overview--General--Unconsolidated Businesses."

LAYERS

     Overview. Our layers segment consists solely of our MoArk, LLC ("MoArk")
subsidiary, which produces and markets shell eggs and egg products. Through June
30, 2003, we carried a 50% ownership interest in MoArk under the equity method
and the remaining interest was owned by Osborne Investments, LLC ("Osborne"). In
2003, we increased our ownership from 50% to 57.5% with an additional investment
of $7.8 million; and in accordance with the provisions of FIN 46, "Consolidation
of Variable Interest Entities," effective July 1, 2003, MoArk was consolidated
into our financial statements. Although Osborne held a 42.5% ownership interest
in MoArk, the Company was allocated 100% of the earnings or loss from the
operations of MoArk.

     Land O'Lakes held a right to acquire (and Osborne held the right to require
the Company to acquire) the remaining 42.5% of MoArk owned by Osborne for a
$42.2 million minimum payment in 2007, plus an additional amount related to
market conditions. In 2005, Land O'Lakes and Osborne agreed to accelerate the
transfer of ownership. In January 2006, we purchased the remaining 42.5%
minority interest in MoArk for $71.0 million in cash. Accordingly, a $71.0
million accrued expense liability was included in the consolidated balance sheet
at December 31, 2005.

     In April 2004, we announced our intention to reposition our Layers
operations. As part of this effort, in the fourth quarter of 2005 we committed
to a plan to sell a portion of our Layers net assets. Management expects the
asset repositioning to occur within a year. Accordingly, certain assets and
liabilities were presented as assets held for sale in the consolidated financial
statements at December 31, 2005.

     Products. MoArk produces and markets shell eggs and egg products that are
sold to retail and wholesale customers for consumer and industrial use
throughout the United States. MoArk markets and processes 629 million dozen eggs
from approximately 26 million layers (hens) and owns approximately 12 million
layers (hens) which produce approximately 368 million dozen eggs annually. As
noted, approximately 45% of the eggs and egg products marketed are produced by
layers owned by MoArk. The remaining 55% are purchased on the spot market or
from third-party producers. Shell eggs represent approximately 74% of eggs MoArk
sells annually, and the balance are broken for use in egg products such as
refrigerated liquid, frozen, dried and extended shelf life liquid.

     Customers and Distribution. MoArk has approximately 600 retail grocery,
industrial, foodservice and institutional customers. While supply contracts
exist with a number of the larger retail organizations, the terms are typically
market based annual contracts and allow early cancellation by either party.
MoArk primarily delivers directly to its customer (including store door
delivery). Alternatively, some customers pick up product at one of MoArk's
facilities.

     Sales and Marketing. MoArk's internal sales force maintains direct
relationships with customers. MoArk also uses food brokers to maintain select
accounts and for niche and "spot" activity in situations where MoArk cannot
effectively support the customer or needs to locate a customer or customers for
excess products. With the exception of the advertising activity associated with
the launch of the LAND O LAKES brand eggs, amounts spent for advertising are
insignificant.

     Competition. MoArk competes with other egg processors, including Cal-Maine
Foods, Rose Acre Farms, Inc. and Michael Foods. MoArk competes with these
companies based upon its low cost production system, its high margin regional
markets and its diversified product line.

OTHER

     We also operate several other wholly owned businesses reflected in the
Other segment, such as our LOL Finance Co. and its subsidiary, LOLFC, LLC, which
provide operating loans and facility financing to farmers and livestock
producers.


                                        9



JOINT VENTURES AND INVESTMENTS

     The joint ventures and investments described below are unconsolidated.

AGRILIANCE LLC

     Agriliance, a 50/50 joint venture with CHS Inc., was formed for the
purposes of distributing and manufacturing agronomy products. Prior to the
contribution of our agronomy assets to Agriliance in July 2000, the financial
results of these assets were consolidated for financial reporting purposes.

     Products. Agriliance markets and sells two primary product lines: crop
nutrients (including fertilizers and micronutrients) and crop protection
products (including herbicides, pesticides, fungicides and adjuvants). For
Agriliance's fiscal year ended August 31, 2005, approximately 92% of these
products were manufactured by third-party suppliers and marketed under the
suppliers' brand names. The remaining 8% was either manufactured by Agriliance
or by a third-party supplier and marketed under the brand names AgriSolutions
(for herbicides, pesticides and related products) and Origin (for
micronutrients).

     Sales and Marketing. Agriliance has an internal sales force of
approximately 320 employees. Agriliance's sales and marketing efforts serve the
entire United States and focus on areas in the Midwest, the Southeast, and the
eastern Corn Belt. Agriliance's strategy is built upon strong relationships with
local cooperatives and Agriliance's ability to purchase and distribute quality
agronomy products at a low cost. Agriliance engages in a limited amount of
advertising in trade journals and produces marketing brochures and
advertisements utilized by local cooperatives. In addition, Agriliance assists
local member cooperatives and independent farmers by identifying, recruiting and
training agronomists who provide advice relating to agronomy products. In the
Midwest, Agriliance has implemented the Total Farm Solutions program, an effort
to utilize the expertise of the agronomists to bundle Agriliance products with
our seed products.

     Production, Source of Supply and Raw Materials. Agriliance operates
primarily as a wholesale distributor of products purchased from other
manufacturers. Agriliance's primary suppliers of crop protection products are
Syngenta, Monsanto, BASF, Dow Chemical, DuPont and Bayer. Agriliance enters into
annual distribution agreements with these manufacturers. However, Agriliance
manufactures approximately 33% of its proprietary crop protection products.
Agriliance's production facilities are located in Iowa, Arkansas and Missouri.
Agriliance procures approximately 31% of its fertilizer needs from CF
Industries. In 2005, Agriliance began purchasing UREA and UAN product from
international suppliers. The majority of the tons were purchased from
Petrochemical Industries Company - Kuwait. Agriliance sources its remaining
fertilizer supply needs from a variety of suppliers including PCS, Mosaic, Terra
Nitrogen, Koch and Agrium. Agriliance also produces micronutrient products. In
2005, approximately 32% of Agriliance's agronomy products were sourced from
three suppliers.

     Customers and Distribution. Agriliance's customer base consists primarily
of farmers, many of whom are members of our cooperative. Agriliance distributes
its products through our local member cooperatives and also through retail
agronomy centers owned by Agriliance. Agriliance stores inventory at a number of
strategically positioned locations, including leased warehouses and storage
space at local cooperatives. Agriliance serves most of the key agricultural
areas of the United States, with its customers and distribution concentrated in
the Midwest.

     Competition. Agriliance's primary competitors are national crop nutrient
distributors, such as Helena, UAP, Agrium, Wilbur-Ellis, Koch, Mosaic and
Royster Clark, as well as smaller regional brokers and distributors. The
wholesale agronomy industry is consolidating as distributors attempt to expand
their distribution capabilities and efficiencies. Wholesale agronomy customers
tend to purchase products based upon a distributor's ability to provide ready
access to product at critical times prior to and during the growing season. In
addition, certain customers purchase on the basis of price. We believe
Agriliance distinguishes itself from its competitors as a result of its
distribution network, which enables it to efficiently distribute product to
customers. In addition, Agriliance provides access to trained agronomists who
give advice to farmers on both agronomy and crop seed products to optimize their
crop production.


                                       10



Governance. Agriliance is managed by a four member board of managers. Land
O'Lakes and CHS Inc., each with 50% ownership positions, have the right to
appoint two of the managers. Certain actions require the unanimous approval of
the board, including (1) adopting or amending the annual business plan; (2)
distributing products produced by Agriliance to anyone other than the members or
patrons of Agriliance's members; (3) approving capital expenditures related to
the expansion of Agriliance's production capabilities, purchasing additional
inventory or changing the types of products produced by Agriliance; (4)
incurring indebtedness other than in the ordinary course of business; (5)
appointing, replacing, or discharging an executive officer; (6) making
distributions to members; and (7) changing income tax or special accounting
elections. Pursuant to the terms of Agriliance's operating agreement, Land
O'Lakes and CHS Inc. have each agreed to refrain from directly or indirectly
engaging in the wholesale marketing of fertilizer and agricultural chemicals in
North America, except through Agriliance, for so long as they, or an entity in
which they are a material owner, remain a member of Agriliance, and for a period
of four years following termination of their membership.

ADVANCED FOOD PRODUCTS, LLC

     We own a 35% interest in Advanced Food Products, a joint venture which
manufactures and markets a variety of custom and non-custom aseptic products.
Aseptic products are manufactured to have extended shelf life through
specialized production and packaging processes, enabling food to be stored
without refrigeration until opened. We formed Advanced Food Products in 2001,
with a subsidiary of Bongrain, S.A., a French food company, for the purpose of
manufacturing and marketing aseptically packaged cheese sauces, snack dips,
snack puddings, and ready to drink dietary beverages. The venture is governed by
a six member board of managers, and we have the right to appoint two members.
Bongrain manages the day-to-day operations of the venture. As of December 31,
2005, our investment in Advanced Food Products had a book value of $31.9 million
and is accounted for under the equity method. The Operating Agreement governing
the joint venture provides that, at any time after February 28, 2006, the
Company may put its membership interest in the joint venture to the other
member, or the other member may call the Company's membership interest in the
joint venture at a price determined by the joint venture's recent operating
performance.

COBANK

     CoBank is a cooperative lender of which we are a member. Our equity
interest in CoBank and the amount of patronage we receive is dependent upon our
outstanding borrowings from CoBank. As of December 31, 2005, our investment in
CoBank had a book value of $10.7 million and is accounted for under the cost
method.

AG PROCESSING INC

     Ag Processing Inc is a cooperative that produces soybean meal and soybean
oil. As a member of Ag Processing Inc, we are entitled to patronage based upon
our purchases of these products. We use soybean meal as an ingredient in our
feed products. Soybean oil is an ingredient used to produce our dairy spread
products. As of December 31, 2005, our investment in Ag Processing Inc had a
book value of $35.8 million and is accounted for under the cost method.

DESCRIPTION OF THE COOPERATIVE

     Land O'Lakes is incorporated in Minnesota as a cooperative corporation.
Cooperatives resemble traditional corporations in most respects, but with two
primary distinctions. First, a cooperative's common shareholders, its "members,"
supply the cooperative with raw materials, and/or purchase its goods and
services. Second, to the extent a cooperative allocates its earnings from member
business to its members and meets certain other requirements, it is allowed to
deduct this "patronage income," known as "qualified" patronage income, from its
taxable income. Patronage income is allocated in accordance with the amount of
business each member conducts with the cooperative.

     Cooperatives typically derive a majority of their business from members,
although they are allowed by the Internal Revenue Code to conduct non-member
business. Earnings from non-member business are retained as permanent equity by
the cooperative and taxed as corporate income in the same manner as a typical
corporation. Earnings from member business are either allocated to patronage
income or retained as permanent equity (in which case it is taxed as corporate
income) or some combination thereof.

     In order to obtain favorable tax treatment on allocated patronage income,
the Internal Revenue Code requires that at least 20% of each member's annual
allocated patronage income be distributed in cash. The portion of patronage
income that is not distributed in cash is retained by the cooperative, allocated
to member equities and distributed to the member at a later time as a
"revolvement" of equity. The cooperative's members must recognize the amount of
allocated patronage income (whether distributed to members or retained by the
cooperative) in the computation of their individual taxable income.


                                       11



     At their discretion, cooperatives are also allowed to designate patronage
income as "nonqualified" patronage income and allocate it to member equities.
Unlike qualified patronage income, the cooperative pays taxes on this
nonqualified patronage income as if it was derived from non-member business. The
cooperative's members do not include undistributed nonqualified patronage income
in their current taxable income. However, the cooperative may revolve the equity
representing the nonqualified patronage income to members at some later date,
and is allowed to deduct those amounts from its taxable income at that time.
When nonqualified patronage income is revolved to the cooperative's members, the
revolvement must be included in the members' taxable income.

OUR STRUCTURE AND MEMBERSHIP

     We have both voting and nonvoting members, with differing membership
requirements for cooperative and individual members. We also separate our
members into two categories: "dairy members" supply our dairy foods segment with
dairy products, primarily milk, cream, cheese and butter, and "ag members"
purchase agricultural products, primarily agronomy products, feed and seed from
our other operations or joint ventures. We further divide our dairy and ag
members by region. There are seven dairy regions and five ag regions.

     All our members must acquire stock and comply with uniform conditions
prescribed by our board of directors and by-laws. The board of directors may
terminate a membership if it determines that the member has failed to adequately
patronize us or has become our competitor.

     A cooperative voting member (a "Class A" member) must be an association of
producers of agricultural products operating on a cooperative basis engaged in
either the processing, handling, or marketing of its members' products or the
purchasing, producing, or distributing of farm supplies or services. Class A
members are entitled to a number of votes based on the amount of business done
with the Company. Class A members tend to be ag members, although a Class A
member may be both an ag and dairy member if they both supply us with dairy
products and purchase agricultural products from us or our joint ventures.

     An individual voting member (a "Class B" member) is an individual,
partnership, corporation or other entity other than a cooperative engaged in the
production of agricultural commodities. Class B members are entitled to one
vote. Class B members tend to be dairy members. Class B members may be both an
ag and dairy member if they both provide us with dairy products and purchase
agricultural products from us or our joint ventures.

     Our nonvoting cooperative members ("Class C" members) are associations
operating on a cooperative basis but whose members are not necessarily engaged
in the production or marketing of agricultural products. Such members are not
given the right to vote, because doing so may jeopardize our antitrust exemption
under the Capper-Volstead Act (the exemption requires all our voting members be
engaged in the production or marketing of agricultural products). Class C
members also include cooperatives which are in direct competition with us.

     Nonvoting individual members ("Class D" members) generally do a low volume
of business with us and are not interested in our governance.

GOVERNANCE

     Our board is made up of 24 elected directors. Our dairy members nominate 12
directors from among the dairy members and our ag members nominate 12 directors
from among the ag members. The nomination of directors is conducted within each
group by region. The number of directors nominated from each region is based on
the total amount of business conducted with the cooperative by that region's
members. Directors are elected to four year terms at our annual meeting by
voting members in a manner similar to a typical corporation. Our by-laws require
that, at least every five years, we evaluate both the boundaries of our regions
and the number of directors from each region, so that the number of directors
reflects the proportion of patronage income from each region.

     The board may also choose to elect up to three non-voting advisory members.
Currently, we have two such members. The board governs our affairs in the same
manner as the boards of corporations that are not organized as cooperatives.


                                       12



EARNINGS

     As described above, we divide our earnings between member and non-member
business and then allocate member earnings to dairy foods operations or
agricultural operations (our Feed, Seed and Agronomy segments). For our dairy
foods operations, the amount of member business is based on the amount of dairy
products supplied to us by our dairy members. In 2005, 71.2% of our dairy input
requirements came from our dairy members. For our agricultural operations, the
amount of member business is based on the dollar-amount of products sold to our
agricultural members. In 2005, 39.5% of our agricultural product net sales, and
93.2% of our agricultural pretax income was derived from sales to agricultural
members.

PATRONAGE INCOME AND EQUITY

     To acquire and maintain adequate capital to finance our business, our
by-laws allow us to retain up to 15% of our earnings from member business as
additions to retained earnings (permanent equity) or offsets to deferred member
equities. We currently retain 10% and apply the remainder of our earnings from
member business to allocated member equities.

     We have two plans through which we revolve patronage income to our members:
the Equity Target Program for our dairy foods operations and the Revolvement
Program for our agriculture businesses.

     The Equity Target Program provides a mechanism for determining the capital
requirements of our dairy foods operations and each dairy member's share of
those requirements. The board of directors has established an equity target
investment of $2.75 per hundred pounds of milk (or milk equivalent) delivered
per year by that member to us. We distribute 20% of allocated patronage income
to a dairy member annually until the investment target is reached by that
member. The remaining 80% of allocated patronage income is retained and
allocated to member equities and revolved in the twelve years after the member
becomes inactive. When the member's equity investment reaches the target, and
for as long as the member's equity target investment is maintained, we
distribute 100% of the member's future allocated patronage income. The equity
target as well as the revolvement period may be changed at the discretion of the
board.

     In 2005, we allocated $9.8 million of our member earnings to our dairy
members as a qualified allocation with an estimated $2.4 million in cash to be
paid in 2006. There was also a nonqualified loss of $3.6 million not allocated.
We also revolved $14.6 million of equities and paid $5.0 million of cash
patronage related to prior year's earnings to dairy members. In 2004, we
allocated $21.6 million of our member earnings to dairy members with an
estimated $5.6 million to be paid in cash in 2005. We also revolved $15.4
million of equities in 2004.

     In the Revolvement Program for our agricultural businesses, we currently
distribute 30% of allocated patronage income in cash and retain and allocate the
remaining 70% to member equity. This equity is currently revolved 13 1/2 years
later. Both the amount distributed in cash and the revolvement period are
subject to change by our board. In 2005, we allocated $112.0 million of our
member earnings to our agricultural members (which included $70.9 million of
patronage income from operations, an allocation of $31.8 million offsetting the
2004 patronage loss related to the loss on impairment of investment and a $9.3
million nonqualified patronage allocation) with estimated $21.3 million in cash
to be paid in 2006. We also paid $10.1 million of cash patronage related to
prior year's earnings in 2005. In 2004, we allocated $2.1 million of our member
earnings to our agricultural members (which included $33.9 million of patronage
income from operations and $31.8 million of patronage losses related to loss on
impairment of investment) with estimated $10.2 million in cash to be paid in
2005. We also paid $9.1 million of cash patronage related to prior year's
earnings in 2004. In 2004 and 2003 our board did not revolve agriculture member
equities.

     Our estate redemption policy provides that we will redeem equity holdings
of deceased natural persons upon the demise of the owner. The Company's age
retirement policy provides that we will redeem in full equity holdings of dairy
members who are natural persons when the member reaches age 75 or older. Subject
to various requirements, we may redeem the equity holdings of members in
bankruptcy or liquidation. All proposed equity redemptions must be presented to,
and are subject to the approval of, our board of directors before payment. In
connection with these programs, we redeemed $4.9 million in 2005 and $7.0
million in 2004.

EMPLOYEES

     At March 1, 2006, we had approximately 7,500 employees, approximately 23%
of whom were represented by unions having national affiliations. Our contracts
with these unions expire at various times throughout the next several years. We
consider our relationship with employees to be generally satisfactory. We have
had no labor strikes or work stoppages within the last five years.


                                       13



PATENTS, TRADEMARKS AND INTELLECTUAL PROPERTY

     We rely on patents, copyrights, trademarks, trade secrets, confidentiality
provisions and licensing arrangements to establish and protect our intellectual
property. We believe that in addition to certain patented processes, the
formulas and production methods of our dairy foods products are trade secrets.
We also have patented formulations and processes for our milk replacer products
and deem our feed product formulations to be proprietary.

     We own a number of registered and unregistered trademarks used in
connection with the marketing and sale of our food products, as well as our
feed, seed and egg products including LAND O LAKES, the Indian Maiden logo,
Alpine Lace, New Yorker, Extra Melt, CROPLAN GENETICS, Maxi Care, Amplifier Max,
Cow's Match, Omolene and MoArk. Land O'Lakes Purina Feed licenses certain
trademarks from Land O'Lakes, including LAND O LAKES, the Indian Maiden logo,
Maxi Care, Cow's Match and Amplifier Max, for use in connection with its animal
feed and milk replacer products. We license the trademarks Purina, Chow and the
"Checkerboard" Nine Square logo from Nestle Purina PetCare Company under a
perpetual, royalty-free license. This license only gives us the right to use
these trademarks for particular products that we currently market with these
trademarks. We do not have the right to use these trademarks outside of the
United States or in conjunction with any products designed primarily for use
with cats, dogs or humans. We do not have the right to assign any of these
trademarks without the written consent of Nestle Purina PetCare Company. These
trademarks are important to us because brand name recognition is a key factor to
our success in marketing and selling our feed products. The registrations of
these trademarks in the United States and foreign countries are effective for
varying periods of time, and may be renewed periodically, provided that we, as
the registered owner, or our licensees, where applicable, comply with all
pertinent renewal requirements including, where necessary, the continued use of
the trademarks in connection with similar goods.

     In 2002, we expanded our licensing agreement with Dean Foods. Under the
expanded agreement, Dean Foods is granted exclusive rights to use the LAND O
LAKES brand and the Indian Maiden logo in connection with the manufacturing,
marketing, promotion, distribution and sale of certain products, including, but
not limited to, basic dairy products (milk, yogurt, cottage cheese, ice cream,
eggnog, juices and dips), creams, small bottle milk, infant formula products and
soy beverage products. Dean Foods is also granted the right to use the Company's
patented Grip 'n Go bottle and the Company's formula to fat-free half & half.
With respect to the basic dairy products and the small bottle milk, the license
is granted on a royalty-free basis. With respect to the remaining products
covered by the license agreement, Dean Foods pays a sales-based royalty, based
on volumes sold, subject to a guaranteed minimum annual royalty payment. In
addition, the license agreement is terminable by either party in the event that
certain minimum thresholds are not met on an annual basis.

     We have patented formulations and processes for our milk replacer and other
feed products which have expirations through 2018.

     We have also entered into other license agreements with other affiliated
and unaffiliated companies, such as MoArk, which permit these companies to
utilize our trademarks in connection with the marketing and sale of certain
products.

ENVIRONMENTAL MATTERS

     We are subject to various Federal, state, local and foreign environmental
laws and regulations, including those governing discharges of pollutants into
the air or water and the use, storage and disposal of hazardous materials or
wastes. Violations of these laws and regulations, or of the permits required for
our operations, may lead to civil and criminal fines and penalties or other
sanctions. For example, we are intermittently exceeding certain wastewater
discharge limitations at the Cheese and Protein International, LLC facility in
California and, as a result, have paid penalties or surcharges, to the City of
Tulare. To date, approximately $6.0 million was spent on the process systems,
contractors, and architectural work required to address the wastewater treatment
issues, with approximately $0.5 million estimated to be spent in 2006 to
complete the project. Based on wastewater compliance status, a portion of the
surcharges are returned to the facility for capital projects related to the
wastewater issue.


                                       14



     Environmental laws and regulations may also impose liability for the
cleanup of environmental contamination. We generate large volumes of waste
water, we use regulated substances in operating our manufacturing equipment, and
we use and store other chemicals on site (including acids, caustics, fuels, oils
and refrigeration chemicals). Agriliance stores petroleum products and other
chemicals on-site (including fertilizers, pesticides and herbicides). Spills or
releases resulting in significant contamination, or changes in environmental
regulations governing the handling or disposal of these materials, could result
in significant costs that could have an impact on our business, financial
condition or results of operations.

     Many of our current and former facilities have been in operation for many
years, and over time, we and other operators of those facilities have generated,
used, stored, or disposed of substances or wastes that are or might be deemed
hazardous under applicable environmental laws, including chemicals and fuel
stored in underground and above-ground tanks, animal wastes and large volumes of
wastewater discharges. As a result, the soil and groundwater at or under certain
of our current and former facilities (and/or in the vicinity of such facilities)
is or may be contaminated, and we may be required in the future to make
significant expenditures to investigate, control and remediate such
contamination.

     We are also potentially responsible for environmental conditions at a
number of former facilities and at waste disposal facilities operated by third
parties. We have been identified as a Potentially Responsible Party ("PRP")
under the federal Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA" or "Superfund") or similar state laws and have
unresolved liability with respect to the past disposal of hazardous substances
at several such sites. CERCLA imposes strict, joint and several liability on
certain statutory classes of persons, meaning that one party may be held
responsible for the entire cost of investigating and remediating contaminated
properties, regardless of fault or the legality of the original disposal. These
persons include the present and former owners or operators of a contaminated
property, and companies that generated, disposed of, or arranged for the
disposal of hazardous substances found at the property. We have contested our
liability at a Superfund site, as to which we have declined to pay past response
costs associated with an ongoing site study.

     We have, on average, paid less than $500,000 in each of the last five years
for investigation and remediation of environmental matters, including Superfund
and related matters. Expenditures for such activities could rise materially if
substantial additional contamination is discovered at any of our current or
former facilities or if other PRPs fail or refuse to participate in cost sharing
at any Superfund site, or similar disposal site, at which we are implicated.

REGULATORY MATTERS

     We are subject to Federal, state and local laws and regulations relating to
the manufacturing, labeling, packaging, health and safety, sanitation, quality
control, fair trade practices, and other aspects of our business. In addition,
zoning, construction and operating permits are required from governmental
agencies which focus on issues such as land use, environmental protection, waste
management, and the movement of animals across state lines. These laws and
regulations may, in certain instances, affect our ability to develop and market
new products and to utilize technological innovations in our business. In
addition, changes in these rules might increase the cost of operating our
facilities or conducting our business which would adversely affect our finances.

     Our dairy business is affected by Federal price support programs and
federal and state pooling and pricing programs. Since 1949, the Federal
government has maintained price supports for cheese, butter and nonfat dry milk.
The government stands as a ready purchaser of these products at their price
support levels. Historically, when the product price reached 110% of its price
support level, the government would sell its inventory into the market,
effectively limiting the price of these products. Because prices for these
products have generally been higher than their support level for a number of
years, the government currently has minimal inventories of cheese and butter. As
a result, these commodity prices have been greater than 110% of their price
support levels for several years. The Farm Security and Rural Investment Act of
2002 extends the dairy price support program through December 31, 2007.


                                       15



     Federal and certain similar state regulations attempt to ensure that the
supply of raw milk flows in priority to fluid milk and soft cream producers
before producers of hard products such as cheese and butter. This is
accomplished in two ways. First, the Federal market order system sets minimum
prices for raw milk. The minimum price of raw milk for use in fluid milk and
soft cream production is set as a premium to the minimum price of raw milk used
to produce hard products. The minimum price of raw milk used to produce hard
products is, in turn, set based upon USDA survey data which includes market
pricing of butter and cheese. Second, the Federal market order system
establishes a pooling program under which participants are required to send at
least some of their raw milk to fluid milk producers. The specific amount varies
based on region, but is at least 10% of the raw milk a participant handles.
Certain areas in the country, such as California, have adopted systems which
supersede the Federal market order system but are similar to it. In addition,
because the Federal market order system is not intended as an exclusive
regulation of the price of raw milk, certain states have, and others could,
adopt regulations which could increase the price we pay for raw milk, which
could have an adverse effect on our financial results. We also pay a premium
above the market order price based on competitive conditions in different
regions.

     Producers of dairy products which are participants in the Federal market
order system pay into regional "pools" for the milk they use based on the amount
of each class of dairy product produced and the price of those products. As
described above, only producers of dairy products who send the required minimum
amount of raw milk to fluid milk producers may participate in the pool. The
amounts paid into the pool for raw milk used to make fluid milk and soft creams
are set at a premium to the amounts paid into the pool for raw milk used to make
cheese or butter. The pool then returns to each dairy product producer for raw
milk it handled the weighted average price for all raw milk (including that used
for fluid milk and soft creams, whose producers must pay into the pool) sold in
that region. The dairy product producer pays at least this pool price to the
dairy farmer for milk received. This pooling system provides an incentive for
hard product producers to participate in the pool (and therefore supply the
required minimum for fluid milk production), because the average price for raw
milk received by these producers from the pool is more than the average price
they pay into the pool.

     As a cooperative, we are exempt from the requirement that we pay pool
prices to our members for raw milk supplied to us. However, as a practical
matter, we must pay a competitive price to our members in order to ensure
adequate supply of raw milk for our production needs, and therefore our
operations are affected by these regulations.

     If we did not participate in the pool, we would not receive the advantage
of the average pool payment and we would not be able to pay our milk producers
as much as participating processors without incurring higher costs for our raw
milk. To maintain our participation in the Federal market order program and
avoid this competitive disadvantage, we must procure at least 110% of our raw
milk requirements to meet our production needs. If we are unable to procure at
least 110% of our requirements, we would have lower production which could have
a material adverse affect on our results of operations. In addition, if the pool
was eliminated we would be subject to additional market forces when procuring
raw milk, which could result in increased milk costs and decreased supply, which
could materially affect our business.

     As a manufacturer and distributor of food and animal feed products, we are
subject to the Federal Food, Drug and Cosmetic Act and regulations issued
thereunder by the Food and Drug Administration ("FDA"). This regulatory scheme
governs the manufacture (including composition and ingredients), labeling,
packaging, and safety of food. The FDA regulates manufacturing practices for
foods through its good manufacturing practices regulations, specifies the
standards of identity for certain foods and animal feed and prescribes the
format and content of certain information required to appear on food and animal
feed product labels. In addition, the FDA enforces the Public Health Service Act
and regulations issued thereunder, which authorize regulatory activity necessary
to prevent the introduction, transmission or spread of communicable diseases. We
and our products are also subject to state and local regulation through
mechanisms such as the licensing of dairy manufacturing facilities, enforcement
by state and local health agencies of state standards for food products,
inspection of facilities and regulation of trade practices. Modification of
these Federal, state and local laws and regulations could increase our costs of
sales or prevent us from marketing foods in the way we currently do and could
have a material adverse effect on our business prospects, results of operations
and financial condition.

     Pasteurization of milk and milk products is also subject to inspection by
the United States Department of Agriculture. We and our products are also
subject to state and local regulation through mechanisms such as the licensing
of dairy manufacturing facilities, enforcement by state and local health
agencies of state standards for food products, inspection of facilities, and
regulation of trade practices in connection with the sale of food products.
Modification of these Federal, state and local laws and regulations could
increase our costs of sales or prevent us from marketing foods in the way we
currently do and could have a material adverse effect on our business prospects,
results of operations and financial condition.


                                       16



     Land O'Lakes Purina Feed distributes animal feed products through a network
of independent dealers. Various states in which these dealers are located have
enacted dealer protection laws which could have the effect of limiting our
rights to terminate dealers. In addition, failure to comply with such laws could
result in awards of damages or statutory sanctions. As a result, it may be
difficult to modify the way we distribute our feed products, which may put us at
a competitive disadvantage.

     Several states maintain "corporate farming laws" that restrict the ability
of corporations to engage in farming activities. Minnesota, North Dakota, South
Dakota, Nebraska, Kansas, Oklahoma, Missouri, Iowa and Wisconsin, states in
which we conduct business, have corporate farming laws. We believe that our
operations currently comply with the corporate farming laws in these states and
their exemptions, but these laws could change in the future and additional
states could enact corporate farming laws that regulate our businesses. Even
with the exemptions, these corporate farming laws restrict our ability to expand
or alter our operations in these states.

ITEM 1A. RISK FACTORS.

     Set forth below is a summary of the material risk factors for Land O'Lakes:

OUR SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT OUR ABILITY TO FULFILL OUR
OBLIGATIONS UNDER OUR DEBT FACILITIES AND TO OPERATE OUR BUSINESS.

     We are highly leveraged and have significant debt service obligations. As
of December 31, 2005, our aggregate outstanding consolidated indebtedness was
$737.9 million, excluding unused commitments and including our 7.45% Capital
Securities. Our total equity was $903.6 million. For the year ended December
31, 2005 our interest expense (net) was $79.9 million. We may incur additional
debt from time to time to finance strategic acquisitions, investments and
alliances, capital expenditures or for other purposes, subject to the
restrictions contained in our debt agreements.

     Our substantial debt could have important consequences to persons holding
our outstanding indebtedness, including the following:

     - we will be required to use a substantial portion of our cash flow from
operations to pay principal and interest on our debt, thereby reducing the
availability of our cash flow to fund working capital, capital expenditures,
strategic acquisitions, investments and alliances and other general corporate
requirements;

     - our interest expense could increase if interest rates in general increase
because a portion of our debt bears interest at floating rates;

     - our substantial leverage could increase our vulnerability to general
economic downturns and adverse competitive and industry conditions and could
place us at a competitive disadvantage compared to our competitors who are less
leveraged;

     - our debt service obligations could limit our flexibility to plan for, or
react to, changes in our business and the dairy and agricultural industries;

     - our level of debt may restrict us from raising additional financing on
satisfactory terms to fund working capital, capital expenditures, strategic
acquisitions, investments and joint ventures and other general corporate
requirements;

     our level of debt may prevent us from raising the funds necessary to
repurchase all of our 8 3/4% senior notes and the 9% senior secured notes
tendered to us upon the occurrence of a change of control, which would
constitute an event of default under the 8 3/4% senior notes and the 9% senior
secured notes; and

     - our failure to comply with the financial and other restrictive covenants
in our debt instruments could result in an event of default that, if not cured
or waived, could cause our debt to become due immediately and permit our lenders
to enforce their remedies.


                                       17


SERVICING OUR INDEBTEDNESS REQUIRES A SIGNIFICANT AMOUNT OF CASH, AND OUR
ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.

     We expect to obtain the cash to make payments on our debt and to fund
working capital, capital expenditures, strategic acquisitions, investments and
joint ventures and other general corporate requirements from our operations. Our
ability to generate cash is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. We cannot
assure investors that our business will generate sufficient cash flow from
operations, that we will realize currently anticipated cost savings, net sales
growth and operating improvements on schedule, or at all, or that future
borrowings will be available to us under our senior bank facilities, in each
case, in amounts sufficient to enable us to service our indebtedness or to fund
our other liquidity needs.

     If we cannot service our indebtedness, we will have to take actions such as
reducing or delaying capital expenditures, strategic acquisitions, investments
and joint ventures, selling assets, restructuring or refinancing our
indebtedness, deferring revolvements and other member payments or seeking
additional equity capital, which may adversely affect our membership and affect
their willingness to remain members. These remedies may not be effected on
commercially reasonable terms, or at all. In addition, the terms of existing or
future financing agreements, including the credit agreement relating to our
senior bank facility, the agreements relating to our receivables securitization
and the indentures for our 8 3/4% senior notes and our 9% senior secured notes
may restrict us from adopting any of these alternatives.

DESPITE OUR SUBSTANTIAL LEVERAGE, WE WILL BE ABLE TO INCUR MORE DEBT, WHICH MAY
INTENSIFY THE RISKS ASSOCIATED WITH OUR SUBSTANTIAL LEVERAGE, INCLUDING OUR
ABILITY TO SERVICE OUR DEBT.

     The agreements governing our debt will permit us, subject to certain
conditions, to incur a significant amount of additional indebtedness. In
addition, we may incur additional debt under our $200 million revolving credit
facility, of which $147.6 million was available to us as of December 31, 2005.
If we incur additional debt, the risks associated with our substantial leverage,
including our ability to service our debt, could intensify.

IF CREDITORS OF OUR SUBSIDIARIES AND JOINT VENTURES MAKE CLAIMS WITH RESPECT TO
THE ASSETS AND EARNINGS OF THESE COMPANIES, SUFFICIENT FUNDS MAY NOT BE
AVAILABLE TO REPAY OUR INDEBTEDNESS AND WE MAY NOT RECEIVE THE CASH WE EXPECT
FROM INTERCOMPANY TRANSFERS.

     We conduct a substantial portion of our operations through our subsidiaries
and joint ventures. We are, therefore, dependent in part upon dividends or other
intercompany transfers of funds from these companies in order to pay the
principal of and interest on our indebtedness and to meet our other obligations.
Generally, creditors of these companies will have claims to the assets and
earnings of these companies that are superior to the claims of creditors of Land
O'Lakes, except to the extent the claims of Land O'Lakes creditors are
guaranteed by these entities.

     Although the Subsidiary Guarantees and the second-priority liens of the
Subsidiary Guarantors will provide the holders of the 9% senior secured notes
with a direct claim against the assets of the Subsidiary Guarantors, enforcement
of the Subsidiary Guarantees and the second-priority liens of the Subsidiary
Guarantors against any Subsidiary Guarantor may be challenged in a bankruptcy or
reorganization case or a lawsuit by or on behalf of creditors of the Subsidiary
Guarantor and could be subject to defenses. To the extent that the Subsidiary
Guarantees and the second-priority liens are not enforceable, the 9% senior
secured notes would be effectively subordinated to all liabilities of the
Subsidiary Guarantors, including trade payables and contingent liabilities, and
preferred stock of the Subsidiary Guarantors. In any event, the 9% senior
secured notes will be effectively subordinated to all liabilities of the
Non-Guarantors. After eliminating intercompany activity the Non-Guarantors:

     -    had assets of $412 million or 13% of our total assets as of December
          31, 2005;

     -    had liabilities of $259 million or 12% of our total liabilities as of
          December 31, 2005 (excluding the $190.7 million of Capital Securities,
          see "Description of capital securities"); and

     -    generated net sales of $694 million or 9% of our consolidated net
          sales for the year ended December 31, 2005.


                                       18



RESTRICTIONS IMPOSED BY OUR DEBT AGREEMENTS LIMIT OUR ABILITY TO FINANCE FUTURE
OPERATIONS OR CAPITAL NEEDS OR ENGAGE IN OTHER BUSINESS ACTIVITIES THAT MAY BE
IN OUR INTEREST.

     The indentures for our 8 3/4% senior notes and our 9% senior secured notes
impose, and the terms of any future debt may impose, operating and other
restrictions on us and our restricted subsidiaries. In addition, our senior bank
facility includes other and more restrictive covenants and prohibit us from
prepaying our other debt, including the 8 3/4% senior notes and the 9% senior
secured notes, while debt under our senior bank facility is outstanding. The
agreement governing our senior bank facility also requires us to achieve
specified financial and operating results and maintain compliance with specified
financial ratios.

     The restrictions contained in our debt agreements could:

     -    limit our ability to plan for or react to market conditions or meet
          capital needs or otherwise restrict our activities or business plans;
          and

     -    adversely affect our ability to finance our operations, strategic
          acquisitions, investments or alliances or other capital needs or to
          engage in other business activities that would be in our interest.

     A breach of any of these restrictive covenants or our inability to comply
with the required financial ratios could result in a default under our senior
bank facility and could trigger cross default provisions in the agreements
governing our other debt. If a default occurs, certain of our debt agreements,
including our senior bank facility, allow the lenders to declare all borrowings
outstanding, together with accrued interest and other fees, to be immediately
due and payable which would result in an event of default under the indentures
governing our 8 3/4% senior notes and our 9% senior secured notes, and a
termination event under the agreements governing our receivables securitization.
Lenders will also have the right in these circumstances to terminate any
commitments they have to provide further borrowings. If we are unable to repay
outstanding borrowings when due, those lenders will also have the right to
proceed against the collateral, including our available cash, granted to them to
secure the indebtedness. If this debt was to be accelerated, our assets may not
be sufficient to repay in full that indebtedness and our other indebtedness. If
not cured or waived, such default could give our lenders the right to enforce
other remedies that would interrupt the operation of our business.

THE COLLATERAL PLEDGED IN SUPPORT OF OUR DEBT OBLIGATIONS MAY NOT BE VALUABLE
ENOUGH TO SATISFY ALL THE BORROWINGS SECURED BY THE COLLATERAL.

     The value of the collateral in the event of a liquidation will depend upon
market and economic conditions, the availability of buyers and similar factors.
No independent appraisals of any of the collateral have been prepared by or on
behalf of us.

     Accordingly, we cannot assure that the proceeds of any sale of the
collateral following an acceleration of maturity with respect to the 9% senior
secured notes or under our senior bank facility would be sufficient to satisfy,
or would not be substantially less than, amounts due on the 9% senior secured
notes and the senior bank facility secured thereby. In addition, some or all of
the collateral may be illiquid and may have no readily ascertainable market
value. Likewise, we cannot provide assurance that the collateral will be
saleable or, if saleable, that there will not be substantial delay in its
liquidation. To the extent that liens, rights and easements granted to third
parties encumber assets located on property owned by us or constitute
subordinate liens on the collateral, those third parties have or may exercise
rights and remedies with respect to the property subject to such encumbrances
(including rights to require marshalling of assets) that could adversely affect
the value of that collateral and the ability of the collateral trustee to
realize or foreclose on that collateral.

THE GEOGRAPHIC SHIFT IN DAIRY PRODUCTION HAS DECREASED SALES AND MARGINS AND
COULD CONTINUE TO NEGATIVELY IMPACT OUR SALES AND MARGINS.

     We operate dairy facilities located in different regions of the United
States. Milk production in certain regions, specifically the Midwest and
Northeast, is declining over time as smaller producers in these regions have
ceased milk production and larger producers in the West have increased milk
production. In addition, a producer, whether a member or a non-member, may
decide not to supply milk to us or may decide to stop supplying milk to us when
the term of their contractual obligation expires. Where milk production is not
sufficient to fully support our operations, such as the Midwest and Northeast,
we are not able to operate our plants at a level that is profitable, are forced
to transport milk from a distance or are forced to pay higher prices for our
milk supply. These conditions have decreased, and could continue to decrease
sales and operating margins.


                                       19



     In response to these trends, we are restructuring our dairy facility
infrastructure in an effort to increase production efficiencies and reduce
costs. There can be no assurance that this restructuring will be successful in
increasing production efficiencies or reducing costs.

     In addition, as dairy production has shifted from the Upper Midwest to the
western United States, we have seen a change in our feed product mix, with lower
sales of complete feed and increased sales of simple blends. Dairy producers in
the western United States tend to purchase feed components and mix them at the
farm location rather than purchase higher margin mixed feed product delivered to
the farm. If this shift continues, we will continue to have decreased volumes of
animal feed in the Midwest and increased costs of production as we are unable to
profitably operate certain of our Midwestern plants.

CHANGES IN CONSUMER PREFERENCES AND DISTRIBUTION CHANNELS COULD DECREASE OUR
DAIRY FOODS REVENUES AND CASH FLOW.

     We are subject to the risks of:

     -    evolving consumer preferences and nutritional and health-related
          concerns; and

     -    changes in food distribution channels, such as consolidation of the
          supermarket industry and other retail outlets that result in a smaller
          customer base and intensify the competition for fewer customers.

     To the extent that consumer preference evolves away from products that we
produce for health or other reasons, and we are unable to create new products
that satisfy new consumer preferences, there will be a decreased demand for our
products. There has been a recent trend toward consolidation among food
retailers which we expect to continue. As a result, these food retailers are
selecting product suppliers who can meet their needs nationwide. If our products
are not selected by these food retailers, our sales volumes could be
significantly reduced. In addition, national distributors or regional food
brokers could choose not to carry our products. Because of the high degree of
consolidation of national food distributors, the decision of a single such
distributor not to carry our products could have a serious impact on our
revenues.

     Any shift in consumer preferences away from our products could decrease our
revenues and cash flow and impair our ability to fulfill our obligations under
our debt obligations and operate our business.

COMPETITION IN THE INDUSTRY MAY REDUCE OUR SALES AND MARGINS.

     Our business segments operate in highly competitive industries. In
addition, some of our business segments compete with companies that have greater
capital resources, research and development staffs, facilities, diversity of
product lines and brand recognition than we have. Increased competition against
any of our products could result in reduced prices which would reduce our sales
and margins.

     Our competitors may succeed in developing new or enhanced products. These
companies may also prove to be more successful in marketing and selling their
products.

     Sectors of the dairy industry are highly fragmented, with the bulk of the
industry consisting of national and regional competitors. However, consolidation
among food retailers is leading to increased competition for fewer customers. If
we are unable to meet our customers' needs, we may lose major customers, which
could materially adversely affect our business and financial condition.

     The animal feed industry is highly fragmented, with the bulk of the
industry consisting of many small local manufacturers, several regional
manufacturers and a limited number of national manufacturers. However, as meat
processors and livestock producers become larger they tend to integrate their
business by acquiring or constructing their own feed production facilities. As a
result, the available market for commercial feed may become smaller and
competition may increase, which could materially adversely affect our business
and financial condition. In addition, purchasers of commercial feed tend to
select products based on price and performance. Furthermore, some of our feed
products are purchased from third parties without further processing by us. As a
result of this price competition and the lack of processing for some of our
products, the barriers to entry for competing feed products are low.


                                       20



     The crop seed industry consists of large companies such as Pioneer,
Monsanto and Syngenta which possess large genetic databases and produce and
distribute a wide range of seeds, as well as niche companies which distribute
seed products for only one or a few crops. Because approximately 90% of our crop
seed sales come from sales of alfalfa, soybeans, corn and forage and turf
grasses, technological developments by our competitors in these areas could
result in significantly decreased sales and could materially adversely affect
our business and financial condition. In addition, if any or all of these large
seed companies decide to sell directly to the market or increase the licensing
fees they charge us, we could experience decreased sales and margins.

     The wholesale agronomy industry consists of a few national crop protection
product distributors such as UAP, Helena and Wilbur-Ellis, a few national crop
nutrient product distributors such as Koch, Mosaic, PCS, Agrium and
Royster-Clark, as well as smaller regional brokers and distributors. Competition
in the industry may intensify as distributors consolidate to increase
distribution capabilities and efficiencies, which could materially adversely
affect Agriliance's business and our financial condition.

     MoArk competes with other egg processors, including Cal-Maine Foods, Rose
Acre Farms, Inc. and Michael Foods. MoArk competes with these companies based
upon its low cost production system and its diversified product line.
Competition in the egg industry may intensify as distributors consolidate to
increase efficiencies, which could materially adversely affect MoArk's business
and financial condition.

OUR OPERATING RESULTS FLUCTUATE BY SEASON AND ARE AFFECTED BY WEATHER
CONDITIONS.

     Operating results within many of our segments are affected by seasonal
fluctuations in sales and margins.

     There is significantly increased demand for butter in the months prior to
Thanksgiving and Christmas. Because our supply of milk is lowest at this time,
we produce and store surplus quantities of butter in the months preceding the
increase in demand for butter. As a result, we are subject both to the risk that
butter prices may decrease and that increased demand for butter may never
materialize, resulting in decreased net sales and negative margin impacts.

     Our animal feed sales are seasonal, with a higher percentage of sales
generated during the first and fourth quarters of the year. This seasonality is
driven largely by weather conditions affecting sales of our beef and grass
cattle products. If the weather is particularly warm during the winter, then
sales of feed for beef and grass cattle may decrease because the cattle may be
better able to graze under warmer conditions.

     The sales of crop seed and crop nutrient and crop protection products are
dependent upon the planting and growing season, which varies in timing from year
to year, resulting in both highly seasonal patterns and substantial fluctuations
in our quarterly sales and margin. Most sales of our seed products and of
Agriliance's agronomy products are sold in the first half of the year during the
spring planting season in the United States. If the spring is particularly wet,
farmers will not apply crop nutrient and crop protection products because they
will be washed away and ineffective if applied.

     In addition, severe weather conditions and natural disasters, such as
floods, droughts, frosts or earthquakes, or adverse growing conditions, diseases
and insect-infestation problems may reduce the quantity and quality of
commodities available for processing by us. For example, dairy cows produce less
milk when subjected to extreme weather conditions, including hot and cold
temperatures. A significant reduction in the quantity or quality of commodities
harvested or produced due to adverse weather conditions, disease, insect
problems or other factors could result in increased processing costs and
decreased production, with adverse financial consequences to us.


                                       21



INCREASED ENERGY AND GAS COSTS COULD INCREASE OUR EXPENSES AND REDUCE OUR
PROFITABILITY.

     We require a substantial amount of electricity, natural gas and gasoline to
manufacture, store and transport our products. The price of electricity, natural
gas and gasoline fluctuate significantly over time. Many of our products compete
based on price, and we may not be able to pass on increased costs of production,
storage or transportation to our customers. As a result, increases in the cost
of electricity, natural gas or gasoline could substantially harm our margins.
Due to price competition in the marketplace, Agriliance may not be able to pass
on the entire increase in crop nutrient costs to customers (approximately 80% of
nitrogen-based crop nutrient input cost is natural gas), therefore Agriliance's
margins on crop nutrient products could be lower than they would be if natural
gas and fertilizer costs remain constant. In addition, a higher sales price of
fertilizer could result in a reduction of sales volume. Increases in natural gas
prices may not occur to the same degree in countries where natural gas does not
have as many other uses, such as countries with temperate climates where natural
gas is not used as a heating fuel or primary source of power generation. As a
result of these demand differences, crop nutrient producers in the United States
may be at a competitive disadvantage to some international competitors during
periods of high natural gas prices.

OUTBREAKS OF DISEASE CAN REDUCE OUR SALES AND MARGINS.

     The productivity and profitability of our businesses depend on animal and
crop health and on disease control.

     We face the risk of outbreaks of BSE, which could lead to decreased feed
and dairy sales and increased costs to produce feed and dairy products. In
response to the discovery of BSE in the U.S. marketplace, the USDA has increased
testing requirements for cows and is exploring additional inspection
requirements which could increase the cost of production of beef and dairy
products. The discovery of additional cases of BSE could lead to widespread
destruction of beef cattle and dairy cows, could cause consumer demand for beef
and dairy products to decrease and could result in increased inspection costs
and procedures. If this occurs, we could have decreased feed sales for beef
cattle and dairy cows as a result of animal destruction or producers lowering
their herd sizes in response to decreased consumer demand. In addition, we could
have decreased sales of our dairy products due to decreased consumer demand or
decreased milk supply and decreased margins as a result of increased dairy
production costs

     We face the risk of outbreaks of foot-and-mouth disease, which could lead
to a significant destruction of cloven-hoofed animals such as dairy cattle, beef
cattle, swine, sheep and goats and significantly reduce the demand for meat
products. Because foot-and-mouth disease is highly contagious and destructive to
susceptible livestock, any outbreak of foot-and-mouth disease could result in
the widespread destruction of all potentially infected livestock. Our feed
operations could suffer as a result of decreased demand for feed products. If
this happens, we could also have difficulty procuring the milk we need for our
dairy operations and incur increased cost to produce our dairy products, which
could reduce our sales and operating margins.

     We face the risk of outbreaks of poultry diseases, such as Newcastle
disease and avian influenza, which could lead to the destruction of poultry
flocks. Because these diseases can be highly contagious and destructive, any
such outbreak of disease could result in the widespread destruction of infected
flocks. If this happens, we could experience a decreased demand for our poultry
feed which could reduce our sales and margins. In addition, if such diseases
spread to flocks owned by MoArk, MoArk could experience a decreased supply of
layers and eggs, which could reduce MoArk's sales and margins.

     Outbreaks of plant diseases (including Asian Soybean Rust) and pests could
destroy entire crops of plants for which we sell crop seed. If this occurs, the
crops grown to produce seed could also be destroyed, resulting in a shortage of
crop seed available for us to sell for the next planting season. In addition,
there may be decreased demand for our crop seed from farmers who choose not to
plant those species of crops affected by these diseases or pests. These
shortages and decreased demand could reduce our sales. In addition, certain
plant diseases (including Asian Soybean Rust) could reduce the total available
supply of soybeans and soybean meal, which are inputs used in our feed business.
To the extent we are unable to find suitable alternatives, are unable to
completely hedge our exposure to such inputs or are unable to pass along price
increases to our customers, a price increase of these inputs could reduce our
sales and could reduce our margins.

CHANGES IN THE MARKET PRICES OF THE DAIRY AND AGRICULTURAL COMMODITIES THAT WE
USE AS INPUTS AS WELL AS THE PRODUCTS WE MARKET MAY CAUSE OUR MARGINS TO DECLINE
AND REDUCE THE LIKELIHOOD OF RECEIVING DIVIDENDS FROM OUR JOINT VENTURES.

     Many of our products, particularly in our dairy foods, animal feed and
layers businesses, use dairy or agricultural commodities as inputs or constitute
dairy or agricultural commodity outputs. Consequently, increased cost of
commodity inputs and decreased market price of commodity outputs may reduce
profitability.


                                       22



     We are major purchasers of commodities used as inputs in our dairy foods
segment, namely milk, cream, butter and bulk cheese. Our dairy foods outputs,
namely butter, cheese and nonfat dry milk, are also commodities. We inventory a
significant amount of the cheese and butter products we produce for sale to our
customers at a later date and at the market price on that date. For example, we
build significant butter inventories in the spring when milk supply is highest
for sale to our retail customers in the fall when butter demand is highest. If
the market price we receive at the time we sell our products is less than the
market price on the day we made the products, we will have lower (or negative)
margins which may have a material adverse impact on our earnings. In addition,
we maintain significant inventories of cheese for aging and face the same risk
with respect to these products.

     The feed segment follows industry standards for feed pricing. The feed
industry generally prices products on the basis of income over ingredient cost
per ton of feed. This practice tends to mitigate the impact of volatility in
commodity ingredient markets on our animal feed margins. However, if our
commodity input prices were to increase dramatically, we may be unable to pass
these prices on to our customers, who may find alternative feed sources at lower
prices or may exit the market entirely. This increased expense could reduce our
margins.

     Our MoArk subsidiary produces and markets eggs. During periods of 2005, egg
prices, as measured by the Urner Barry South Central Large index, have been
below historical norms. To the extent the price of eggs remains at these low
levels MoArk's ability to make dividend distributions to the Company could be
diminished.

WE OPERATE THROUGH JOINT VENTURES IN WHICH OUR RIGHTS TO EARNINGS AND CONTROL OF
THE JOINT VENTURE ARE LIMITED.

     We produce, market and sell products through numerous joint ventures with
unaffiliated third parties. Our agronomy business is primarily operated through
a joint venture.

     The terms of each joint venture are different, but our joint venture
agreements generally contain:

     -    restrictions on our ability to transfer our ownership interest in the
          joint venture;

     -    no right to receive distributions without the unanimous consent of the
          members of the joint venture; and

     -    noncompetition arrangements restricting our ability to engage
          independently in the same line of business as the joint venture.

     In addition to these restrictions, in connection with the formation of some
of our joint ventures, we have entered into purchase or supply agreements which
require us to purchase a minimum amount of the products produced by the joint
venture or supply a minimum amount of the raw materials used by the joint
venture. The day-to-day operations of some of our joint ventures are managed by
us through a management contract and others are managed by other joint venture
members. As a result, we do not have day-to-day control over certain of these
companies. See "Item 1, Business--Joint Ventures and Investments" and Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Unconsolidated Businesses" for a discussion of our material joint
ventures.

CERTAIN OF OUR BUSINESS MAY BE ADVERSELY AFFECTED BY THEIR DEPENDENCE UPON THEIR
SUPPLIERS.

     Certain of our businesses, particularly our Seed and Agronomy businesses,
rely on a limited number of suppliers for the products they sell. In the event
these businesses are unable to purchase their products on favorable terms from
these suppliers, they may be unable to find suitable alternatives to meet their
product needs.


                                       23



A LOSS OF OUR COOPERATIVE TAX STATUS COULD INCREASE OUR TAX LIABILITY.

     Subchapter T of the Internal Revenue Code sets forth rules for the tax
treatment of cooperatives. As a cooperative, we are not taxed on earnings from
member business that we deem to be patronage income allocated to our members.
However, we are taxed as a typical corporation on the remainder of our earnings
from our member business (those earnings which we have not deemed to be
patronage income) and on earnings from nonmember business. If we were not
entitled to be taxed as a cooperative, our tax liability would be significantly
increased. For additional information regarding our cooperative structure and
the taxation of cooperatives, see "Item 1. Business -- Description of the
cooperative."

OUR LIMITED ACCESS TO EQUITY MARKETS COULD ADVERSELY AFFECT OUR ABILITY TO
OBTAIN ADDITIONAL EQUITY CAPITAL.

     As a cooperative, we may not sell our common stock in the traditional
equity markets. In addition, our articles of incorporation and by-laws contain
limitations on dividends and liquidation preferences on any preferred stock we
issue. These limitations restrict our ability to raise equity capital and may
adversely affect our ability to compete with entities that do not face similar
restrictions.

OUR OPERATIONS ARE SUBJECT TO NUMEROUS LAWS AND REGULATIONS, EXPOSING US TO
POTENTIAL CLAIMS AND COMPLIANCE COSTS THAT COULD ADVERSELY AFFECT OUR MARGINS.

     We are subject to Federal, state and local laws and regulations relating to
the manufacturing, labeling, packaging, health and safety, sanitation, quality
control, fair trade practices, and other aspects of our business. In addition,
zoning, construction and operating permits are required from governmental
agencies which focus on issues such as land use, environmental protection, waste
management, and the movement of animals across state lines. These laws and
regulations may, in certain instances, affect our ability to develop and market
new products and to utilize technological innovations in our business. In
addition, changes in these rules might increase the cost of operating our
facilities or conducting our business which would adversely affect our business.

     Our dairy business is affected by Federal price support programs and
federal and state pooling and pricing programs to support the prices of certain
products we sell. Federal and certain state regulations help ensure that the
supply of raw milk flows in priority to fluid milk and soft cream producers
before producers of hard products such as cheese and butter. In addition, as a
producer of dairy products, we participate in the Federal market order system
and pay into regional "pools" for the milk we use based on the amount of each
class of dairy product we produce and the price of those products. If any of
these programs was no longer available to us, the prices we pay for milk could
increase and reduce our profitability.

     As a manufacturer of food and animal feed products, we are subject to the
Federal Food, Drug and Cosmetic Act and regulations issued thereunder by the
Food and Drug Administration ("FDA"). The pasteurization of our milk and milk
products is also subject to inspection by the United States Department of
Agriculture. Several states also have laws that protect feed distributors or
restrict the ability of corporations to engage in farming activities. These
regulations may require us to alter or restrict our operations or cause us to
incur additional costs in order to comply with the regulations.

INABILITY TO PROTECT OUR TRADEMARKS AND OTHER PROPRIETARY RIGHTS COULD DAMAGE
OUR COMPETITIVE POSITION.

     We rely on patents, copyrights, trademarks, trade secrets, confidentiality
provisions and licensing arrangements to establish and protect our intellectual
property. Any infringement or misappropriation of our intellectual property
could damage its value and could limit our ability to compete. We may have to
engage in litigation to protect our rights to our intellectual property, which
could result in significant litigation costs and require a significant amount of
management time.

     We license our LAND O LAKES and the Indian Maiden logo trademarks to
certain of our joint ventures and other third parties for use in marketing
certain of their products. We have invested substantially in the promotion and
development of our trademarked brands and establishing their reputation as
high-quality products. Actions taken by these parties may damage our reputation
and our trademarks' value.


                                       24



     We believe that the recipes and production methods for our dairy and spread
products and formulas for our feed products are trade secrets. In addition, we
have amassed a large body of knowledge regarding animal nutrition and feed
formulation which we believe to be proprietary. Because most of this proprietary
information is not patented, it may be more difficult to protect. We rely on
security procedures and confidentiality agreements to protect this proprietary
information, however such agreements and security procedures may be insufficient
to keep others from acquiring this information. Any such dissemination or
misappropriation of this information could deprive us of the value of our
proprietary information and negatively affect our results.

     We license the trademarks Purina, Chow and the "Checkerboard" Nine Square
logo under a perpetual, royalty-free license from Nestle Purina PetCare Company.
Under the terms of the license agreement, Nestle Purina PetCare Company retains
primary responsibility for protecting the licensed trademarks from infringement.
If Nestle Purina PetCare Company fails to assert its rights to the licensed
trademarks, we may be unable to stop such infringement or cause them to do so.
Any such infringement of the licensed trademarks, or of similar trademarks of
Nestle Purina PetCare Company, could result in a dilution in the value of the
licensed trademarks.

OUR BRAND NAMES COULD BE CONFUSED WITH NAMES OF OTHER COMPANIES WHO, BY THEIR
ACT OR OMISSION, COULD ADVERSELY AFFECT THE VALUE OF OUR BRAND NAMES.

     Many of our branded feed products are marketed under the trademarks Purina,
Chow and the "Checkerboard" Nine Square logo under a perpetual, royalty-free
license from Nestle Purina PetCare Company. Nestle Purina PetCare Company
markets widely recognized products under the same trademarks and has given other
unaffiliated companies the right to market products under these trademarks. A
competitor, Cargill, licenses from Nestle Purina PetCare Company the right to
market the same types of products which we sell under these trademarks in
countries other than the United States. Acts or omissions by Nestle Purina
PetCare Company or other unaffiliated companies may adversely affect the value
of the Purina, Chow and the "Checkerboard" Nine Square logo trademarks and the
demand for our products. Third-party announcements or rumors about these
unaffiliated companies could also have these negative effects.

PRODUCT LIABILITY CLAIMS OR PRODUCT RECALLS COULD ADVERSELY AFFECT OUR BUSINESS
REPUTATION AND EXPOSE US TO INCREASED SCRUTINY BY FEDERAL AND STATE REGULATORS.

     The sale of food products for human consumption involves the risk of injury
to consumers and the sale of animal feed products involves the risk of injury to
those animals as well as human consumers of those animals. Such hazards could
result from:

     -    tampering by unauthorized third parties;

     -    product contamination (such as listeria, e. coli. and salmonella) or
          spoilage;

     -    the presence of foreign objects, substances, chemicals, and other
          agents;

     -    residues introduced during the growing, storage, handling or
          transportation phases; or

     -    improperly formulated products which either do not contain the proper
          mixture of ingredients or which otherwise do not have the proper
          attributes.

     Some of the products that we sell are produced for us by third parties, or
contain inputs manufactured by third parties, and such third parties may not
have adequate quality control standards to assure that such products are not
adulterated, misbranded, contaminated or otherwise defective. In addition, we
license our LAND O LAKES brand for use on products produced and marketed by
third parties, for which we receive royalties. We may be subject to claims made
by consumers as a result of products manufactured by these third parties which
are marketed under our brand names.

     Consumption of our products may cause serious health-related illnesses and
we may be subject to claims or lawsuits relating to such matters. An inadvertent
shipment of adulterated products is a violation of law and may lead to an
increased risk of exposure to product liability claims, product recalls and
increased scrutiny by federal and state regulatory agencies. Such claims or
liabilities may not be covered by our insurance or by any rights of indemnity or
contribution which we may have against others in the case of products which are
produced by third parties. In addition, even if a product liability claim is not
successful or is not fully pursued, the negative publicity surrounding any
assertion that our products caused illness or injury could have a material
adverse effect on our reputation with existing and potential customers and on
our brand image. In the past, we have voluntarily recalled certain of our
products in response to reported or suspected contamination. If we determine to
recall any of our products, we may face material consumer claims.


                                       25



WE COULD INCUR SIGNIFICANT COSTS FOR VIOLATIONS OF OR LIABILITIES UNDER
ENVIRONMENTAL LAWS AND REGULATIONS APPLICABLE TO OUR OPERATIONS.

     We are subject to various Federal, state, local, and foreign environmental
laws and regulations, including those governing the use, storage, discharge and
disposal of solid and hazardous materials and wastes. Violations of these laws
and regulations (or of the permits required for our operations) may lead to
civil and criminal fines and penalties or other sanctions.

     These laws and regulations may also impose liability for the clean-up of
environmental contamination. Many of our current and former facilities have been
in operation for many years and, over time, we and other operators of those
facilities have generated, used, stored, or disposed of substances or wastes
that are or might be defined as hazardous under applicable environmental laws,
including chemicals and fuel stored in underground and above-ground tanks,
animal wastes and large volumes of wastewater discharges. As a result, the soil
and groundwater at or under certain of our current and former facilities is or
may be contaminated, and we may be required in the future to make material
expenditures to investigate, control and remediate such contamination.

     We have been identified as a potentially responsible party under the
Federal Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA") or similar state statutes and currently have unresolved liability
with respect to the past disposal of hazardous substances at several of our
former facilities and at waste disposal facilities operated by third parties.
Under CERCLA, any current or former owner, operator or user of a contaminated
site may be held responsible for the entire cost of investigating and
remediating such contamination, regardless of fault or the legality of the
original disposal.

     Although compliance and clean-up costs have not been material in the past,
the imposition of additional or more stringent environmental laws or unexpected
remediation obligations could result in significant costs and have a material
adverse effect on our business, financial condition, or results of operations.

STRIKES OR WORK STOPPAGES BY OUR UNIONIZED WORKERS COULD DISRUPT OUR BUSINESS.

     As of December 31, 2005, approximately 23% of our employees were covered by
collective bargaining agreements, some of which are due to expire within the
next twelve months. Our inability to negotiate acceptable contracts with the
unions upon expiration of these contracts could result in strikes or work
stoppages and increased operating costs as a result of higher wages or benefits
paid to union members or replacement workers. If the unionized workers were to
engage in a strike or work stoppage, or other non-unionized operations were to
become unionized, we could experience a significant disruption of our operations
or higher ongoing labor costs. See "Item 1. Business -- Employees" for
additional information.

THERE IS NO ASSURANCE THAT OUR SENIOR MANAGEMENT TEAM OR OTHER KEY EMPLOYEES
WILL REMAIN WITH US.

     We believe that our ability to successfully implement our business strategy
and to operate profitably depends on the continued employment of our senior
management team and other key employees. If members of the management team or
other key employees become unable or unwilling to continue in their present
positions, the operation of our business would be disrupted and we may not be
able to replace their skills and leadership in a timely manner to continue our
operations as currently anticipated. We operate generally without employment
agreements with, or key person life insurance on the lives of, our key
personnel.


                                       26



ITEM 2. PROPERTIES.

     We own the land underlying our corporate headquarters in Arden Hills,
Minnesota and lease the buildings. Our corporate headquarters, consisting of a
main office building and a research and development facility, has an aggregate
of approximately 275,000 gross square feet. In addition, we own offices,
manufacturing plants, storage warehouses and facilities for use in our various
business segments. Thirty of our owned properties are mortgaged to secure our
indebtedness. The following table provides summary information about our
principal facilities as of December 31, 2005:



                    TOTAL NUMBER    TOTAL NUMBER       REGIONAL
                   OF FACILITIES   OF FACILITIES       LOCATION
BUSINESS SEGMENT       OWNED           LEASED        OF FACILITIES
- ----------------   -------------   -------------   ----------------
                                          
Dairy Foods.....        11(1)             4        Midwest(2) -- 10
                                                   West(3) -- 2
                                                   East(4) -- 3
                                                   South(5) -- 0

Feed............       103(6)            46        Midwest -- 79
                                                   West -- 35
                                                   East -- 10
                                                   South -- 25

Seed............        18                6        Midwest -- 14
                                                   West -- 9
                                                   East -- 1

Agronomy........         4                0        Midwest -- 4

Layers..........        18               29        Midwest -- 11
                                                   West -- 26
                                                   East -- 9
                                                   South -- 1


(1)  Includes a facility the Company closed in the first quarter of 2006 and a
     non-edible foods manufacturing facility.

(2)  The Midwest region includes the states of Ohio, Michigan, Indiana,
     Illinois, Wisconsin, Minnesota, Iowa, Missouri, Oklahoma, Kansas, Nebraska,
     South Dakota and North Dakota and Ontario, Canada.

(3)  The West region includes the states of Montana, Wyoming, Colorado, Texas,
     New Mexico, Arizona, Utah, Idaho, Washington, Oregon, Nevada, California,
     Alaska and Hawaii.

(4)  The East region includes the states of Maine, New Hampshire, Vermont, New
     York, Massachusetts, Rhode Island, Connecticut, Pennsylvania, New Jersey,
     Delaware and Maryland.

(5)  The South region includes the states of West Virginia, Virginia, North
     Carolina, Kentucky, Tennessee, South Carolina, Georgia, Florida, Alabama,
     Mississippi, Louisiana and Arkansas.

(6)  Includes 8 closed facilities.

     We do not believe that we will have difficulty in renewing the leases we
currently have or in finding alternative space in the event those leases are not
renewed. We consider our properties suitable and adequate for the conduct of our
business.


                                       27


ITEM 3. LEGAL PROCEEDINGS.

     We are currently and from time to time involved in litigation and
environmental claims incidental to the conduct of business. The damages claimed
in some of these cases are substantial. Although the amount of liability that
may result from these matters cannot be ascertained, we do not currently believe
that, in the aggregate, they will result in liabilities material to the
Company's consolidated financial condition, future results of operations or cash
flows.

     On February 24, 2004, Cache La Poudre Feeds, LLC ("Cache") filed a lawsuit
in the United States District Court for the District of Colorado against the
Company, Land O'Lakes Farmland Feed LLC and certain named individuals claiming
trademark infringement with respect to certain animal feed sales under the
Profile trade name. Cache seeks damages of at least $132.8 million, which, it
claims, is the amount the named entities generated in gains, profits and
advantages from using the Profile trade name. In response to Cache's complaint,
the Company denied any wrongdoing and pursued certain counterclaims against
Cache relating to trademark infringement, and other claims against Cache for,
among other things, defamation and libel. In addition, the Company believes that
Cache's calculation of the Company's gains, profits and advantages allegedly
generated from the use of the Profile trade name are grossly overstated. The
Company believes that sales revenue generated from the sale of products carrying
the Profile trade name was immaterial. Although the amount of any loss that may
result from this matter cannot be ascertained with certainty, management does
not believe that it will result in a loss material to the Company's consolidated
financial condition, future results of operations or cash flow. The trial is
scheduled for June 2007.

     In 2003, several lawsuits were filed against the Company by Ohio alpaca
producers in which it was alleged that the Company manufactured and sold animal
feed that caused the death of, or damage to, certain of the producers' alpacas.
The two remaining lawsuits are scheduled to go to trial in 2006.

     In a letter dated January 18, 2001, the Company was identified by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party for cleanup costs in connection with hazardous substances and
wastes at the Hudson Refinery Superfund Site in Cushing, Oklahoma. The letter
invited the Company to enter into negotiations with the EPA for the performance
of a remedial investigation and feasibility study at the site and also demanded
that the Company reimburse the EPA approximately $8.9 million for remediation
expenses already incurred at the site. In March 2001, the Company responded to
the EPA denying any responsibility. No further communication has been received
from the EPA.

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

     None.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.

     There is no established public market for the common equity of Land
O'Lakes. In view of the following, it is unlikely in the foreseeable future that
a public market for these securities will develop:

          (1) The common stock interests are non-dividend bearing;

          (2) The right of any holder of common stock to receive patronage
     income depends on the quantity and value of the business the member
     conducts with us (See "Item 1. Business -- Description of the Cooperative
     -- Patronage Income and Equity");

          (3) The class of common stock issued to a member depends on whether
     the member is a cooperative or individual member and whether the member is
     a "dairy member" or "ag member" (See "Item 1. Business -- Description of
     the Cooperative -- Our Structure and Membership");

          (4) We may redeem holdings of members under certain circumstances upon
     the approval of our board of directors (See "Item 1. Business --
     Description of the Cooperative -- Patronage Income and Equity"); and


                                       28



          (5) Our board of directors may terminate a membership if it determines
     that the member has failed to adequately patronize us or has become our
     competitor (See "Item 1. Business -- Description of the Cooperative -- Our
     Structure and Membership").

     As of December 31, 2005, there are approximately 1,004 holders of Class A
common stock, 4,118 holders of Class B common stock, 175 holders of Class C
common stock and 1,024 holders of Class D common stock.

ITEM 6. SELECTED FINANCIAL DATA.

     The historical consolidated financial information presented below has been
derived from the Land O'Lakes consolidated financial statements for the periods
indicated. It should be read together with the audited consolidated financial
statements of Land O'Lakes and the related notes included elsewhere in the
Annual Report on Form 10-K. Read the selected consolidated historical financial
information along with "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial
statements included in this Annual Report on Form 10-K.



                                                                               YEARS ENDED DECEMBER 31,
                                                                 ----------------------------------------------------
                                                                   2005       2004       2003       2002       2001
                                                                 --------   --------   --------   --------   --------
                                                                                     ($ IN MILLIONS)
                                                                                              
STATEMENT OF OPERATIONS DATA:
Net sales ....................................................   $7,556.7   $7,656.8   $6,256.1   $5,779.5   $5,777.7
Cost of sales ................................................    6,971.7    7,063.1    5,671.9    5,273.6    5,305.1
                                                                 --------   --------   --------   --------   --------
   Gross profit ..............................................      585.0      593.7      584.2      505.9      472.6
Selling, general and administrative ..........................      494.9      501.0      464.6      466.5      376.8
Restructuring and impairment charges(1) ......................        6.4        7.8        6.3       31.4        3.7
                                                                 --------   --------   --------   --------   --------
   Earnings from operations ..................................       83.7       84.9      113.3        8.0       92.1
Interest expense, net ........................................       79.9       83.1       81.0       76.4       53.7
Other expense (income), net(2) ...............................        9.3       (7.5)     (24.4)    (163.9)      20.1
Gain on sale of investment in CF Industries, Inc(3) ..........     (102.4)        --         --         --         --
Loss on impairment of investment in CF Industries, Inc(4) ....         --       36.5         --         --         --
Equity in earnings of affiliated companies ...................      (36.7)     (58.4)     (57.3)     (24.2)     (45.3)
Minority interest in earnings of subsidiaries ................        1.3        1.6        6.4        5.5        6.9
                                                                 --------   --------   --------   --------   --------
   Earnings before income taxes and discontinued operations ..      132.3       29.6      107.6      114.2       56.7
Income tax expense (benefit) .................................        5.5        1.4       20.7        4.4       (8.4)
                                                                 --------   --------   --------   --------   --------
   Net earnings from continuing operations ...................      126.8       28.2       86.9      109.8       65.1
Earnings (loss) from discontinued operations, net of income
   taxes(5) ..................................................        2.1       (6.8)      (4.9)     (13.4)       3.0
                                                                 --------   --------   --------   --------   --------
   Net earnings ..............................................   $  128.9   $   21.4   $   82.0   $   96.4   $   68.1
                                                                 ========   ========   ========   ========   ========
OTHER FINANCIAL DATA:
Depreciation and amortization ................................   $  108.0   $  112.8   $  119.2   $  105.0   $   94.6
Unrealized hedging gains(losses)(6) ..........................        5.3      (23.1)      19.5      (20.7)      (6.6)
Capital expenditures .........................................       70.4       96.1       71.7       84.8       80.6
Cash patronage paid to members(7) ............................       15.1       11.4        4.2       20.2       30.7
Equity revolvement paid to members(8) ........................       53.6       23.2       20.2       17.7       16.2

BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents ....................................   $  179.7   $   73.1   $  110.3   $   64.3   $  130.2
Restricted cash(9) ...........................................         --       20.3       20.1         --         --
Working capital(10) ..........................................      186.2      306.8      401.2      370.9      311.0
Property, plant and equipment, net ...........................      658.2      610.0      617.4      572.1      669.3
Property under capital leases, net ...........................       10.4      100.2      109.1      105.7         --
Total assets .................................................    3,095.1    3,199.8    3,373.1    3,221.3    3,068.2
Total debt(11) ...............................................      547.2      805.0      963.2      959.0    1,010.3
Capital securities of trust subsidiary .......................      190.7      190.7      190.7      190.7      190.7
Obligations under capital leases .............................        9.3      100.9      110.0      108.3         --
Minority interests ...........................................        6.0        9.4       62.7       53.7       59.8
Total equities ...............................................      903.6      854.9      879.4      895.8      823.3



                                       29





                                                        YEARS ENDED DECEMBER 31,
                                          ----------------------------------------------------
                                            2005       2004       2003       2002       2001
                                          --------   --------   --------   --------   --------
                                                              ($ IN MILLIONS)
                                                                       
SELECTED SEGMENT FINANCIAL INFORMATION:
DAIRY FOODS
Net sales .............................   $3,904.6   $3,956.9   $2,975.0   $2,898.8   $3,462.1
Earnings (loss) from operations .......       31.3       37.0       26.3      (20.5)      60.2
Depreciation and amortization .........       42.7       39.6       43.0       36.8       42.5
Capital expenditures ..................       20.5       53.1       28.2       32.3         .7
FEED (12)
Net sales .............................    2,586.9    2,626.6    2,467.2    2,444.7    1,864.0
Earnings from operations ..............       61.4       12.8       56.1       41.7       39.0
Depreciation and amortization .........       35.2       38.5       44.9       46.6       31.7
Capital expenditures ..................       25.9       26.3       24.0       26.0       24.9
SEED
Net sales .............................      653.9      518.8      466.2      396.8      413.6
Earnings from operations ..............       30.5       19.9       15.0        8.7       10.3
Depreciation and amortization .........        2.3        2.5        2.2        3.0        5.0
Capital expenditures ..................        2.4        1.6        0.5        0.6        2.7
AGRONOMY(13)
Net sales .............................         --         --         --         --         --
Loss from operations ..................      (27.6)     (12.8)     (14.0)     (18.9)     (16.5)
Depreciation and amortization .........        6.1        6.1        6.1        6.1        6.3
Capital expenditures ..................         --         --         --         --         --
LAYERS (14)
Net sales .............................      407.0      541.3      317.8         --         --
(Loss) earnings from operations .......      (11.1)      26.8       28.5       (2.1)      (0.3)
Depreciation and amortization .........       10.3       10.8        6.3        0.9        0.3
Capital expenditures ..................       17.7        8.9        3.8         --         --
OTHER/ELIMINATIONS
Net sales .............................        4.3       13.2       29.9       39.2       38.0
Earnings (loss) from operations .......       (0.8)       1.3        1.4       (1.0)      (0.6)
Depreciation and amortization .........       11.6       15.3       16.8       11.6        8.8
Capital expenditures ..................        4.0        6.2       15.1       25.9       15.3


               See accompanying Notes to Selected Financial Data.

                        NOTES TO SELECTED FINANCIAL DATA

     (1) The following table summarizes restructuring and impairment charges
     (reversals):




                                               YEARS ENDED DECEMBER 31,
                                        ----------------------------------
                                        2005   2004   2003    2002    2001
                                        ----   ----   ----   -----   -----
                                                      
Restructuring charges (reversals) ...   $0.3   $2.4   $3.5   $13.2   $(4.1)
Impairment of assets ................    6.1    5.4    2.8    18.2     7.8
                                        ----   ----   ----   -----   -----
   Total ............................   $6.4   $7.8   $6.3   $31.4   $ 3.7
                                        ====   ====   ====   =====   =====


     Restructuring charges resulted primarily from the closing of manufacturing
facilities in Dairy Foods and initiatives to consolidate facilities and reduce
personnel in Feed.


                                       30



     The impairment charge of $6.1 million in 2005 related to the write-down of
various assets to their estimated fair value primarily due to closing facilities
in Dairy Foods and Feed. The impairment charge of $5.4 million in 2004 consisted
of the write-down of various assets to their estimated fair value in Dairy Foods
and Feed and a goodwill impairment in Seed due to the sale of a subsidiary. The
impairment charge of $2.8 million in 2003 related to the write-down of various
assets to their estimated fair value in Feed and Seed and a goodwill impairment
in Seed. The impairment charge of $18.2 million in 2002 consisted of the
write-down of certain impaired plant assets in Dairy Foods and Feed to their
estimated fair value. The impairment charge of $7.8 million in 2001 related to
the write-down of a Feed operation in Mexico to its estimated fair value.

(2) The following table summarizes other expense (income), net:



                                                YEARS ENDED DECEMBER 31,
                                        ----------------------------------------
                                         2005    2004    2003      2002     2001
                                        -----   -----   ------   -------   -----
                                                            
Loss on extinguishment of debt ......   $11.0   $  --   $  0.5   $    --   $23.4
Gain on legal settlements ...........    (0.6)   (5.4)   (22.8)   (155.5)   (3.0)
Gain on divestiture of businesses ...      --    (1.5)    (0.7)     (5.1)     --
Gain on sale of intangibles .........      --      --     (0.5)     (4.2)     --
(Gain) loss on sale of investments,
   excluding CF Industries ..........    (1.1)   (0.6)    (0.9)      0.9    (0.3)
                                        -----   -----   ------   -------   -----
   Total ............................   $ 9.3   $(7.5)  $(24.4)  $(163.9)  $20.1
                                        =====   =====   ======   =======   =====


(3) In 2005, we recorded a $102.4 million gain on sale of our investment in CF
Industries, Inc., a domestic manufacturer of crop nutrients.

(4) In 2004, we reduced the carrying value of our investment in CF Industries,
Inc. by $36.5 million.

(5) Earnings (loss) from discontinued operations reflects the results of our
swine production operations, which were sold in 2005.

(6) Derivative commodity instruments, primarily futures contracts, are
marked-to-market each month and gains and losses on open positions are
recognized in earnings.

(7) Cash patronage paid to members reflects the portion of earnings allocated to
members for the prior fiscal year distributed in cash in the following fiscal
year.



                                          YEARS ENDED DECEMBER 31,
                                    ------------------------------------
                                     2005    2004   2003    2002    2001
                                    -----   -----   ----   -----   -----
                                            (DOLLARS IN MILLIONS)
                                                    
20% required for tax deduction ..   $11.0   $ 7.9   $2.8   $14.1   $28.5
Discretionary ...................     4.1     3.5    1.4     6.1     2.2
                                    -----   -----   ----   -----   -----
   Total ........................   $15.1   $11.4   $4.2   $20.2   $30.7
                                    =====   =====   ====   =====   =====


(8) Equity revolvement reflects the distribution of earnings previously
allocated to members and not paid out initially as cash patronage. Also includes
the distribution of a portion of the equity issued in connection with the
acquisition of Dairyman's Cooperative Creamery Association and the acquisition
of certain assets of Countrymark Cooperative.



                               YEARS ENDED DECEMBER 31,
                       -------------------------------------
                        2005    2004    2003    2002    2001
                       -----   -----   -----   -----   -----
                               (DOLLARS IN MILLIONS)
                                        
Revolvement
   Dairy Foods .....   $17.1   $19.9   $18.0   $15.2   $14.0
   Ag Services(a) ..    36.5     3.3     2.2     2.5     2.2
                       -----   -----   -----   -----   -----
      Total ........   $53.6   $23.2   $20.2   $17.7   $16.2
                       =====   =====   =====   =====   =====


          (a) Included equity revolvements to deceased members of local
     cooperatives.

(9) Cash held in a restricted account was required to support the CPI property
and equipment lease. This lease was prepaid in 2005 and the restricted cash was
released.

(10) Working capital is defined as current assets (less cash and cash
equivalents and restricted cash) minus current liabilities (less notes and
short-term obligations, and current maturities of long-term debt and obligations
under capital leases).


                                       31


(11) Total debt excludes the 7.45% Capital Securities due on March 15, 2028, of
our trust subsidiary.

(12) In October 2001, we acquired Purina Mills, Inc. and since then we have
consolidated its operating activities in the Feed segment.

(13) In 2000, we contributed all of our revenue generating agronomy assets to
Agriliance LLC a joint venture with CHS Inc. in exchange for a 50% interest in
Agriliance. Our share of earnings or losses in Agriliance is reported under the
equity method of accounting, and accordingly, Agronomy, which primarily consists
of our Agriliance joint venture, has no net sales. Loss from operations reflects
overhead allocated to selling, general, and administrative expense and does not
include the equity earnings from Agriliance.

(14) Through June 30, 2003, our layers business, MoArk, was unconsolidated and
accounted for under the equity method. Effective July 1, 2003, MoArk was
consolidated in our financial statements. Financial statements for periods prior
to July 1, 2003 have not been restated.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

     You should read the following discussions of financial condition and
results of operations together with the financial statements and the notes to
such statements included elsewhere in this Annual Report on Form 10-K. This
discussion contains forward-looking statements based on current expectations,
assumptions, estimates and projections of our management. These forward-looking
statements involve risks and uncertainties. Actual results could differ
materially from those anticipated in these statements as a result of certain
factors, as more fully described in "Item 1A. "Risk Factors" and elsewhere in
this Annual Report on Form 10-K. We undertake no obligation to publicly update
any forward-looking statements.

OVERVIEW

GENERAL

Segments

     We operate our business predominantly in the United States in five
segments: Dairy Foods, Feed, Seed, Agronomy and Layers.

- -    Dairy Foods develops, produces, markets and sells premium butter, spreads,
     cheese and other dairy products.

- -    Feed is largely comprised of the operations of Land O'Lakes Purina Feed LLC
     ("Land O'Lakes Purina Feed"), the Company's wholly-owned subsidiary. Land
     O'Lakes Purina Feed develops, produces, markets and distributes animal
     feeds such as ingredient feed, formula feed, milk replacers, vitamins and
     additives to both commercial and lifestyle customers.

- -    Seed develops, markets and sells seed for a variety of crops, including
     alfalfa, corn, soybeans and forage and turf grasses.

- -    Agronomy consists primarily of our 50% ownership in Agriliance LLC, which
     is accounted for under the equity method. Agriliance manufactures, markets
     and sells two primary products lines: crop protection (including herbicides
     and pesticides) and crop nutrients (including fertilizer and
     micronutrients).

- -    Layers consists of MoArk, LLC, a consolidated subsidiary in which we held a
     57.5% ownership interest in 2005. The remaining interest was owned by
     Osborne Investments, LLC. MoArk produces and markets shell eggs and liquid
     egg products that are sold to retail and wholesale customers for consumer
     and industrial use throughout the United States. In 2004, we announced our
     intention to reposition our layers operations. As part of this effort, in
     the fourth quarter of 2005 we committed to a plan to sell a portion of our
     layers net assets. Management expects the asset repositioning to occur
     within a year. Accordingly, certain assets and liabilities were presented
     as assets held for sale in the consolidated financial statements at
     December 31, 2005. In January 2006, we purchased the remaining 42.5%
     minority interest in MoArk for $71.0 million in cash.

- -    We also derive a portion of revenues and income from other related
     businesses, which are insignificant to our overall results.

     We allocate corporate administrative expense to all five of our business
segments using the following two methodologies: direct usage for services for
which we are able to track usage, such as payroll and legal, and invested
capital for all other expenses.


                                       32



A majority of these costs is allocated based on direct usage. We allocate these
costs to all segments, including segments comprised solely of investments and
joint ventures.

     Unconsolidated Businesses

     We have investments in certain entities that are not consolidated in our
financial statements. Investments in which we hold a 20% to 50% ownership
interest are accounted for under the equity method and provided earnings and
cash flows for the three years ended December 31 as follows:



                                                            DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                                2005           2004           2003
                                                            ------------   ------------   ------------
                                                                           (IN MILLIONS)
                                                                                 
Earnings from unconsolidated businesses..................       $36.7          $58.4          $57.2
Cash flow from investments in unconsolidated businesses..        35.3           47.8           37.4


     We also hold investments in other cooperatives which are stated at cost
plus unredeemed patronage refunds received, or estimated to be received, in the
form of capital stock and other equities. Investments held in less than
20%-owned companies are stated at cost.

     Our investment in unconsolidated businesses was $263.8 million and $470.5
million as of December 31, 2005 and 2004, respectively. This decline is
primarily due to the sale of our investment in CF Industries, Inc., a domestic
manufacturer of crop nutrients in which we held a 38% ownership interest. In
August of 2005, we received $315.5 million in cash and recorded a gain on sale
of this investment of $102.4 million, before income taxes and related expenses.

     Agriliance LLC, which is reflected in our agronomy segment and is accounted
for under the equity method, constitutes the most significant of our investments
in unconsolidated businesses. Our investment in, and earnings and cash
distributions from, Agriliance are as follows as of and for the years ended:



                                           DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                               2005           2004           2003
                                           ------------   ------------   ------------
                                                          (IN MILLIONS)
                                                                 
AGRILIANCE:
   Investment in Agriliance.............      $112.9         $101.3          $92.1
   Equity in earnings from Agriliance...        35.5           39.3           33.9
   Cash distributions from Agriliance...        28.9           32.1           25.8


     Land O'Lakes, CHS Inc. ("CHS") and Farmland Industries contributed
substantially all of their agronomy marketing assets to Agriliance in July 2000.
Agriliance is a distributor of agricultural inputs and is owned equally by Land
O'Lakes and CHS. Prior to May 1, 2004, Agriliance was owned by Land O'Lakes (50%
voting interest) and CHS, Inc. (25% voting interest) and Farmland Industries,
Inc. (25% voting interest). Farmland Industries, Inc. filed for Chapter 11
bankruptcy court protection on May 31, 2002 and subsequently sold its ownership
interest to CHS effective April 30, 2004.

     Land O'Lakes provides certain support services to Agriliance at competitive
market prices. Agriliance was billed $12.9 million, $10.7 million and $9.2
million in 2005, 2004, and 2003, respectively, for these support services. In
addition, Land O'Lakes sells seed product to Agriliance and recorded sales of
$38.2 million, $31.7 million and $25.6 million in 2005, 2004, and 2003,
respectively.

     The fiscal year of Agriliance ends on August 31. Unless otherwise
indicated, references to the annual results of Agriliance in this Annual Report
on Form 10-K are presented on a calendar year basis to conform to Land O'Lakes'
presentation.

     Agriliance funds its operations from operating cash flows and with
borrowings from unaffiliated third parties. As of December 31, 2005, Agriliance
had syndicated secured and revolving credit arrangements in an aggregate amount
of $325 million and a $225 million receivables securitization with CoBank.
Agriliance also had $100 million of senior secured notes from a private
placement outstanding. Neither Land O'Lakes nor any of the restricted
subsidiaries guarantee these obligations. Land O'Lakes does not have an
obligation to contribute additional capital to finance Agriliance's operations.

     Agriliance's performance reflects the seasonal nature of its business. Most
of its annual sales and earnings, which are


                                       33



principally derived from the distribution of crop nutrients and crop protection
products manufactured by others occur in the second quarter of each calendar
year.



                                FOR THE YEARS
                             ENDED DECEMBER 31,
                             ------------------
                                 2005    2004     DECREASE
                                -----   -----     --------
                                     (IN MILLIONS)
                                         
Agriliance net earnings...      $71.0   $78.6      $(7.6)


     The $7.6 million decrease in earnings was primarily driven by lower
earnings from Agro Distribution, LLC, Agriliance's southern retail business,
partially offset by improved crop nutrient earnings. Earnings decreased by $12.1
million in Agro Distribution, LLC in 2005 compared to 2004. The change was
primarily driven by the impact of higher interest and bad debt costs in 2005.
Sales of crop protection products decreased 3% due to continued devaluation
related to products losing patent protection while earnings were down slightly
due to product mix and timing of sales programs. Partially offsetting these
decreases, crop nutrient earnings improved by $6.2 million due to a 2% volume
increase and improved product mix.

     We have an investment in CoBank, an agricultural cooperative bank, of $10.7
million at December 31, 2005, $15.5 million at December 31, 2004 and $18.6
million at December 31, 2003. This investment constitutes less than one percent
of CoBank's total shareholders' equity. We account for our investment in CoBank
under the cost method of accounting. The investment consists of an initial
nominal cash amount of $1,000 and net equity contributions based on a percentage
(currently 10.0%) of our five-year average loan volume. Since CoBank operates as
a cooperative, we receive patronage income from CoBank based on our annual loan
volume with CoBank. This patronage income reduces our interest expense. We
believe that our CoBank loan transactions are on terms comparable to those
available from unaffiliated third parties.

     Cooperative Structure

     Cooperatives typically derive a majority of their business from members,
although they are allowed by the Internal Revenue Code to conduct non-member
business. Earnings from non-member business are retained as permanent equity by
the cooperative and taxed as corporate income in the same manner as a typical
corporation. Earnings from member business are either applied to allocated
member equities, deferred member equities or retained as permanent equity (in
which case it is taxed as corporate income) or some combination thereof.

     For the year ended December 31, 2005, our net earnings from member business
were $120.1 million, excluding the portion (10% holdback) added to permanent
equity. Of this amount, $118.3 million was applied to allocated patronage
refunds and $1.8 million was applied to deferred equities. The $118.3 million of
allocated patronage refunds, which includes $63.7 million of patronage gains
related to the gain on sale of our CF Industries investment, consisted of an
estimated $23.7 million to be paid in cash in 2006 and $94.6 million to be
retained as allocated member equities and revolved at a later time, subject to
approval by the board of directors. The $1.8 million of deferred equities
represents earnings from member businesses that are held in an equity reserve
account rather than being allocated to members. For the year ended December 31,
2005 we had net earnings of $8.8 million applied to retained earnings, which
represents permanent equity derived from non-member business, the 10% holdback
of member earnings, unrealized hedging gains and income taxes.

     In 2005, we made payments of $68.7 million for the redemption of member
equities. This included $15.1 million for the cash patronage portion of the 2004
earnings allocated to members. It also included $53.6 million for the
revolvement of member equities previously allocated to members, and not paid as
cash patronage, and the revolvement of a portion of equities issued in
connection with the 1998 acquisitions of Dairyman's Cooperative Creamery
Association and certain assets of Countrymark Cooperative.

     Wholesaling and Brokerage Activities

     Dairy Foods operates a wholesale milk marketing program. We purchase excess
raw milk over our manufacturing needs from our members and sell it directly to
other dairy processors. We generate losses or insignificant earnings on these
transactions. There are three principal reasons for doing this: first, we need
to sell a certain percentage of our raw milk to fluid dairy processors in order
to participate in the Federal market order system, which lowers our input cost
of milk for the manufacture of dairy products; second, it reduces our need to
purchase raw milk from sources other than members during periods of low milk
production in the United States (typically August, September and October) and
third, it ensures that our members have a market for the milk that they produce
during periods of high milk production.


                                       34



     For the year ended December 31, 2005, we sold 5,510.1 million pounds of
milk, which resulted in $1,186.9 million of net sales or 30.4% of our Dairy
Foods segment's net sales for that period, with cost of sales exceeding net
sales by $9.4 million.

     Feed, in addition to selling its own products, buys and sells or brokers
for a fee soybean meal and other feed ingredients. We market these ingredients
to our local member cooperatives and to other feed manufacturers, which use them
to produce their own feed. Although this activity generates substantial
revenues, it is a very low-margin business. We are generally able to obtain feed
inputs at a lower cost as a result of our ingredient merchandising business
because of lower per unit shipping costs associated with larger purchases and
volume discounts. For the year ended December 31, 2005, ingredient merchandising
generated net sales of $536.2 million, or 23.2% of total feed segment net sales,
and a gross profit of $17.6 million, or 4.7% of total feed segment gross profit.

     Seasonality

     Certain segments of our business are subject to seasonal fluctuations in
demand. In our Dairy Foods segment, butter sales typically increase in the fall
and winter months due to increased demand during holiday periods. Feed sales
tend to be highest in the first and fourth quarter of each year because cattle
are less able to graze during cooler months. Most Seed sales occur in the first
and fourth quarter of each year. Agronomy product sales tend to be much higher
in the first and second quarters of each year, as farmers buy crop nutrients and
crop protection products to meet their seasonal planting needs.

     FACTORS AFFECTING COMPARABILITY

     Dairy and Agricultural Commodity Inputs and Outputs

     Many of our products, particularly in Dairy Foods, Feed and Layers use
dairy or agricultural commodities as inputs or constitute dairy or agricultural
commodity outputs. Consequently, our results are affected by the cost of
commodity inputs and the market price of commodity outputs. Government
regulation of the dairy industry and industry practices in the animal feed
industry tend to stabilize margins in those segments but do not protect against
large movements in either input costs or output prices.

     Dairy Foods. Raw milk is the major commodity input for our Dairy Foods
segment. For the year ended December 31, 2005, our raw milk input cost was
$1,896.9 million, or 51.1% of the cost of sales for Dairy Foods. Cream, butter
and bulk cheese are also significant Dairy Foods commodity inputs. Cost of sales
for the year ended December 31, 2005 for these inputs was $182.3 million for
cream, $105.2 million for butter and $375.1 million for bulk cheese. Our Dairy
Foods outputs, namely butter, cheese and nonfat dry milk, are also commodities.

     The minimum price of raw milk and cream is set monthly by Federal
regulators based on the regional prices of dairy food products manufactured.
These prices provide the basis for our raw milk and cream input costs. As a
result, dairy foods products for which the sales price is fixed shortly after
production, such as most bulk cheese, are not usually subject to significant
commodity price risk as the price received for the output usually varies with
the cost of the significant inputs. For the year ended December 31, 2005, bulk
cheese, which is generally priced the date of make, represented $409.9 million,
or 10.2%, of our Dairy Foods segment's net sales.

     We also maintain significant inventories of butter and cheese for sale to
our retail and foodservice customers, which are subject to commodity price risk.
Because production of raw milk and demand for butter varies seasonally, we
inventory significant amounts of butter. Demand for butter is highest during the
fall and winter when milk supply is lowest. As a result, we produce and store
excess quantities of butter during the spring when milk supply is highest. In
addition, we maintain some inventories of cheese for aging. For the year ended
December 31, 2005, branded and private label retail, deli and foodservice net
sales of cheese and butter represented $1,366.4 million, or 35.0%, of our Dairy
Foods segment's net sales.

     Market prices for commodities such as butter and cheese can have a
significant impact on both the cost of products produced and the price for which
products are sold. In the past three years, the lowest monthly market price for
butter was $1.05 in February 2003, and the highest monthly market price was
$2.21 in April 2004. In the past three years, the lowest monthly market price
for block cheese was $1.07 in March 2003 and the highest monthly market price
was $2.14 in April 2004. The per pound average market price for each of the
three years ended December 31, 2005 and the per pound market price as of
December 31, 2005, 2004, and 2003 is as follows:


                                       35





                                           DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                               2005           2004          2003
                                           ------------   ------------   ------------
                                                                
PER POUND MARKET PRICE AVERAGE FOR YEAR:
   Butter...............................       $1.55          $1.82         $1.14
   Block cheese.........................        1.49           1.65          1.32

PER POUND MARKET PRICE AT YEAR END:
  Butter................................        1.35           1.54          1.25
  Block cheese..........................        1.37           1.49          1.31


     We maintain a significant dairy manufacturing presence in strategic
locations across the United States. As milk production continues to migrate to
the West, our plants in the Upper Midwest and East are competing with other
manufacturers for a declining amount of milk. The increased competition, coupled
with higher energy costs has pressured margins related to these facilities.

     Feed. The Feed segment follows industry standards for feed pricing. The
feed industry generally prices products based on income over ingredient cost per
ton of feed. This practice tends to mitigate the impact of volatility in
commodity ingredient markets on our animal feed profits. As ingredient costs
fluctuate, the changes are generally passed on to customers through weekly or
monthly changes in prices. Accordingly, net sales are less of an indicator of
performance since large fluctuations can occur from period-to-period due to
volatility in the underlying commodity ingredient prices.

     We enter into forward sales contracts to supply feed to customers, which
currently represent approximately 17% of our feed sales. When we enter into
these contracts, we also generally enter into forward purchase contracts on the
underlying commoditities to lock in our operating margins.

     Changes in commodity grain prices have an impact on the mix of products we
sell. When grain prices are relatively high, the demand for complete feed rises
since many livestock producers are also grain growers and sell their grain in
the market and purchase complete feed as needed. When grain prices are
relatively low, these producers feed their grain to their livestock and purchase
premixes and supplements to provide complete nutrition to their animals. These
fluctuations in product mix generally have minimal effects on our operating
results. Complete feed has a far lower margin per ton than supplements and
premixes. Thus, during periods of relatively high grain prices, although our
margins per ton are lower, we sell substantially more tonnage because the grain
portion of complete feed makes up the majority of its weight.

     As dairy production has shifted to the western United States, we have seen
a change in our feed product mix, with lower sales of complete feed and
increased sales of simple blends and supplemental feeds. Complete feed is
manufactured to meet the complete nutritional requirements of animals, whereas a
simple blend is a blend of unprocessed commodities to which the producer then
adds vitamins to supply the animal's nutritional need. A supplemental feed is
somewhere between these two points. Simple blends tend to have lower margins
than supplemental feeds, and both have lower margins than complete feeds. This
change in product mix is a result of differences in industry practices. Dairy
producers in the western United States tend to purchase feed components and mix
them at the farm location rather than purchasing a complete feed product
delivered to the farm. Producers purchase grain blends and concentrated premixes
from separate suppliers. This shift is reflected in increased sales of simple
blends in our western feed region and increases in our subsidiaries that
manufacture premixes in the West.

     The increase in vertical integration of swine and poultry producers has
also impacted our feed product mix by increasing sales of lower-margin feed
products. The vertically integrated producers tend to purchase feed components
and mix the components themselves rather than purchasing a complete feed product
delivered to the farm. For the year ended December 31, 2005, swine feed volumes
were down 23% compared to 2004, and poultry feed was down 33%. Some of this
volume reduction was deliberate due to plant closings, exiting company ownership
positions and an increased focus on value-added sales opportunities. We expect
downward pressure on volumes in dairy, poultry and swine feed to continue in
2006 as further integration occurs in these industries.

     Layers. MoArk produces and markets shell eggs and liquid egg products.
MoArk's sales and earnings fluctuate depending on egg prices. For the year ended
December 31, 2005, egg prices averaged $0.72 per dozen as measured by Urner
Barry South Central Large, compared to egg prices of $0.91 for 2004. Decreasing
market prices for eggs resulted, in part, from greater supply due to increased
layer flock size as well as seasonal demand fluctuations.


                                       36



     Through June 30, 2003, MoArk was unconsolidated and our ownership interest
was recorded only as equity in earnings or loss from affiliated companies.
Effective July 1, 2003, MoArk was consolidated in our financial statements as
required by Financial Accounting Standards Board Interpretation No. 46 ("FIN
46") and we did not restate prior periods. Accordingly, the 2003 financial
statements are not comparable to 2005 and 2004 for several categories, including
sales and cost of sales in this segment. Sales of $407.0 million and $541.3
million were recorded for the years ended December 31, 2005 and 2004,
respectively, and sales of $317.8 million were recorded for the six months ended
December 31, 2003. Cost of sales of $385.1 million and $476.0 million was
recorded for the years ended December 31, 2005 and 2004, respectively, and cost
of sales of $264.7 million was recorded for the six months ended December 31,
2003. There were no sales and cost of sales recorded for the first six months of
the year ended December 31, 2003 as MoArk was accounted for under the equity
method during these periods.

Acquisitions/Joint Ventures/Divestitures

     In 2005, we paid $30.1 million for the remaining purchase price for Madison
Dairy Produce Company, a private label butter business acquired by Dairy Foods
in 2000. The $30.1 million was recorded in accrued liabilities in the
consolidated balance sheet as of December 31, 2004. In December 2005, we paid
$3.2 million for the remaining 1.5% minority interest in Cheese & Protein
International LLC, a cheese manufacturing and whey processing plant in Tulare,
California. In September 2005, we increased our ownership in Penny-Newman
Milling LLC, a grain and feed company in Fresno, California, from 40.0% to
50.01% with an additional investment of $4.0 million and began consolidating
Penny-Newman Milling, LLC into our financial statements effective September 30,
2005. In January 2006, we paid $13.2 million in cash to increase our ownership
of Penny-Newman Milling, LLC to 100%. In August 2005, we paid $8.2 million to
acquire the assets of an alfalfa seed company. The results of operations of this
Seed acquisition are included in the consolidated financial statements since
that date.

Discontinued Operations

     In February, 2005, we completed the sale of substantially all of the assets
of the swine production operations to Maschhoff West LLC. We received net
proceeds of $42.0 million, which resulted in a gain, net of income taxes, of
approximately $0.1 million. Under the terms of the agreement, Land O'Lakes, Inc.
continues to hold all current aligned system contracts. For the purposes of this
Form 10-K, certain components of the swine production operations are reported as
discontinued operations for all periods presented.

Derivative Commodity Instruments

     In the normal course of operations, we purchase commodities such as milk,
butter and soybean oil in Dairy Foods, soybean meal and corn in Feed, and
soybeans in Seed. Derivative commodity instruments, primarily futures contracts
offered through regulated commodity exchanges, are used to reduce our exposure
to changes in commodity prices. These contracts are not designated as hedges
under Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The futures contracts for open
positions are marked-to-market each month and these unrealized gains or losses
("unrealized hedging gains and losses") are recognized in earnings and are fully
taxed and applied to retained earnings on our balance sheet. Amounts recognized
in earnings, before income taxes, for the years ended December 31 are as
follows:



                                    DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                        2005           2004           2003
                                    ------------   ------------   ------------
                                                   (IN MILLIONS)
                                                         
Unrealized hedging gain (loss)...       $5.3          $(23.1)         $19.5



                                       37


RESULTS OF OPERATIONS



                                                                                FOR THE YEARS ENDED DECEMBER 31
                                                                       -------------------------------------------------
                                                                             2005             2004             2003
                                                                       ---------------  ---------------  ---------------
                                                                       $ AMOUNT         $ AMOUNT         $ AMOUNT
                                                                       --------         --------         --------
                                                                                     (DOLLARS IN MILLIONS)
                                                                                                 
Net sales............................................................  $7,556.7         $7,656.8         $6,256.1

                                                                                  % OF             % OF             % OF
                                                                                  NET              NET              NET
                                                                       $ AMOUNT  SALES  $ AMOUNT  SALES  $ AMOUNT  SALES
                                                                       --------  -----  --------  -----  --------  -----
Cost of sales .......................................................   6,971.7  92.3    7,063.1  92.2    5,671.9  90.7
                                                                       --------  ----   --------  ----   --------  ----
Gross profit ........................................................     585.0   7.7      593.7   7.8      584.2   9.3
Selling, general and administrative .................................     494.9   6.6      501.0   6.5      464.6   7.4
Restructuring and impairment charges ................................       6.4   0.1        7.8   0.1        6.3   0.1
                                                                       --------  ----   --------  ----   --------  ----
Earnings from operations ............................................      83.7   1.1       84.9   1.1      113.3   1.8
Interest expense, net ...............................................      79.9   1.1       83.1   1.1       81.0   1.3
Other expense (income), net .........................................       9.3   0.1       (7.5) (0.1)     (24.4) (0.4)
Gain on sale of investment in CF Industries, Inc. ...................    (102.4) (1.4)        --    --         --    --
Loss on impairment of investment in CF Industries, Inc. .............        --    --       36.5   0.5         --    --
Equity in earnings of affiliated companies ..........................     (36.7) (0.5)     (58.4) (0.8)     (57.3) (0.9)
Minority interest in earnings of subsidiaries .......................       1.3   0.0        1.6   0.0        6.4   0.1
                                                                       --------  ----   --------  ----   --------  ----
Earnings before income taxes and discontinued operations ............     132.3   1.8       29.6   0.4      107.6   1.7
Income tax expense ..................................................       5.5   0.1        1.4   0.0       20.7   0.3
                                                                       --------  ----   --------  ----   --------  ----
Net earnings from continuing operations .............................     126.8   1.7       28.2   0.4       86.9   1.4
Earnings (loss) from discontinued operations, net of income taxes ...       2.1   0.0       (6.8) (0.1)      (4.9) (0.1)
                                                                       --------  ----   --------  ----   --------  ----
Net earnings ........................................................  $  128.9   1.7   $   21.4   0.3   $   82.0   1.3
                                                                       ========  ====   ========  ====   ========  ====


YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

     Overview of Results



                         FOR THE YEARS ENDED DECEMBER 31,
                         --------------------------------
                              2005     2004   INCREASE
                             ------   -----   --------
                                   (IN MILLIONS)
                                     
Net earnings..........       $128.9   $21.4    $107.5



                                       38



     Net earnings in 2005 were impacted by the gain on the sale of CF Industries
of $102.4, which was partially offset by related expenses of $28.9 million and
income tax expense of $3.8 million. In addition, we had an unrealized hedging
gain of $5.3 million in 2005, partially offset by income tax expense of $2.0
million. In 2004, net earnings were negatively impacted by $36.5 million for the
impairment of our investment in CF Industries, which was partially offset by a
$1.8 million income tax benefit. Unrealized hedging losses lowered earnings by
$23.1 million in 2004 partially offset by a tax benefit of $8.8 million.
Excluding these items, our net earnings decreased $14.5 million in 2005 compared
to 2004. This decrease reflects lower earnings in the Layers and Dairy Foods
segments, partially offset by improved volumes and margins in the Feed and Seed
segments.



                         FOR THE YEARS ENDED DECEMBER 31,
                         --------------------------------
                            2005       2004     DECREASE
                          --------   --------   --------
                                   (IN MILLIONS)
                                       
Net sales.............    $7,556.7   $7,656.8   ($100.1)


     The decrease in net sales was primarily attributed to a $134.3 million
decrease in Layers due to lower egg prices in 2005 compared to 2004. The Dairy
Foods and Feed segments sales declined $52.3 million and $39.7 million,
respectively, mainly due to lower commodity prices in 2005 compared to 2004.
These declines were partially offset by a $135.1 million increase in sales in
the Seed segment due to volume and price increases. A discussion of net sales by
business segment is found below under the caption "Net Sales and Gross Profit by
Business Segment."



                         FOR THE YEARS ENDED DECEMBER 31,
                         --------------------------------
                             2005     2004    DECREASE
                            ------   ------   --------
                                   (IN MILLIONS)
                                      
Gross profit..........      $585.0   $593.7    $(8.7)


     The decrease in gross profit was primarily due to a $43.4 million impact of
lower egg prices in the Layers segment. Partially offsetting the decline were
increases in the Feed and Seed segments due to volume improvements, margin
increases and unrealized hedging gains in 2005. A discussion of gross profit by
business segment is found below under the caption "Net Sales and Gross Profit by
Business Segment."



                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                       --------------------------------
                                                           2005     2004    DECREASE
                                                          ------   ------   --------
                                                                 (IN MILLIONS)
                                                                   
Selling, general and administrative expense.........      $494.9   $501.0    $(6.1)


     The decrease in selling, general and administrative expense was driven by
lower expenses in Dairy Foods, Feed and Layers. This was partially offset by
increased expenses in the Agronomy segment due to expenses related to the sale
of our investment in CF Industries.



                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                       --------------------------------
                                                            2005   2004   DECREASE
                                                            ----   ----   --------
                                                                 (IN MILLIONS)
                                                                 
Restructuring and impairment charges................        $6.4   $7.8    $(1.4)



                                       39



     In 2005, we had restructuring charges of $0.3 million. Dairy Foods recorded
a $1.1 million restructuring charge, which represented severance for
approximately 30 employees and other exit costs related to the anticipated 2006
closure of a cheese facility in Greenwood, Wisconsin. Partially offsetting this
charge was a reversal of $0.4 million related to prior year restructuring
charges for the closure of the Volga, South Dakota cheese facility and $0.4
million related to prior year restructuring charges for downsizing of feed
operations. In 2005, we incurred $6.1 million of impairment charges. This
included write-downs of impaired plant fixed assets to their estimated fair
values of $3.4 million in Dairy Foods, $2.3 million in Feed and $0.4 million in
Layers.

     In 2004, we had restructuring charges of $2.4 million. Feed recorded a $2.9
million restructuring charge, which represented severance costs for
approximately 100 employees due to the downsizing of operations. Dairy Foods had
a reversal of $0.5 million related to prior year restructuring charges for the
closure of the Volga, South Dakota cheese facility. In 2004, we incurred $5.4
million of impairment charges. This included a $1.5 million charge for goodwill
impairment in Seed and impairments related to the write-down of certain assets
to their estimated fair value of $3.1 million in Feed, and $0.6 million in Dairy
Foods and $0.2 million in other.



                                    FOR THE YEARS ENDED DECEMBER 31,
                                    --------------------------------
                                         2005    2004   DECREASE
                                        -----   -----   --------
                                              (IN MILLIONS)
                                               
Interest expense, net............       $79.9   $83.1    $(3.2)


     The decrease in interest expense was driven by debt reduction efforts in
2005. Partially offsetting the impact of lower debt was an increase in average
interest rates and the impact of the write-off of deferred financing charges.
Interest rates on borrowings averaged 7.6% in 2005 compared to 6.5% in 2004.
Deferred financing amortization increased by $3.1 million in 2005 to $8.7
million due to the acceleration of deferred financing charges related to early
payments on Term B loan and the senior unsecured notes.



                                                         FOR THE YEARS ENDED DECEMBER 31,
                                                         --------------------------------
                                                              2005    2004   DECREASE
                                                             -----   -----   --------
                                                                   (IN MILLIONS)
                                                                    
Equity in earnings of affiliated companies............       $36.7   $58.4    $(21.7)


     Results for 2005 included equity in earnings from Agriliance of $35.5
million compared to equity in earnings of $39.3 million for 2004. A discussion
of net earnings for Agriliance can be found under the caption "Overview --
General -- Unconsolidated Businesses." MoArk equity investments had equity
losses of $6.5 million for the year ended December 31, 2005 compared to equity
earnings of $7.9 million for the year ended December 31, 2004. This decrease in
earnings of $14.4 million was due to a decline in market prices for eggs.

     Net Sales and Gross Profit by Business Segment

     Our reportable segments consist of business units that offer similar
products and services and/or similar customers. We have five segments: Dairy
Foods, Feed, Seed, Agronomy and Layers. Agronomy consists primarily of our 50%
ownership in Agriliance, which is accounted for under the equity method.
Accordingly, no sales or gross profit are recorded in the Agronomy segment. A
discussion of net earnings for Agriliance can be found under the caption
"Overview -- General -- Unconsolidated Businesses."


                                       40



     DAIRY FOODS



                                              FOR THE YEARS ENDED DECEMBER 31
                                              -------------------------------
                                                 2005       2004     % CHANGE
                                               --------   --------   --------
                                                   (DOLLARS IN MILLIONS)
                                                            
Net sales .................................    $3,904.6   $3,956.9    (1.3%)
Gross profit ..............................       186.6      197.8    (5.7%)
   Gross profit as a % of sales ...........         4.8%       5.0%


NET SALES VARIANCE SCHEDULE



                                               INCREASE
                                              (DECREASE)
                                              ----------
                                                  (IN
                                               MILLIONS)
                                           
Pricing / product mix impact...............     $(57.7)
Volume impact..............................        5.4
                                                ------
   Total decrease..........................     $(52.3)


     The net sales decrease in 2005 was primarily driven by the impact of lower
commodity prices. The negative pricing / mix variance of $57.7 million in 2005
was mainly due to the average full year market price decreasing $0.27 per pound
for butter. The negative pricing / mix variances in retail and private label
butter were $18.9 million and $59.4 million, respectively. Partially offsetting
this was an increase in dairy manufacturing due to the mix of products sold. The
volume variance of $5.4 million was primarily driven by increased volumes in
foodservice cheese, partially offset by lower volumes in raw milk sales.

GROSS PROFIT VARIANCE SCHEDULE



                                               INCREASE
                                              (DECREASE)
                                              ----------
                                                  (IN
                                               MILLIONS)
                                           
Margin / product mix impact................     $(10.9)
Volume impact..............................        1.3
Unrealized hedging.........................       (1.6)
                                                ------
   Total decrease..........................     $(11.2)


     The gross profit decline in 2005 was primarily due to higher energy prices
in industrial manufacturing and lower margins in branded cheese, partially
offset by improved margins in retail butter and increased volumes at CPI. The
negative margin / mix variance of $10.9 million was partially due to a $10.2
million increase in energy costs that impacted dairy manufacturing. In addition,
branded cheese was down $11.9 million due to the impact of lower prices.
Partially offsetting the margin / mix variances was higher prices in retail
butter which had a positive impact of $9.6 million. The volume variance impact
of $1.3 million was primarily due to improvements at CPI due to increased
volumes related to the completion of the Phase II expansion in June of 2004.
Partially offsetting this was the impact of lower volumes in retail butter.

     FEED



                                              FOR THE YEARS ENDED DECEMBER 31
                                              -------------------------------
                                                 2005       2004     % CHANGE
                                               --------   --------   --------
                                                    (DOLLARS IN MILLIONS)
                                                            
Net sales..................................    $2,586.9   $2,626.6    (1.5)%
Gross profit...............................       290.6      256.5    13.3%
   Gross profit as a % of sales............        11.2%       9.8%


NET SALES VARIANCE SCHEDULE



                                               INCREASE
                                              (DECREASE)
                                              ----------
                                                  (IN
                                               MILLIONS)
                                           
Pricing / product mix impact...............     $(37.7)
Volume impact..............................        3.4
One-time items.............................       (5.4)
                                                ------
   Total decrease..........................     $(39.7)



                                       41


     The decrease in net sales was due primarily to the impact of lower
commodity prices. The $37.7 million negative pricing / mix variance was
primarily related to a $74.8 million pricing impact to ingredient sales. In
addition, formula feed sales, which includes both lifestyle and livestock feeds,
decreased by $38.6 million, primarily in the livestock category due to the
impact of lower commodity prices. Partially offsetting these decreases were
increases in our premix subsidiaries and milk replacer sales of $43.2 million
and $30.1 million, respectively. The volume variance of $3.4 million was driven
by the impact of a 4% increase in ingredient volumes, which caused sales to
increase $27.7 million, and the impact of an 11% increase in volumes in our
premix subsidiaries, which caused sales to increase by $17.0 million. Partially
offsetting these was a $38.5 million negative impact of lower volumes in formula
feed, entirely in the livestock category. The one-time category includes the
sale of Heritage Trading Company, LLC in 2005 which was partially offset by
higher sales due to the consolidation of Penny-Newman Milling, LLC on September
30, 2005.



                                    INCREASE
GROSS PROFIT VARIANCE SCHEDULE     (DECREASE)
- ------------------------------   -------------
                                 (IN MILLIONS)
                              
Margin / product mix impact ..       $12.7
Volume impact ................         1.8
Unrealized hedging ...........        19.4
One-time items ...............         0.2
                                     -----
   Total increase ............       $34.1


     The increase in gross profit was primarily due to volume increases in
lifestyle feeds, cost control efforts, product mix adjustments, improved markets
and unrealized hedging. The positive margin / mix impact of $12.7 million was
primarily due to a $15.3 million improvement in the lifestyle category of
formula feed. In addition, improved markets increased gross profit in
ingredients by $5.2 million. Partially offsetting these was a negative margin /
mix impact in our premix subsidiaries of $4.2 million. The volume variance of
$1.8 million was due to improvements in our lifestyle business of $4.2 million,
driven by a 2% increase in volumes. In addition, the volume increase in the
ingredient business and premix subsidiaries caused gross profit to increase by
$1.0 million and $1.6 million, respectively. Partially offsetting these was the
$4.9 million impact of lower volumes in the livestock business. The one-time
category includes the impact from the sale of Heritage Trading Company, LLC in
2005 which was partially offset by higher gross profit due to the consolidation
of Penny Newman-Milling, LLC.

SEED



                                      FOR THE YEARS ENDED DECEMBER 31
                                      -------------------------------
                                          2005     2004    % CHANGE
                                         ------   ------   --------
                                           (DOLLARS IN MILLIONS)
                                                  
Net sales .........................      $653.9   $518.8     26.0%
Gross profit ......................        84.4     70.4     19.9%
   Gross profit as a % of sales ...        12.9%    13.6%




                                       INCREASE
NET SALES VARIANCE SCHEDULE           (DECREASE)
- ---------------------------         -------------
                                    (IN MILLIONS)
                                 
Pricing / product mix impact ....      $ 42.3
Volume impact ...................       108.5
Divestiture .....................       (15.7)
                                       ------
   Total increase ...............      $135.1


     The net sales increase was primarily driven by double digit volume growth
in corn, alfalfa, soybeans and forages. The $42.3 million positive pricing / mix
variance was primarily related to higher prices in our partnered soybean and
corn seed. In addition, alfalfa and propriety corn and soybeans showed
improvement in 2005 compared to 2004. The volume variance of $108.5 million was
primarily driven by strength in our partnered soybeans and corn. Alfalfa also
had a significant sales increase due to strong markets. The sale of Seed
Research of Oregon in 2004 caused sales to decrease by $15.7 million in 2005
compared to 2004.


                                       42





                                      INCREASE
GROSS PROFIT VARIANCE SCHEDULE       (DECREASE)
- ------------------------------     -------------
                                   (IN MILLIONS)
                                
Margin / product mix impact ....       $ 0.4
Volume impact ..................        12.3
Unrealized hedging .............         3.5
One-time items .................        (2.2)
                                       -----
   Total increase ..............       $14.0


     The gross profit margin / mix increase was $0.4 million in 2005 compared to
2004. Improvements in alfalfa and partnered corn and soybeans were mostly offset
by reductions in proprietary corn and soybeans. The volume improvement of $12.3
million was driven by 26% higher corn, 24% higher alfalfa, and 16% higher
soybeans sales. The sale of Seed Research of Oregon caused a decrease in gross
profit of $2.2 million in 2005 compared to 2004.

     LAYERS



                                      FOR THE YEARS ENDED DECEMBER 31
                                      -------------------------------
                                          2005     2004    % CHANGE
                                         ------   ------   --------
                                             (DOLLARS IN MILLIONS)
                                                   
Net sales .........................      $407.0   $541.3    (24.8%)
Gross profit ......................        21.9     65.3    (66.5%)
   Gross profit as a % of sales ...         5.4%    12.1%




                                       INCREASE
NET SALES VARIANCE SCHEDULE           (DECREASE)
- ---------------------------         -------------
                                    (IN MILLIONS)
                                 
Pricing / product mix impact ....      $(144.4)
Volume impact ...................         10.1
                                       -------
   Total decrease ...............      $(134.3)


     The net sales decrease was primarily driven by lower egg market prices. The
average quoted price based on the South Central Large market decreased to $0.72
per dozen in 2005 compared to $0.91 per dozen in 2004. As a result, sales of
shell eggs decreased $74.5 million and sales of egg products decreased by $59.8
million.



                                      INCREASE
GROSS PROFIT VARIANCE SCHEDULE       (DECREASE)
- ------------------------------     -------------
                                   (IN MILLIONS)
                                
Margin / product mix impact ....      $(46.6)
Volume impact ..................         1.2
Unrealized hedging .............         2.0
                                      ------
   Total decrease ..............      $(43.4)


     The gross profit decline is primarily attributable to the drop in average
market price of eggs. Partially offsetting the impact of reduced egg prices were
lower feed costs and unrealized hedging gains in 2005.

YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

     Overview of Results



                          FOR THE YEARS ENDED DECEMBER 31,
                          --------------------------------
                               2004    2003   DECREASE
                              -----   -----   --------
                                    (IN MILLIONS)
                                      
Net earnings ..........       $21.4   $82.0    $(60.6)



                                       43



     Net earnings in 2004 were negatively impacted by a $36.5 million impairment
on our investment in CF Industries, partially offset by a $1.8 million income
tax benefit, and unrealized hedging losses of $23.1 million, partially offset by
an $8.8 million income tax benefit. In 2004, we also recorded a gain on legal
settlement of $5.4 million, partially offset by income tax expense of $1.9
million. In 2003, net earnings benefited from a gain on legal settlement of
$22.8 million, partially offset by income tax expense of $6.5 million, and
unrealized hedging gains of $19.5 million, partially offset by income tax
expense of $7.5 million. Excluding these items, the Company's net earnings
increased $13.2 million in 2004. This increase reflects improved margins in
Dairy Foods and Seed, and higher volume growth in Seed, partially offset by
lower earnings in the Feed and Layers segments.



                          FOR THE YEARS ENDED DECEMBER 31,
                          --------------------------------
                             2004       2003     INCREASE
                           --------   --------   --------
                                    (IN MILLIONS)
                                       
Net sales .............    $7,656.8   $6,256.1   $1,400.7


     The primary increase in net sales is attributed to a $981.9 million
increase in Dairy Foods. Sales were also impacted from the consolidation of
MoArk effective July 1, 2003, which increased sales by $223.5 million in 2004
compared to 2003. Prior to July 1, 2003, MoArk was accounted for under the
equity method. Increased sales in Seed and Feed also contributed $211.9 million.
A discussion of net sales by business segment is found below under the caption
"Net Sales and Gross Profit by Business Segment."



                          FOR THE YEARS ENDED DECEMBER 31,
                          --------------------------------
                              2004     2003    INCREASE
                             ------   ------   --------
                                     (IN MILLIONS)
                                      
Gross profit ..........      $593.7   $584.2     $9.5


     Increased volumes in Dairy Foods, improved margins in Seed and the
inclusion of a full year of MoArk gross profit in 2004 were the most significant
reasons for the increase in gross profit. Prior to July 1, 2003, MoArk was
accounted for under the equity method. Partially offsetting these increases was
a $37.8 million increase in unrealized hedging losses, mainly in Feed. A
discussion of gross profit by business segment is found below under the caption
"Net Sales and Gross Profit by Business Segment."



                                                  FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------
                                                      2004     2003    INCREASE
                                                     ------   ------   --------
                                                            (IN MILLIONS)
                                                              
Selling, general and administrative expense ...      $501.0   $464.6     $36.4


     The increase in selling, general and administrative expense was primarily
due to the consolidation of MoArk effective July 1, 2003, which resulted in an
additional $13.6 million of expense for the year ended December 31, 2004. Prior
to July 1, 2003, MoArk was accounted for under the equity method. Also
contributing to the increase was a gain on the sale of the Perham and Gustine
dairy facilities of $9.4 million in 2003 compared to no recorded gain for 2004
and increased incentive expense of $5.0 million in 2004.



                                                  FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------
                                                       2004   2003   INCREASE
                                                       ----   ----   --------
                                                            (IN MILLIONS)
                                                            
Restructuring and impairment charges ..........        $7.8   $6.3     $ 1.5


     In 2004, Feed reported a restructuring charge of $2.9 million for severance
costs for 100 employees affected by the restructuring of operations in 2004. In
addition, impairment of Feed assets held for sale was $3.1 million in 2004. We
had impairments of $0.6 million in Dairy Foods and $0.2 million in the other
segment related to the write-down of certain assets to their estimated fair
value. We also incurred $1.5 million for goodwill impairment in our Seed segment
and reversed $0.5 million of restructuring charges in our Dairy Foods segment
related to the closure of our Volga, South Dakota and Perham, Minnesota plants.


                                       44



     The $6.3 million charge in 2003 related to $3.5 million of restructuring
charges primarily for Dairy Foods and $2.8 million for impairment charges for
the Feed and Seed segments.



                                                  FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------
                                                       2004    2003   INCREASE
                                                      -----   -----   --------
                                                            (IN MILLIONS)
                                                            
Interest expense, net .........................       $83.1   $81.0     $2.1


     The consolidation of MoArk effective July 1, 2003 resulted in an additional
$2.3 million of interest expense for the year ended December 31, 2004. Prior to
July 1, 2003, MoArk was accounted for under the equity method. In addition, we
accelerated $1.5 million of deferred financing cost amortization as a result of
early payoff of our Term A loan and prepayment of a portion of the Term B loan
with proceeds from the $100 million expansion of our receivables securitization
facility. Partially offsetting these increases was a $2.5 million decrease in
interest expense from the interest rate swap entered into during 2004. Combined
interest rates for borrowings, excluding CoBank patronage, averaged 6.8% in
2004, compared to 7.2% in 2003.



                                                  FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------
                                                      2004    2003   INCREASE
                                                     -----   -----   --------
                                                             (IN MILLIONS)
                                                            
Equity in earnings of affiliated companies ....      $58.4   $57.3     $1.1


     Results for 2004 included equity in earnings from Agriliance of $39.3
million compared to equity in earnings of $33.9 million for 2003. This increase
was primarily driven by improved crop protection product and crop nutrient
product margins, partially offset by increased selling, general and
administrative expense. A discussion of net earnings for Agriliance can be found
under the caption "Overview -- General -- Unconsolidated Businesses." MoArk
equity investments had equity earnings of $7.9 million for the year ended
December 31, 2004, a decrease of $2.3 million from 2003, due to a decline in
market prices for eggs.



                                                  FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------
                                                      2004    2003   DECREASE
                                                      ----   -----   --------
                                                             (IN MILLIONS)
                                                            
Income tax expense ............................       $1.4   $20.7    $(19.3)


     The decline was primarily a result of unrealized hedging losses of $23.1
million in 2004 compared to unrealized hedging gains of $19.5 million in 2004. A
decline in MoArk earnings, which is a non-member business, also caused a
decrease in income tax expense.



                                                  FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------
                                                       2004   2003   INCREASE
                                                       ----   ----   --------
                                                            (IN MILLIONS)
                                                             

Loss from discontinued operations, net of
   income taxes ...............................        $6.8   $4.9     $1.9


     The larger loss is primarily the result of an unrealized hedging loss of
$3.3 million in 2004 from our swine production operations compared to unrealized
hedging gains of $1.9 million in 2003 and higher feed input costs in 2004.
Partially offsetting the increase was savings from reduced expenses in our
cost-plus program and higher hog market prices in 2004 compared to 2003.

     Net Sales and Gross Profit by Business Segment


                                       45



     DAIRY FOODS



                                      FOR THE YEARS ENDED DECEMBER 31
                                      -------------------------------
                                         2004       2003     %CHANGE
                                       --------   --------   -------
                                            (DOLLARS IN MILLIONS)
                                                    
Net sales .........................    $3,956.9   $2,975.0    33.0%
Gross profit ......................       197.8      170.3    16.2%
   Gross profit as a % of sales ...         5.0%       5.7%




                                      INCREASE
NET SALES VARIANCE SCHEDULE          (DECREASE)
- ---------------------------        -------------
                                   (IN MILLIONS)
                                
Pricing / product mix impact ...     $1,006.9
Volume impact ..................        (25.0)
                                     --------
   Total increase ..............     $  981.9


     The net sales increase was driven primarily by the impact of higher
commodity prices. The pricing / mix variance of $1,006.9 million was due to a
higher average commodity price for butter of $0.68 per pound and an increase in
the average commodity prices for cheese of $0.34 per pound over 2003. The impact
of these market price changes increased net sales of butter by $246.6 million
and increased net sales of cheese by $94.4 million compared to 2003. Sales
through our wholesale milk marketing program increased $351.9 million primarily
due to increases in milk market prices. In the Upper Midwest region, net sales
of industrial bulk cheese increased by $90.2 million over 2003 due to higher
commodity prices. The negative volume impact of $25.0 million was primarily due
to the decrease in volumes from private label butter, resulting in a $26.0
million decrease in sales.



                                      INCREASE
GROSS PROFIT VARIANCE SCHEDULE       (DECREASE)
- ------------------------------     -------------
                                   (IN MILLIONS)
                                
Margin / product mix impact ....       $30.2
Volume impact ..................         2.9
Unrealized hedging .............        (5.6)
                                       -----
   Total increase ..............       $27.5


     The increase in gross profit was primarily driven by increased margins in
the retail butter and consumer cheese categories and increased volumes from CPI.
The margin / mix improvement of $30.2 million was driven primarily by improved
margins in retail butter and consumer cheese of $12.0 million and $13.8 million,
respectively. Improved gross profit due to volume of $2.9 million was primarily
due to the impact of increased production at CPI and higher volumes in consumer
cheese.

     FEED



                                      FOR THE YEARS ENDED DECEMBER 31
                                      -------------------------------
                                         2004       2003     % CHANGE
                                       --------   --------   --------
                                            (DOLLARS IN MILLIONS)
                                                    
Net sales .........................    $2,626.6   $2,467.2      6.5%
Gross profit ......................       256.5      288.1    (10.9)%
   Gross profit as a % of sales ...         9.8%      11.7%




                                      INCREASE
NET SALES VARIANCE SCHEDULE          (DECREASE)
- ---------------------------        -------------
                                   (IN MILLIONS)
                                
Pricing / product mix impact ...       $119.9
Volume impact ..................         39.5
                                       ------
   Total increase ..............       $159.4


     The increase in net sales was primarily driven by the impact of higher
commodity prices in 2004 compared to 2003. The pricing / mix variance of $119.9
million was due to the impact of higher commodity prices of ingredients, which
caused sales to increase by $81.8 million in 2004. In addition, the pricing /
mix impact to formula feed, which includes both lifestyle and livestock feeds,
drove a sales increase of $19.1 million, primarily in the livestock category.
The volume variance of $39.5 million was due to volume improvements in formula
feed of $12.1 million, premix subsidiaries of $33.6 million and milk replacer of
$19.0 million, partially offset by a $24.3 million negative volume variance in
ingredients.


                                       46




GROSS PROFIT VARIANCE SCHEDULE                               INCREASE (DECREASE)
- ------------------------------                               -------------------
                                                                (IN MILLIONS)
                                                          
Margin / product mix impact...............................         $(16.4)
Volume impact.............................................           10.2
Unrealized hedging........................................          (25.4)
                                                                   ------
   Total decrease.........................................         $(31.6)


     The gross profit decrease was mainly due to the impact of unrealized
hedging losses. The negative margin / mix variance of $16.4 million was
primarily due to a $9.1 million negative margin / mix impact in our milk
replacer products and $6.2 million margin / mix variance in lifestyle feed.
Partially offsetting the negative margin / mix variance was a $5.6 million
favorable impact in ingredients due to focused purchasing opportunities in
rising and volatile commodity markets. The volume increase of $10.2 million was
primarily related to increased volumes in milk replacer and lifestyle feed.

     SEED



                                                 FOR THE YEARS ENDED DECEMBER 31
                                                 -------------------------------
                                                    2004     2003    % CHANGE
                                                   ------   ------   --------
                                                      (DOLLARS IN MILLIONS)
                                                            
Net sales.....................................     $518.8   $466.2     11.3%
Gross profit..................................       70.4     63.1     11.6%
   Gross profit as a % of sales...............       13.6%    13.5%




NET SALES VARIANCE SCHEDULE                                           INCREASE
- ---------------------------                                        -------------
                                                                   (IN MILLIONS)
                                                                
Pricing / product mix impact....................................       $36.0
Volume impact...................................................        16.6
                                                                       -----
   Total increase...............................................       $52.6


     Higher net sales were primarily driven by higher soybean and corn prices
and higher volumes for corn. The $36.0 million increase in sales caused by
pricing / mix is due to improved soybean, corn and alfalfa prices. The volume
impact of $16.6 million was primarily driven by higher corn volume.

GROSS PROFIT VARIANCE SCHEDULE



                                    INCREASE
                                   (DECREASE)
                                 ------------
                                 (IN MILLIONS)
                              
Margin / product mix impact...       $10.7
Volume impact.................         2.2
Unrealized hedging............        (5.6)
                                     -----
   Total increase.............       $ 7.3


     Increased gross profit was primarily driven by lower cost of product in
alfalfa and improved corn volumes. The margin / mix increase of $10.7 million
was primarily due to the margin improvement in alfalfa of $7.3 million mainly
due to lower inventory cost. The volume improvement of $2.2 million resulted
from an increase in corn gross profit due to a volume increase of 12%.

     LAYERS

     Effective July 1, 2003, we consolidated MoArk as required by FIN 46 and
presented the business as our Layers segment in our financial statements. Prior
periods were not restated. Prior to July 1, MoArk was accounted for under the
equity method; accordingly, sales and gross profit for the first six months
ended June 30, 2003 were not included in our Layers segment, which is comprised
solely of our ownership in MoArk.


                                       47



     Net Sales

     Net sales for the year ended December 31, 2004 were $541.3 million compared
to $317.8 million for the year ended December 31, 2003. On a stand-alone basis,
MoArk had net sales of $552.4 million for the year ended December 31, 2003. The
decrease in sales was primarily driven by lower egg market prices. The average
quoted price based on the South Central Large market decreased to $0.91 per
dozen in 2004 compared to $0.94 per dozen in 2003. As a result, sales of shell
eggs decreased $26.9 million. Partially offsetting this decrease was a $12.8
million increase in the sales of liquid egg products, due to increased volumes
of 231 million dozen equivalents in 2004 compared to 226 million in 2003.

     Gross Profit

     Gross profit for the year ended December 31, 2004 was $65.3 million
compared to $53.1 million for the year ended December 31, 2003. On a stand-alone
basis, MoArk had a gross profit of $72.5 million for the year ended December 31,
2003. The margin decline is primarily a result of the drop in sales dollars due
to decreased egg market prices. This is partially offset by a decrease in the
cost of feed ingredients and the reduction of cost from the disposition of some
Georgia contract layer production operations. Gross profit as a percent of net
sales decreased to 12.1% for the year ended December 31, 2004 compared to 13.1%
for the year ended December 31, 2003.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

     We rely on cash from operations, borrowings under our bank facilities and
other institutionally-placed debt as the main sources for financing working
capital requirements, additions to property, plant and equipment as well as
acquisitions and investments in joint ventures. Other sources of funding consist
of leasing arrangements, a receivables purchase facility and the sale of
non-strategic assets.

     Total long-term debt, including the current portion, was $661.4 million at
December 31, 2005 compared to $943.9 million at December 31, 2004. The decrease
was primarily due to term debt repayments of $118.4 million in February and
March of 2005 and a $153.5 million repurchase of the Company's 8.75% senior
unsecured notes due 2011 in November.

     Our primary sources of debt at December 31, 2005 included a $200 million
undrawn revolving credit facility, $175 million in senior secured notes, $196.5
million in senior unsecured notes and $191 million of capital securities. For
more information, please see the section below entitled "Principal Debt
Facilities."

     At December 31, 2005, $59.1 million of our long-term debt was attributable
to MoArk. Land O'Lakes does not provide any guarantees or support for MoArk's
debt. In addition, we had $40.1 million of other miscellaneous long-term debt at
December 31, 2005.

     In 2001, we entered into a $100 million (expanded to $200 million in 2004)
receivables purchase facility program with CoBank, ACB ("CoBank") in an effort
to reduce overall financing costs. At December 31, 2005 and 2004, no amounts
were outstanding under this facility. In accordance with generally accepted
accounting principles, this facility is not reflected as debt in our
consolidated balance sheet. A more complete description of this accounts
receivable securitization program is found below under the caption, "Off-balance
Sheet Arrangements."

     Our principal liquidity requirements are to service our debt and meet our
working capital and capital expenditure needs. At December 31, 2005, $147.6
million was available under our $200 million revolving credit facility for
working capital and general corporate purposes after giving effect to $52.4
million of outstanding letters of credit, which reduce availability. There was
no outstanding balance on the facility at December 31, 2005. Our peak borrowing
on the revolving credit facility in 2005 was $45 million in September.

     At December 31, 2005, we had available cash and cash equivalents on hand of
$179.7 million, including $6.0 million of cash at MoArk. Total equities at
December 31, 2005 were $903.6 million.


                                       48



Our total liquidity as of December 31 is as follows:



                                                        2005     2004
                                                       ------   ------
                                                       ($ in millions)
                                                          
Cash and cash equivalents...........................   $179.7   $ 73.1
Availability on revolving credit facility...........    147.6    145.3
Availability on receivable securitization program...    200.0    200.0
Total liquidity.....................................   $527.3   $418.4


     We expect that funds from operations and available borrowings under our
revolving credit facility and receivables securitization facility will provide
sufficient working capital to operate our business, to make expected capital
expenditures and to meet liquidity requirements for at least the next twelve
months.

CASH FLOWS

     The following table summarizes the key elements in our cash flows for the
last three years ended December 31:



                                                             2005          2004      2003
                                                       ---------------   -------   -------
                                                       ($ in millions)
                                                                          
Net cash provided by operating activities...........      $ 223.1        $ 202.0   $ 230.5
Net cash provided (used) by investing activities....        275.8          (33.1)    (34.3)
Net cash used by financing activities...............       (438.3)        (206.8)   (146.3)


     Operating Activities. Net cash provided by operating activities increased
$21.1 million in 2005 compared to 2004. Working capital cash flow improved,
primarily due to the seed segment customer prepay programs. Cash flows from
operating activities in 2004 declined $28.5 million as compared to 2003. A
decrease in cash proceeds from legal settlements which were $5.4 million in
2004, compared to $119.5 million in 2003, was partially offset by $109 million
in additional cash flows from working capital in 2004.

     Investing Activities. Net cash provided by investing activities was $275.8
million in 2005, primarily due to $315.5 million of cash received on the sale of
the company's investment in CF Industries, Inc. In addition, $20.3 million of
restricted cash was released as a result of the prepayment of a capital lease at
CPI, $24.8 million was received from the sale of assets, and $35.3 million was
received as dividends from affiliated companies. These proceeds were partially
offset by acquisition spending of $46.1 million in 2005 and $70.4 million of
capital expenditures. In 2004, net cash used by investing activities was $33.1
million. Of this amount, $108.2 million in cash was used for capital
expenditures and the purchase of a minority interest in Land O'Lakes Purina
Feed. Partially offsetting the cash use was $27.4 million of proceeds from sales
of assets and $47.8 million of dividends received from affiliated companies,
primarily dividends from Agriliance and MoArk. In 2003, we used $81.7 million
for investing spending and capital expenditures and received cash of $26.5
million from the sale of assets and $37.4 million from dividends from affiliated
companies.

     Financing Activities. In 2005, our financing activities resulted in a cash
outflow of $438.3 million. We paid $118.4 million principal for Term B loan,
$153.6 million for the repurchase of 8.75% senior unsecured notes due 2011,
$11.0 million of debt extinguishment costs related to the repurchase of the
senior unsecured notes, and $92.6 million of payments for obligations under
capital lease. We also paid $68.7 million for redemption of member equities in
2005. During 2004, our financing activities resulted in a cash outflow of $206.8
million. Principal payments in 2004 on term loans were $126.5 million, other
long-term debt principal payments for 2004 were $20.0 million and short-term
debt declined by $28.6 million. The redemption of member equities in 2004 was
$34.6 million. In 2003, we paid $274.8 million in term loan debt, partly offset
by the issuance of $175 million senior secured notes. In addition, in 2003 we
paid $30.1 million in other long-term debt principal payments and $24.4 million
in cash for redemption of member equities.


                                       49



CASH REQUIREMENTS

At December 31, 2005, we had certain contractual obligations, which require us
to make payments as follows:



                                                                  Payments Due by Year (as of December 31, 2005)
                                                         ---------------------------------------------------------------
                                                                           Less Than                           More Than
Contractual Commitments                                       Total         1 Year     1-3 Years   3-5 Years    5 Years
- -----------------------                                  --------------   ----------   ---------   ---------   ---------
                                                         (In thousands)
                                                                                                
Debt and leases:
Revolving credit facility(1)                               $       --     $       --    $     --    $     --    $     --
Long-term debt                                                661,413         22,245      16,826     186,026     436,316
Obligations under capital lease                                 9,310          1,676       3,109       2,712       1,813
Operating leases                                              103,833         31,363      43,374      24,205       4,891
Other:
Penny-Newman Milling LLC minority interest purchase(2)         13,187         13,187          --          --          --
MoArk minority interest purchase(3)                            71,000         71,000          --          --          --
Swine contract payments (4)                                    87,482         42,196      39,041       5,569         676
Non-cancelable purchase commitments (5)                     1,330,279      1,306,276      18,000       6,000          --
Other obligations(6)                                           16,245          6,086       5,120       3,286       1,753
   TOTAL CONTRACTUAL OBLIGATIONS(7)                        $2,292,746     $1,494,029    $125,470    $227,798    $445,449


(1)  A $200 million facility, of which $147.6 million was available as of
     December 31, 2005. A total of $52.4 million of this commitment was
     unavailable due to outstanding letters of credit. This facility was undrawn
     as of December 31, 2005. For more information regarding the credit
     facility, please see the caption below entitled "Principal Debt
     Facilities."

(2)  Represents the January 2006 purchase price for the 49.9% minority interest
     in Penny-Newman Milling, LLC.

(3)  Represents the January 2006 purchase price for the 42.5% minority interest
     in MoArk, LLC. See "Item 1. Business -- Business Segments -- Layers" for a
     discussion of this payment obligation.

(4)  Includes contractual commitments to purchase weaner pigs, feeder pigs, and
     producer services accounted for in our Feed and Other segments. In Feed, we
     enter into commitments to purchase weaner and feeder pigs from producers
     and generally have commitments to immediately resell the animals to swine
     producers. Market exposure is managed by procuring contracts to resell the
     pigs at terms that capture the pig cost and associated margin. In our Other
     segment, we account for purchase commitments used to source feeder pigs for
     our Aligned System program. We sold our sow herd and feeder pig inventory
     and the production facilities for our Aligned System program as part of the
     sale of swine production assets to Maschhoff West LLC in February 2005, but
     retained long-term agreements to supply feeder pigs to our local
     cooperative members. For the Aligned System program, pigs are purchased
     from Maschhoff West LLC utilizing fixed or variable pricing and immediately
     resold utilizing similar pricing under sales contracts with local
     cooperatives. Our profit or loss from these programs is minimal.

(5)  Primarily for raw materials in our Dairy Foods, Feed, Seed and Layers.
     These purchase commitments, estimated for this table, are contracted on a
     short-term basis, typically for one year or less.

(6)  Primarily represent contractual commitments to purchase marketing and
     consulting services and capital equipment.

(7)  Does not include contingent obligations under our pension and
     postretirement plans. For accounting disclosures of our pension and
     postretirement obligations, see Note 14 in "Item 8. Financial Statements
     and Supplementary Data."

     We expect total capital expenditures to be approximately $105 million in
2006. Of such amount, we currently estimate that a minimum range of $35 million
to $45 million of ongoing maintenance capital expenditures will be required. We
had $70.4 million in capital expenditures for the year ended December 31, 2005,
compared to $96.1 million and $71.7 million in capital expenditures for the
years ended December 31, 2004 and 2003, respectively.

     In 2006, we expect our total cash payments to members to be approximately
$80 million for revolvement, cash patronage and estates and age retirements.

     In 2006, we anticipate our total cash payments for interest on our
short-term and long-term debt obligations to be approximately $65 million.


                                       50


GUARANTEES AND INDEMNIFICATION OBLIGATIONS

     The Company has provided various representations, warranties and other
standard indemnifications in various agreements with customers, suppliers and
other parties, as well as in agreements to sell business assets or lease
facilities. In general, these provisions indemnify the counterparty for matters
such as breaches of representations and warranties, certain environmental
conditions and tax matters, and, in the context of sales of business assets, any
liabilities arising prior to the closing of the transactions. Non-performance
under a contract could trigger an obligation of the Company. The ultimate effect
on future financial results is not subject to reasonable estimation because
considerable uncertainty exists as to the final outcome of any potential claims.
We do not believe that any of these commitments will have a material effect on
our results of operations or financial condition.

     MoArk has guaranteed certain loan agreements for an equity investee. MoArk
is responsible for 50% of the outstanding balance of these guaranteed notes
totaling $11.3 million as of December 31, 2005. These notes are fully secured by
collateral of the equity investee.

PRINCIPAL DEBT FACILITIES

     Under our revolving credit facility, lenders have committed to make
advances and issue letters of credit until January 2007 in an aggregate amount
not to exceed $200 million, subject to a borrowing base limitation. Borrowings
under the revolving credit facility bear interest at a variable rate (either
LIBOR or an Alternative Base Rate) plus an applicable margin. The margin is
dependent upon the Company's leverage ratio. Based on our leverage ratio at the
end of 2005, the LIBOR margin for the revolving credit facility is 200 basis
points. Spreads for the Alternative Base Rate are 100 basis points lower than
the applicable LIBOR spreads. LIBOR may be set for one, two, three or six month
periods at our election. As a result of the Company's January 2006 purchase of
the minority interest in MoArk, LLC, the revolving credit facility was amended
to allow for the continued treatment of MoArk as an unrestricted subsidiary
under this agreement.

     In December 2003, we issued $175 million of senior secured notes that
mature on December 15, 2010. Proceeds from the issuance were used to make
prepayments on the Company's term loans. These notes bear interest at a fixed
rate of 9.00% per annum, payable on June 15 and December 15 each year. The notes
are callable beginning in December 2007 at a redemption price of 104.5%. In
December 2008, the redemption price is 102.25%. The notes are callable at par
beginning in December 2009.

     In November 2001, we issued $350 million of senior unsecured notes that
mature on November 15, 2011. Proceeds from the issuance were used to refinance
the Company in connection with the acquisition of Purina Mills. These notes bear
interest at a fixed rate of 8.75% per annum, payable on May 15 and November 15
each year. The notes are callable beginning in November 2006 at a redemption
price of 104.375%. In November 2007 and 2008, the redemption price is 102.917%
and 101.458%, respectively. The notes are callable at par beginning in November
2009. In September 2005, $3.8 million of these notes were tendered as a result
of our required par offer in August 2005. The par offer was made upon receiving
the cash proceeds from the sale of our investment in CF Industries in accordance
with the terms of the indentures for our senior unsecured and senior secured
notes. In November 2005, we completed a "modified Dutch Auction" cash tender for
these notes and purchased $149.8 million in aggregate principal amount of the
notes at a purchase price of $1,070 per $1,000 principal amount.

     In addition to the modified Dutch Auction, we, or our affiliates, are
permitted by the indentures governing our 8.75% senior unsecured notes and our
9% senior secured notes to make open market purchases of such notes, on such
terms and at such prices as we or our affiliates may determine. No such
purchases were made in 2005.

     Until March of 2005, the company also had outstanding borrowings under a
syndicated Term B loan facility with a final maturity of October 10, 2008. The
Term B loan was prepayable at any time without penalty and was completely paid
off in 2005. In February 2005, we made a $50 million prepayment on the Term B
loan, of which approximately $46.5 million was mandatory based on an excess cash
flow calculation for the year ended December 31, 2004, as defined in the credit
agreement. The remaining $3.5 million was optional. In March 2005, we made a
further prepayment of the remaining $68.4 million outstanding on the Term B loan
due partly to cash proceeds received from the disposal of assets related to our
swine production operations.


                                       51



     We use interest rate swap agreements, designated as fair value hedges, to
help manage exposure to interest rate fluctuations. The objective of the swaps
is to maintain an appropriate balance between fixed and floating interest rate
exposures. These swaps mirror the terms of the 8.75% senior unsecured notes and
effectively convert $102 million of such notes from a fixed 8.75% rate to an
effective rate of LIBOR plus 385 basis points. At December 31, 2005, the
aggregate notional amount of the swaps was $102 million. The swap fair value was
a liability of $1.9 million at December 31, 2005, which is reflected in employee
benefits and other liabilities in our consolidated balance sheet, and the fair
value adjustment on the hedged debt was included in long-term debt in the
consolidated balance sheet at December 31, 2005.

     In 1998, Capital Securities in an amount of $200 million were issued by our
trust subsidiary, and the net proceeds were used to acquire a junior
subordinated note of Land O'Lakes. The holders of the securities are entitled to
receive dividends at an annual rate of 7.45% until the securities mature in
2028. The payment terms of the Capital Securities correspond to the payment
terms of the junior subordinated debentures, which are the sole asset of the
trust subsidiary. Interest payments on the debentures can be deferred for up to
five years, and the obligations under the debentures are junior to all of our
debt. At December 31, 2005, the outstanding balance of Capital Securities was
$190.7 million.

     The Company's MoArk subsidiary had a $60 million revolving credit facility
due March 2006, subject to a borrowing base limitation. Borrowings of $19
million and $0, respectively, were outstanding at December 31, 2005 and 2004,
and are recorded as notes and short-term obligations. MoArk had outstanding
notes and term loans of $59.1 million and $73.5 million as of December 31, 2005
and 2004, respectively. The term loans and revolving credit facility are subject
to certain debt covenants, including a minimum interest coverage ratio and a
maximum net allowable capital expenditure calculation. At December 31, 2005,
MoArk was not in compliance with these covenant requirements and obtained
waivers until February 2007 for a term loan and until March 2006 for a term loan
and the revolving credit facility. MoArk is currently in the process of renewing
and extending its revolving credit facility, and expects to obtain appropriate
amendments or waivers for the remainder of 2006.

     The credit agreements relating to the revolving credit facility and the
indentures relating to the 8.75% senior unsecured notes and the 9.00% senior
secured notes impose certain restrictions on us, including restrictions on our
ability to incur indebtedness, make payments to members, make investments, grant
liens, sell our assets and engage in certain other activities. In addition, the
credit agreement relating to the revolving credit facility requires us to
maintain an interest coverage ratio and a leverage ratio. These actual and
required ratios for the years ended December 31 are as follows:



                                     AT DECEMBER 31,   AT DECEMBER 31,   AT DECEMBER 31,
                                           2005              2004              2003
                                     ---------------   ---------------   ---------------
                                                                
Actual Interest Coverage Ratio ...      3.91 to 1         3.23 to 1         4.55 to 1
Required Interest Coverage Ratio:
   Must be at least ..............      2.50 to 1         2.50 to 1         2.50 to 1
Actual Leverage Ratio ............      1.71 to 1         3.17 to 1         2.62 to 1
Required Leverage Ratio:
   Must be no greater than .......      4.00 to 1         4.50 to 1         3.75 to 1


     Indebtedness under the revolving credit facility is secured by
substantially all of the material assets of Land O'Lakes and its wholly-owned
domestic subsidiaries (other than MoArk, LLC, LOL Finance Co., LOLFC, LLC and
LOL SPV, LLC (formerly named LOL Farmland Feed SPV, LLC)), including real and
personal property, inventory, accounts receivable (other than those receivables
which have been sold in connection with our receivables securitization),
intellectual property and other intangibles. Indebtedness under the revolving
credit facility is also guaranteed by our wholly-owned domestic subsidiaries
including CPI (other than MoArk, LLC, LOL Finance Co., LOLFC, LLC, and LOL SPV,
LLC). The 9.00% senior notes are secured by a second lien on essentially all of
the assets which secure the revolving credit agreement, and are guaranteed by
the same entities. The 8.75% senior notes are unsecured but are guaranteed by
the same entities that guarantee the obligations under the revolving credit
facility.


                                       52



OFF-BALANCE SHEET ARRANGEMENTS

     In December 2001, we established a $100 million (expanded to $200 million
in 2004) receivables purchase facility with CoBank, ACB ("CoBank") in an effort
to reduce our overall financing costs. A wholly-owned, unconsolidated special
purpose entity ("SPE") was established for the limited purpose of purchasing and
obtaining financing for these receivables. Under this facility, Land O'Lakes,
Land O'Lakes Purina Feed and Purina Mills sell Feed, Dairy Foods, Seed and
certain other receivables to LOL SPV, LLC, a wholly owned subsidiary of Land
O'Lakes Purina Feed. This subsidiary is a qualifying special purpose entity
(QSPE) under applicable accounting rules. Transfers of receivables from the
Company to the SPE are structured as sales; accordingly, the receivables
transferred to the SPE are not reflected in our consolidated balance sheets. The
Company sells the receivables to the SPE in exchange for a note equal to the
present value of the receivables, adjusted for risk of loss. Amounts owing on
the note are paid back to the Company upon collection of the receivables by the
SPE or when the SPE enters into borrowings with CoBank. The Company is subject
to credit risk related to the repayment of the notes receivable with the SPE,
which, in turn, is dependent upon the collection of the SPE's receivables pool.
Accordingly, the Company has retained reserves for estimated losses. The Company
expects no significant gains or losses from the facility. The facility with
CoBank expires in 2007 and the effective cost of the facility is LIBOR plus
137.5 basis points. At December 31, 2005 and 2004, the SPE had no borrowings
outstanding with CoBank and $200 million was available under this facility.

     We also lease various equipment and real properties under long-term
operating leases. Total consolidated rental expense was $53.1 million for the
year ended December 31, 2005, $51.5 million for the year ended December 31, 2004
and $51.7 million for the year ended December 31, 2003. Most of the leases
require payment of operating expenses applicable to the leased assets. We expect
that in the normal course of business most leases that expire will be renewed or
replaced by other leases.

CAPITAL LEASES

     Cheese & Protein International (CPI), a consolidated subsidiary of Land
O'Lakes, leased certain equipment and the buildings related to its cheese
manufacturing and whey processing plant in Tulare, California (the "Lease"). At
June 30, 2005, the Lease was accounted for as a capital lease in our
consolidated financial statements. On July 1, 2005, the remaining $85.9 million
Lease balance was voluntarily prepaid. The cash for the prepayment was made
available to CPI from Land O'Lakes as an equity injection on July 1, 2005,
thereby increasing Land O'Lakes ownership interest in the venture from 97.5% to
98.5%. This prepayment permitted the release of $20.3 million of cash which the
Company had pledged to support the lease. Simultaneous with the prepayment of
the CPI Lease, the Company elected to designate CPI as a restricted subsidiary
under the Land O'Lakes senior bond indentures, and a loan party under the
Company's revolving credit facility. Beginning July 1, 2005, CPI's on-balance
sheet debt and earnings or loss is included in the covenant calculations for the
Company's senior debt facilities. Effective as of July 1, 2005, CPI guarantees
the Company's obligations under the revolving credit facility, the 8.75% senior
unsecured notes, and the 9.00% senior secured notes. CPI's assets have also been
pledged to support the revolving credit facility and the 9.00% senior secured
notes. In December 2005, the Company paid $3.2 million for the remaining 1.5%
minority interest in CPI from the minority partner, MMDI, Inc., an affiliate of
Mitsui & Co., USA.

     MoArk, a consolidated subsidiary of Land O'Lakes, had capital leases at
December 31, 2005 of $9.3 million for land, buildings, machinery and equipment
at various locations. The interest rates on the capital leases range from 5.22%
to 8.95% with the weighted average rate of 7.0%. The weighted average term until
maturity is three years. Land O'Lakes does not provide any guarantees or support
for MoArk's capital leases.

CRITICAL ACCOUNTING ESTIMATES

     We utilize certain accounting measurements under applicable generally
accepted accounting principles, which involve the exercise of management's
judgment about subjective factors and estimates about the effect of matters
which are inherently uncertain. The following is a summary of those accounting
measurements which we believe are most critical to our reported results of
operations and financial condition.

     Inventory Valuation. Inventories are valued at the lower of cost or market.
Cost is determined on a first-in, first-out or average cost basis. Many of our
products, particularly in our Dairy Foods and Feed segments, use dairy or
agricultural commodities as inputs or constitute dairy or agricultural commodity
outputs. Consequently, our results are affected by the cost of commodity inputs
and the market price of outputs. Government regulation of the dairy industry and
industry practices in the animal feed industry tend to stabilize margins in
those segments but do not protect against large movements in either input costs
or output prices. Such large movements in commodity prices could result in
significant write-downs to our inventories, which could have a significant
negative impact on our operating results.


                                       53



     Derivative Commodity Instruments. In the normal course of operations, we
purchase commodities such as milk, butter and soybean oil in Dairy Foods,
soybean meal and corn in Feed; and soybeans in Seed. In addition, sales
contracts with various customers are used to varying degrees to lock in prices.
We use derivative commodity instruments, primarily futures contracts offered
through regulated commodity exchanges, to reduce exposure to changes in
commodity prices for our inventory and fixed or partially fixed purchase and
sales contracts. The futures contracts are not designated as hedges under
Statement of Financial Accounting Standards "(SFAS)" No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The futures contracts are
marked-to-market (either Chicago Mercantile Exchange or Chicago Board of Trade)
on the last day of each month and gains and losses ("unrealized hedging gains
and losses") are recognized as an adjustment to cost of sales. The Company has
established formal position limits to monitor its hedging activities and
generally does not use derivative commodity instruments for speculative
purposes.

     Allowance for Doubtful Accounts. We estimate our allowance for doubtful
accounts based on an analysis of specific accounts, an analysis of historical
trends, payment and write-off histories, current sales levels and the state of
the economy. In addition, we estimate losses and retain reserves for the credit
risk related to the repayment of the notes receivable with the qualifying
special purpose entity ("QSPE") (See "Off-balance sheets arrangements"). Our
credit risks are continually reviewed and management believes that adequate
provisions have been made for doubtful accounts. However, unexpected changes in
the financial strength of customers or changes in the state of the economy could
result in write-offs which exceed estimates and negatively impact our financial
results.

     Trade Promotion and Consumer Incentive Activities. We report sales net of
costs incurred to promote our products through various trade promotion and
consumer incentive activities. These activities include volume discounts,
coupons, payments to gain distribution of new products, and other activities.
The recognition of some of the costs related to these activities requires the
use of estimates based on historical utilization and redemption rates. Actual
costs may differ if the utilization and redemption rates vary from the
estimates.

     Recoverability of Long-Lived Assets. Our test for goodwill impairment is a
two-step process and is performed on at least an annual basis. The first step is
a comparison of the fair value of the reporting unit with its carrying amount,
including goodwill. If this step reflects impairment, then the loss would be
measured as the excess of recorded goodwill over its implied fair value. Implied
fair value is the excess of fair value of the reporting unit over the fair value
of all identified assets and liabilities. We assess the recoverability of other
long-lived assets annually or whenever events or changes in circumstances
indicate that expected future undiscounted cash flows might not be sufficient to
support the carrying amount of an asset. We deem an asset to be impaired if a
forecast of undiscounted future operating cash flows is less than an asset's
carrying amount. If an asset is determined to be impaired, the loss is measured
as the amount by which the carrying value of the asset exceeds its fair value.
Changes in our business strategies and/or changes in the economic environment in
which we operate may result in future impairment charges.

     Pension and Other Post-Retirement Plans. Accounting for pension and other
postretirement liabilities requires the estimation of several critical factors.
Key assumptions that determine this liability and related earnings or expense
include the discount rate and expected rate of return on plan assets. The
discount rate for our pension and other postretirement benefit plans is
determined annually based on market trends and prevailing interest rates on
long-term corporate bonds for which the timing and amount of cash outflows is
comparable to our projected benefit obligations. Specific indicators for
establishing a discount rate include long-term Treasury rates, corporate bond
spreads as reported by Reuters and the Moody's Investor Services AA corporate
bond index. The discount rate used to determine the benefit obligations at
December 31 is also used to determine the interest component of pension and
postretirement expense for the following year.

     Our expected rate of return on plan assets is determined by our asset
allocation, historical long-term investment performance, and our expectation of
the plans' investment strategies. The expected rate of return on plan assets for
2006 is 8.25% compared to 8.50% for 2005. A one-percentage point change in the
assumed rate of return on plan assets would impact net earnings by $3.6 million.
Actual future net pension and postretirement benefits expense will depend on
each plan's investment performance, changes in future discount rates and various
other factors related to the populations participating in the plans.


                                       54



RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2004, the Financial Accounting Standards Board ("FASB") issued
FASB Staff Position (FSP) No. 109-1, "Application of FASB Statement No. 109,
Accounting for Income Taxes, to the Tax Deduction on Qualified Production
Activities Provided by the American Jobs Creation Act of 2004." FSP No. 109-1
states that the tax deduction on qualified domestic production activities should
be accounted for as a special deduction under SFAS No. 109, "Accounting for
Income Taxes," and not be treated as a rate reduction. Accordingly, any benefit
from the deduction should be reported in the period in which the deduction is
claimed on the tax return. This FSP was effective January 1, 2005, and the
Company has included a $0.6 million income tax benefit related to this deduction
in its consolidated financial statements for the year ended December 31, 2005.

     In December 2004, the FASB issued Statement No. 123(R), "Share-Based
Payment." This Statement eliminated the alternative of accounting for
share-based compensation under APB Opinion No. 25, "Accounting for Stock Issued
to Employees." The revised standard requires compensation expense for shares
with accelerated vesting provisions to be recognized in the period the employee
becomes eligible for the award. This Statement is effective January 1, 2006 and
is not expected to have a significant impact on the Company's consolidated
financial statements.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities, an Interpretation of ARB 51" ("FIN 46"). The primary
objectives of FIN 46 are to provide guidance on the identification and
consolidation of variable interest entities, or VIEs, which are entities for
which control is achieved through means other than through voting rights. As
permitted by the Interpretation, the Company early-adopted FIN 46 as of July 1,
2003 and began consolidating MoArk, LLC ("MoArk"), an egg production and
marketing company. FIN 46 was revised in December 2003 and was effective for the
Company on January 1, 2005 and had no material impact to the Company's
consolidated financial statements.

     In November 2004, the FASB issued Statement No. 151, "Inventory Costs."
This Statement requires that abnormal idle facility expense, spoilage, freight
and handling costs be recognized as current-period charges. In addition,
Statement No. 151 requires that allocation of fixed production overhead costs to
inventories be based on the normal capacity of the production facility. The
Company is required to adopt the provisions of this Statement prospectively
after January 1, 2006. The effect of adoption is not expected to be material to
the Company's consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

COMMODITY RISK

     In the ordinary course of business, we purchase and sell commodities which
are subject to market risk resulting from changes in prices. We rigorously
monitor our positions for all commodities and utilize futures and option
contracts offered through regulated commodity exchanges to reduce exposure to
changes in commodity prices. Certain commodities cannot be hedged with futures
or option contracts because such contracts are not offered for these commodities
by regulated commodity exchanges. Inventories and purchase contracts for those
commodities are hedged with forward contracts to the extent practical so as to
arrive at a net commodity position within the formal position limits set by us
and deemed prudent for each of those commodities. Commodities for which futures
and options contracts are available are also typically hedged first in this
manner, with futures and options used to hedge within position limits that
portion not covered by forward contracts. We generally do not use derivative
instruments for speculative purposes. See "Item 7. Management Discussion and
Analysis of Financial Condition and Results of Operation" for further
information.

     The notional or contractual amount of derivative commodity contracts
provides an indication of the extent of our involvement in such instruments for
the dates and the periods provided below, but does not represent exposure to
market risk or future cash requirements under certain of these instruments. A
summary of our derivative commodity contracts follows:



                                                       AT DECEMBER 31,
                                           ---------------------------------------
                                                  2005                 2004
                                           ------------------   -------------------
                                           NOTIONAL     FAIR    NOTIONAL     FAIR
                                            AMOUNT     VALUE     AMOUNT     VALUE
                                           --------   -------   --------   -------
                                                        (IN THOUSANDS)
                                                               
Commodity futures and options contracts
   Commitments to purchase .............   $177,507   $  (433)  $147,965   $(3,790)
   Commitments to sell .................    (61,162)   (4,477)   (62,224)   (4,171)



                                       55





                                                            YEAR ENDED DECEMBER 31,
                                                -----------------------------------------------
                                                         2005                     2004
                                                ----------------------   ----------------------
                                                              REALIZED                 REALIZED
                                                  NOTIONAL      GAINS      NOTIONAL      GAINS
                                                   AMOUNT     (LOSSES)      AMOUNT     (LOSSES)
                                                -----------   --------   -----------   --------
                                                                 (IN THOUSANDS)
                                                                           
Commodity futures and options contracts
   Total volume of exchange traded contracts:
   Commitments to purchase ..................   $ 1,150,192   $ 21,305   $ 2,333,863    $36,389
   Commitments to sell ......................    (1,080,452)   (18,904)   (2,215,442)     2,003


INTEREST RATE RISK

     We are exposed to market risk from fluctuations in interest rates. Market
risk for fixed-rate, long-term debt is estimated as the potential increase in
fair value resulting from a decrease in interest rates. The fixed rate debt as
of December 31, 2005 totaled $600.0 million. A 10% adverse change in market
rates would potentially impact the fair value of our fixed rate debt by
approximately $14 million. Interest rate changes generally do not affect the
market value of floating rate debt but do impact the amount of our interest
payments and, therefore, our future earnings and cash flows. Holding other
variables constant, including levels of floating-rate indebtedness, a
one-percentage point increase in interest rates would have an immaterial impact
on net earnings and cash flows for 2005.

     We manage our exposure to interest rate fluctuations through the use of
interest rate swaps. The objective of the swaps is to maintain an appropriate
balance between fixed and floating interest rate exposures. As of December 31,
2005, we had three interest rate swaps relating to our 8.75% senior unsecured
notes. These swaps mirror the terms of the 8.75% notes and effectively convert
$102 million of such notes from a fixed 8.75% rate to an effective rate of LIBOR
plus 385 basis points. The interest rate swaps are designated as fair value
hedges of our fixed rate debt. As critical terms of the swaps and the debt are
the same, the swap is assumed to be 100 percent effective and the fair value
gains or losses on the swaps are completely offset by the fair value adjustment
to the underlying debt. At December 31, 2005 the notional amount of the swaps
was $102 million in aggregate and the fair value was a liability of $1.9
million.

INFLATION RISK

     Inflation is not expected to have a significant impact on our business,
financial condition or results of operations. We generally have been able to
offset the impact of inflation through a combination of productivity
improvements and price increases.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The financial statements and notes thereto required pursuant to this Item 8
begin immediately after the signature page of this annual report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None.

ITEM 9A. CONTROLS AND PROCEDURES.

     (a) Evaluation of disclosure controls and procedures.

     As of the end of the period covered by this report, the Company conducted
an evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

     (b) Change in internal controls


                                       56



     There were no changes in our internal controls over financial reporting
during the most recently completed fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.

ITEM 9B. OTHER INFORMATION.

     None

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The following table sets forth certain information with respect to our
directors and executive officers as of March 15, 2006:



NAME                   AGE   TITLE
- ----                   ---   -----
                       
Chris Policinski....    47   President and Chief Executive Officer
Daniel Knutson......    49   Senior Vice President and Chief Financial Officer
Steve Dunphy........    48   Executive Vice President and Chief Operating
                             Officer, Dairy Foods Value Added
Alan Pierson........    55   Executive Vice President and Chief Operating
                             Officer, Dairy Foods Industrial
Fernando Palacios...    46   Executive Vice President and Chief Operating
                             Officer Feed
David Seehusen......    59   Executive Vice President and Chief Operating
                             Officer - Seed
Barry Wolfish.......    49   Vice President, Corporate Strategy & Business
                             Development
Jim Fife............    56   Vice President, Public Affairs
Peter Janzen........    46   Vice President, General Counsel
Karen Grabow........    56   Vice President, Human Resources
Robert Bignami......    63   Director
Lynn Boadwine.......    42   Director
Harley Buys.........    53   Director
Dennis Cihlar.......    57   Director
Ben Curti...........    55   Director
Richard Epard.......    66   Director
Jim Hager...........    54   Director
Gordon Hoover.......    48   Director
Pete Kappelman......    43   Director, Chairman of the Board
Cornell Kasbergen...    48   Director
Paul Kent, Jr.......    55   Director
Larry Kulp..........    63   Director
Charles Lindner.....    53   Director
Manuel Maciel, Jr...    61   Director, Second Vice Chairman of the Board
Robert Marley.......    54   Director
Jim Miller..........    64   Director
Ronnie Mohr.........    57   Director, First Vice Chairman of the Board
Ron Muzzall.........    43   Director
Art Perdue..........    61   Director
Douglas Reimer......    55   Director, Secretary
Richard Richey......    58   Director
Floyd Trammell......    50   Director
Thomas Wakefield....    56   Director
John Zonneveld, Jr..    52   Director
Bobby Moser.........    62   Nonvoting Advisory Member
Mary Shefland ......    55   Nonvoting Advisory Member


     Unless otherwise indicated below, each officer is elected by and serves at
the pleasure of the Board of Directors and each director and officer of Land
O'Lakes has been in his current profession for at least the past five years.


                                       57


     Chris Policinski, President and Chief Executive Officer since October 2005.
Prior to becoming President and Chief Executive Officer, Mr. Policinski was the
Executive Vice President and Chief Operating Officer of the Dairy Foods division
beginning in March 2002. From 1999 to 2002, Mr. Policinski served as our
Executive Vice President of the Dairy Foods division's Value Added Group. Prior
to his current position, he was Vice President of Strategy, Business Development
and International Development. Before joining Land O'Lakes, Chris spent four
years with The Pillsbury Company in leadership roles in Marketing/General
Management as Vice President of their Pizza and Mexican Food Groups.

     Daniel Knutson, Senior Vice President and Chief Financial Officer of Land
O'Lakes since 2000. Mr. Knutson began his career at the Company in 1978. He
received his BS Degree in Accounting in 1977 and MBA with emphasis in Finance in
1991, both from Minnesota State University - Mankato, and has earned his CPA and
CMA certifications.

     Fernando Palacios, Executive Vice President and Chief Operating Officer of
the Feed division since December 2004. Prior to his appointment to this
position, Mr. Palacios served as Vice President Operations and Supply Chain of
the Dairy Foods division since 2000. Before joining Land O'Lakes, Mr. Palacios
served as the Director of Consumer Goods Consulting at KPMG LLP from 1997 to
2000. Mr. Palacios also serves as the Chief Operating Officer of Melrose Dairy
Proteins.

     Alan Pierson, Executive Vice President and Chief Operating Officer of Dairy
Foods Industrial business since August 2005. Mr. Pierson joined the Company in
1998 and most recently served as Vice President of Dairy Foods Western Region
Manufacturing and Fluid Milk Procurement and Marketing. Prior to joining the
Company, Mr. Pierson was Chief Financial Officer for Dairymans Cooperative
Creamery Association and held senior level positions at the Pillsbury Company.

     Steve Dunphy, Executive Vice President and Chief Operating Officer of Dairy
Foods Value-Added business since August 2005. Mr. Dunphy joined the Company in
2001 and most recently held the position of Vice President of Dairy Foods Retail
and Deli Sales. Prior to joining the Company, Mr. Dunphy was Senior Vice
President and Chief Customer Officer with the Kellogg Company, Vice President of
Sales for the Pillsbury Company and held sales management positions with Procter
& Gamble.

     Barry Wolfish, Vice President of Strategy and Business Development since
August 2005. Mr. Wolfish joined the Company in 1999, most recently serving as
Vice President of Dairy Foods Cheese and Foodservice businesses. Prior to
joining the Company, Mr. Wolfish worked at General Mills, where he held Vice
President positions for several businesses including: Adult Cereals, New
Channels, Yoplait Foodservice.

     Jim Fife, Vice President of Public Affairs since August 2004. Prior to his
appointment to this position Mr. Fife was the General Manager of the Ag Supply
Co-op located in Wenatchee, Washington for 21 years. Mr. Fife sat on the
Company's board of directors from 1991-2004, serving the final three years as
Chairman.

     Peter Janzen, Vice President and General Counsel since February 2004. Mr.
Janzen joined our company as an attorney in 1984. He holds a Juris Doctor degree
from Hamline University.

     Karen Grabow, Vice President of Human Resources since September 2001. Prior
to joining our company, Karen was employed as the Vice President, Human
Resources of Target Corporation, starting in 1993.

     Robert Bignami has held his position as director since February 2005 and
his present term of office will end in February 2010. Mr. Bignami operates the
Brentwood Farms, a dairy operation located in Orland, California.

     Lynn Boadwine has held his position as director since 1999 and his present
term of office will end in February 2008. Mr. Boadwine operates Boadwine Farms,
Inc., a farm in South Dakota.

     Harley Buys has held his position as director since February 2003 and his
present term of office will end in February 2008. Mr. Buys farms corn, soybeans
and alfalfa and operates a dairy farm in partnership with his son in Edgerton,
Minnesota.

     Dennis Cihlar has held his position as director since February 2005 and his
present term of office will end in February 2009. Mr. Cihlar is a dairy farm
owner/operator of Cihlar Farms, Inc., located in Mosinee, Wisconsin.

     Ben Curti has held his position as director since February 2003 and his
present term of office will end in February 2009. Mr. Curti maintains a dairy
operation and farms field crops and pistachios in Tulare, California.


                                       58



     Richard Epard has held his position as director since February 2003 and his
present term of office will end in February 2007. Mr. Epard farms wheat, corn,
soybeans and sunflowers in Colby, Kansas.

     Jim Hager has held his position as director since February 2006 and his
present term of office will end in February 2010. Mr. Hager manages Harmony
Country Cooperative, located in Colby, Wisconsin.

     Gordon Hoover has held his position as director since 1997 and his present
term of office will end in February 2009. Mr. Hoover owns a dairy operation in
Pennsylvania that consists of 120 head of Holstein cows and 120 replacements and
farms 188 acres of corn and alfalfa.

     Pete Kappelman has held his position as Chairman since February 2004, and
as director since 1996. Mr. Kappelman's present term of office as a director
will end in February 2007. Mr. Kappelman is co-owner of Meadow Brook Dairy
Farms, LLC, a dairy farm in Wisconsin.

     Cornell Kasbergen has held his position as director since 1998 and his
present term of office will end in February 2008. Mr. Kasbergen operates a dairy
in California.

     Paul Kent, Jr. has held his position as director since 1990 and his present
term of office will end in February 2010. Mr. Kent operates a dairy farm in
Minnesota.

     Larry Kulp has held his position as director since February 2003 and his
present term of office will end in February 2007. Mr. Kulp is a partner in his
family dairy farm, Kulp Family Dairy, LLC, located in Martinsburg, Pennsylvania.

     Charles Lindner has held his position as director since 1996 and his
present term of office will end in February 2009. Mr. Lindner operates a dairy
farm in Wisconsin.

     Manuel Maciel, Jr. has held his position as director since 1998 and his
present term of office will end in February 2007. Mr. Maciel operates Macy-L
Holsteins, a dairy farm in California.

     Robert Marley has held his position as director since 2000 and his present
term of office will end in February 2007. Mr. Marley is President and Chief
Executive Officer of Jackson Jennings Farm Bureau Co-operative Association, a
local cooperative located in Seymour, Indiana.

     Jim Miller has held his position as director since February 2003 and his
present term of office will end in February 2010. Mr. Miller farms grain and
raises beef cattle in Hardy, Nebraska.

     Ronnie Mohr has held his position as director since 1998 and his present
term of office will end in February 2009. Mr. Mohr operates a farm, hog
finishing operation and grain bin and equipment sales business in Indiana. Mr.
Mohr has served as a director of Holiday Gulf Homes Inc. since 1996.

     Ron Muzzal has held his position as director since February 2006 and his
present term of office will end in February 2010. Mr. Muzzal operates a dairy
and beef operation in Oak Harbor, Washington.

     Art Perdue has held his position since February 2004 and his present term
of office will end in February 2008. Mr. Perdue manages Farmers Union Oil
Company in North Dakota, a diversified cooperative.

     Douglas Reimer has held his position as director since 2001 and his present
term of office will end in February 2007. Mr. Reimer is the managing partner of
Deer Ridge S.E.W. Feeder Pig LLC, located in Iowa.

     Richard Richey has held his position as director since February 2004 and
his present term of office will end in February 2008. Mr. Richey is the general
manager of Husker Co-Op in Columbus, Nebraska, a full-service cooperative with
10 locations.

     Floyd Trammell has held his position as director since February 2005 and
his present term of office will end in February 2009. Mr. Trammell is the manger
of Farmers, Inc., a locally-owned cooperative located in Mississippi.


                                       59



     Thomas Wakefield has held his position since 2004 and his present term will
end in February 2008. Mr. Wakefield operates JTJ Wakefield Farms, a 400 acre
operation located in Bedford, Pennsylvania, that includes corn, alfalfa and
grass hay production, along with a milking herd of approximately 120.

     John Zonneveld, Jr. has held his position as director since 2000 and his
present term of office will end in February 2010. Mr. Zonneveld operates a dairy
farm in California.

     Bobby Moser is a nonvoting advisory member of the board. He is appointed by
the Board of Directors annually and has held his position since 2002. Mr. Moser
is Vice President for Agricultural Administration at The Ohio State University
in Columbus, Ohio.

     Mary Shefland is a nonvoting advisory member of the board. Ms. Shefland is
appointed by the Board of Directors annually, and was first appointed in 2004.
Ms. Shefland is a certified public accountant and works as a tax manager at
Olsen, Thielen & Co., Ltd., a Minnesota-based accounting and consulting firm.
Ms. Shefland received her B.S. in economics from Minnesota State University -
Mankato and operates a corn and soybean farm with her husband in southern
Minnesota.

     The Land O'Lakes board is made up of 24 directors. Twelve directors are
chosen by our dairy members and 12 by our Ag members. Each board member must
also be a member of the group of members, dairy or Ag, which elects him or her.
The board may also choose to elect up to 3 nonvoting advisory members.
Currently, there are two such advisory board members, one of whom, Ms. Shefland,
was appointed to the audit committee to provide additional guidance to the audit
committee with respect to financial matters. Our board of directors governs our
affairs in virtually the same manner as any other corporation. See "Item 1.
Business -- Description of the Cooperative -- Governance" for more information
regarding the election of our directors.

     We have seven committees of our board of directors: the Executive
Committee, the Advisory Committee, the Audit Committee, the Governance
Committee, the Expense Committee, the PAC Committee and the Board
Performance/Operations Committee.

     The Company's Board of Directors passed a resolution in 2004, stating that
the Company will not designate an audit committee financial expert, as such term
is defined in Item 401(h) of Regulation S-K promulgated by the Securities and
Exchange Commission. Similar to other cooperative corporations, the Company's
Board of Directors is comprised of cooperative members who become members by
virtue of purchases they make of cooperative products or sales they make to the
cooperative. Accordingly, while each Board member possesses a strong
agricultural background, no current member possesses, in the Board's present
estimation, the requisite experience to qualify as audit committee financial
expert. As noted above, the Board of Directors, in December 2004, appointed Ms.
Shefland, a non-voting advisory member of the Board, to the audit committee to
provide additional guidance to the committee with respect to financial matters.

     We transact business in the ordinary course with our directors and with our
local cooperative members with which the directors are associated. Such
transactions are on terms no more favorable than those available to our other
members.

     The Company maintains a code of ethics applicable to it senior financial
officers, which include, the chief executive officer, the chief financial
officer, the chief operating officers of each operating division, the treasurer,
the controller and any person serving in a similar capacity. The code is a "code
of ethics" as defined by applicable rules promulgated by the Securities and
Exchange Commission. The code is publicly available on the Company's website at
www.landolakesinc.com. If the Company makes any amendments to the code other
than technical, administrative or other non-substantive amendments, or grants
any waivers from a provision of this code to a senior financial officer, the
Company will disclose, on its website, the nature of the amendment or waiver,
its effective date and to whom it applies.


                                       60



ITEM 11. EXECUTIVE COMPENSATION.

     The following table shows, for the Chief Executive Officer of Land O'Lakes
and each of our four other most highly compensated executive officers (including
Mr. Gherty, who retired as President and Chief Executive Officer, effective
September 30, 2005), information concerning compensation earned for services in
all capacities during the years ended December 31, 2005, 2004 and 2003.

SUMMARY COMPENSATION TABLE



                                                                                   LONG-TERM COMPENSATION
                                                                                ----------------------------
                                                                                     AWARDS
                                                      ANNUAL COMPENSATION          SECURITIES       PAYOUTS
                                                  ---------------------------      UNDERLYING        LTIP           ALL OTHER
NAME AND PRINCIPAL POSITION                       YEAR   SALARY($)   BONUS($)   OPTIONS/SARS(#)   PAYOUTS($)   COMPENSATION($)(3)
- ---------------------------                       ----   ---------   --------   ---------------   ----------   ------------------
                                                                                             
Chris Policinski, President and Chief Executive
   Officer (1).................................   2005    $550,000   $265,342         5,250           $--            $46,905
                                                  2004     489,423    237,690         7,000            --             42,782
                                                  2003     453,269    251,515         7,000            --             32,504

John E. Gherty, President and Chief Executive
   Officer (2).................................   2005    $829,423   $901,749        12,000           $--            $94,285
                                                  2004     825,770    408,960        16,000            --             79,398
                                                  2003     700,000    307,440        16,000            --             56,828

Dan Knutson, Senior Vice President and Chief
   Financial Officer...........................   2005    $437,423   $351,426         5,250           $--            $46,387
                                                  2004     437,500    222,997         7,000            --             33,974
                                                  2003     402,115    176,965         7,000            --             27,380

Fernando Palacios, Executive Vice President and
   Chief Operating Officer, Feed...............   2005    $426,812   $367,229         5,250           $--            $35,903
                                                  2004     355,192    162,244         3,000            --             28,582
                                                  2003     306,723     86,625         3,000            --             21,606

Karen Grabow, Vice President, Human Resources..   2005    $300,308   $204,059         2,250           $--            $39,759
                                                  2004     301,962    119,061         3,000            --             21,104
                                                  2003     279,269     95,990         3,000            --             24,588

David Seehusen, Executive Vice President and      2005    $255,962   $202,459         2,250           $--            $35,767
   Chief Operating Officer, Seed...............   2004     251,365    155,379         3,000            --             27,159
                                                  2003     233,504    109,997         3,000            --             30,990


(1)  Chris Policinski became President and Chief Executive Officer, effective as
     of October 1, 2005. During the previous reported periods, Mr. Policinski
     was the Executive Vice President and Chief Operating Officer of Dairy
     Foods.

(2)  John Gherty was President and Chief Executive Officer for all reported
     periods through September 30, 2005. Mr. Gherty remained an employee of the
     Company through year end.

(3)  The amounts shown in the table for 2005 reflect life insurance premiums
     paid by Land O'Lakes in the amount of $6,875 for Mr. Policinski, $25,600
     for Mr. Gherty, $7,562 for Mr. Knutson, $5,726 for Mr. Palacios, $8,898 for
     Ms. Grabow and $8,650 for Mr. Seehusen. In addition, the following amounts
     were provided as car allowance: $12,539 for Mr. Policinski, $14,000 for Mr.
     Gherty, $12,000 for Mr. Knutson, $12,000 for Mr. Palacios, $6,277 for Ms.
     Grabow and $9,969 for Mr. Seehusen. The above amounts also include
     contributions made by Land O'Lakes on behalf of the named individuals under
     the qualified and non-qualified defined contribution plans of Land O'Lakes
     as follows:


                                       61





                    COMPANY MATCHING
                      CONTRIBUTION     COMPANY CONTRIBUTION
NAME                (QUALIFIED PLAN)   (NON-QUALIFIED PLAN)
- ----                ----------------   --------------------
                                 
Mr. Policinski ..        $6,300               $13,078
Mr. Gherty ......         6,300                27,846
Mr. Knutson .....         6,300                12,284
Mr. Palacios ....         6,300                 5,805
Ms. Grabow ......         6,300                11,927
Mr. Seehusen ....         6,300                 5,167


OPTION/SAR GRANTS IN LAST FISCAL YEAR



                             INDIVIDUAL GRANTS
                       ----------------------------                              AT ASSUMED ANNUAL
                                        PERCENT OF                                 RATES OF STOCK
                         NUMBER OF         TOTAL                                       PRICE
                         SECURITIES    OPTIONS/SARS                              APPRECIATION FOR
                         UNDERLYING     GRANTED TO                                 OPTION TERM(2)
                        OPTIONS/SARS   EMPLOYEES IN     EXERCISE    EXPIRATION   -----------------
NAME                   GRANTED(#)(1)    FISCAL YEAR   PRICE($/SH)      DATE       5%($)     10%($)
- ----                   -------------   ------------   -----------   ----------   -------   -------
                                                                         
Chris Policinski ...        5,250          11.2%         34.47       3/31/2015   128,548   335,354
John Gherty ........       12,000          25.6%         34.47       3/31/2015   155,945   628,643
Daniel Knutson .....        5,250          11.2%         34.47       3/31/2015   128,548   335,354
Fernando Palacios ..        5,250           4.8%         34.47       3/31/2015   128,548   335,354
Karen Grabow .......        2,250           4.8%         34.47       3/31/2015    55,092   143,723
Dave Seehusen ......        2,250           4.8%         34.47       3/31/2015    55,092   143,723


(1)  Value Appreciation Right (VAR) Units are described below under the Land
     O'Lakes Long-Term Incentive Plan. The vesting schedule for all grants of
     Units is set forth below in the plan descriptions.

(2)  The dollar amounts under these columns are the results of calculations at
     the 5% and 10% annual appreciation rates set by the Securities and Exchange
     Commission for illustrative purposes, and, therefore, are not intended to
     forecast future financial performance. Accordingly, these calculations
     assume 5% and 10% appreciation in the value of the Units.

AGGREGATED VAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VAR VALUES

     The purpose of the following table is to report exercises of VAR units by
the named executive officers of Land O'Lakes during the fiscal year ended
December 31, 2005 and any value of their unexercised VAR units as of December
31, 2005. The named executive officers did not exercise VAR units in fiscal year
2005. Land O'Lakes has not issued any stock appreciation rights to the named
executive officers.



                                                                                         VALUE OF UNEXERCISED
                                                                                             IN-THE-MONEY
                                                          NUMBER OF UNEXERCISED              OPTIONS/SARS
                                                           OPTIONS AT FY-END(#)            AT FY-END($)(1)
                       SHARES ACQUIRED      VALUE      ---------------------------   ---------------------------
NAME                    ON EXERCISE(#)   REALIZED($)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
- ----                   ---------------   -----------   -----------   -------------   -----------   -------------
                                                                                 
Chris Policinski ...          --              --          24,063          9,188        166,110         98,630
John Gherty ........          --              --          55,000         21,000        379,680        225,440
Daniel Knutson .....          --              --          24,063          9,188        166,110         98,630
Fernando Palacios ..          --              --          11,063          6,188         76,170         57,210
Karen Grabow .......          --              --           7,313          3,938         71,190         42,270
Dave Seehusen ......          --              --          10,313          3,938         71,190         42,270


(1)  Value is based on the December 31, 2005 Unit price of $41.11, minus the
purchase price for the grants in a particular year, multiplied by the
exercisable and unexercisable units granted in a particular year.


                                       62


LAND O'LAKES EMPLOYEES SAVINGS AND SUPPLEMENTAL RETIREMENT PLAN

     The Land O'Lakes Employee Savings and Supplemental Retirement Plan is a
qualified defined contribution 401(k) plan which permits employees to make both
pre-tax and after-tax contributions. All full-time, non-union Land O'Lakes
employees are eligible to participate. Union employees may participate if their
participation is specified by their collective bargaining agreement. Subject in
all cases to maximum contribution limits established by law, the maximum total
contribution for non-highly compensated employees is 60% of compensation; the
maximum pre-tax contribution for such employees is 50%. For highly compensated
employees, the maximum total contribution is 12% of compensation and the maximum
pre-tax contribution is 8%. The Company matches 50% of the first 6% of pre-tax
contributions made by employees. Employees are immediately 100% vested in their
full account balance, including the Company match.

EXECUTIVE ANNUAL VARIABLE COMPENSATION PLAN

     The Executive Annual Variable Compensation Plan is a plan for executive
officers of Land O'Lakes. For 2005, the target award opportunity varies by the
participant's position up to a maximum target award of 80% of base salary.
Awards from this plan are dependent on a combination of three elements of
performance: 1) company overall results (20%); 2) targets for business
performance (65%); and 3) individual performance commitments (15%). Company net
earnings of $0 dollars (breakeven) are required to trigger payments from this
plan. Targets for company results, business performance, and individual
performance commitments are established annually. Once maximum results from all
of these components are achieved, the maximum award of 80-160% of base salary
may be granted.

LAND O'LAKES, INC. EXECUTIVE LONG-TERM VARIABLE COMPENSATION PLAN

     The Land O'Lakes, Inc. Executive Long-Term Variable Pay Compensation Plan
is effective for the 3-year performance periods of 2004-2006 and 2005-2007. The
President and all officers of Land O'Lakes who were not otherwise participating
in a long-term variable plan are eligible. The target award is 50-90% of base
salary and the maximum award is 62.5-112.5% of base salary at the end of the
performance period. Corporate Staff Officers awards are made based on Total Land
O' Lakes Return on Invested Capital (ROIC) and Pretax Earnings and Business Unit
Officers awards are made based on Business Unit Return on Invested Capital
(ROIC) and Pretax Earnings for the 3-year performance periods of January 1, 2004
through December 31, 2006 and January 1, 2005 through December 31, 2007. The
awards are payable in cash or eligible to be deferred at the option of the award
recipient.

LAND O'LAKES LONG-TERM INCENTIVE PLAN

     The Land O'Lakes Cooperative Value Incentive Plan, initiated in 2001, was
amended and restated effective January 1, 2005 to conform to Code section 409A,
which was established by the American Job Creations Act of 2004. The restated
plan is a phantom value appreciation right plan. Value Appreciation Right Units
granted under the plan may not be transferred, assigned, pledged, encumbered, or
otherwise alienated from the grantee. Officers are eligible to participate, as
are selected non-officers identified by the Chief Executive Officer.
Participants are granted an annual award of Value Appreciation Right (VAR)
Units. One quarter of the grant vests on December 31 of the year in which the
grant is made, with the remainder of the grant vesting ratably on December 31 of
the succeeding three years. VAR Units are not traditional stock, and do not
provide the grant holder with any voting rights or rights to receive assets of
Land O'Lakes.

     The grant price of the VAR Unit is established as of December 31 of the
year prior to the grant of the unit, based on a formula reflecting the value of
the enterprise at the close of the fiscal year preceding the grant of the unit.
The value of the VAR Unit is the difference between the "current price" of the
unit and the grant price. The current price is determined each year on December
31, through application of the same formula by which the grant price of the unit
is determined.

     Participants are required to elect, generally in the calendar year prior to
the calendar year in which the VAR Unit grant is received, the year in which the
value of each unit will be distributed. Changes to distribution elections are
allowed on a restricted basis, in conformance with Code section 409A. Special
distribution rules apply in the event of death, inability to work due to
disability, retirement or other termination.

     Participants may, after a VAR Unit grant is fully vested, elect to have the
VAR Unit valued in a manner different than that described above. Subsequent to
said election, the value of the VAR Unit will increase based on application of a
company-specified interest rate.


                                       63



     As part of the restatement of the plan, any options that had been granted
as of December 31, 2004 under this plan and the California Cooperative Value
Incentive Plan were converted to VAR Units as of January 1, 2005.

CALIFORNIA COOPERATIVE VALUE INCENTIVE PLAN

     This plan is no longer in operation and any grants made under the plan
through December 31, 2004 have been converted to Value Appreciation Rights under
the Land O'Lakes Cooperative Value Incentive Plan.

LAND O'LAKES NON-QUALIFIED DEFERRED COMPENSATION PLAN

     The Land O'Lakes Non-Qualified Deferred Compensation Plan provides a select
group of employees with base salaries equal to or in excess of $95,000 an
opportunity to elect to defer a portion of their compensation for later payment
at the earlier of their death, disability, retirement or other termination.
Eligible employees may elect to defer a minimum of $1,000 up to a maximum 30% of
base compensation and 100% of variable pay. The default distribution is monthly
installments over a five year period. Deferred compensation is included as
compensation for purposes of the company's qualified retirement plan, but is
excluded from the company's qualified savings plan. The Company adds an
additional amount equal to three percent (3%) of the participant's elective
deferrals to this plan. In addition, at the end of each calendar quarter, the
Company credits the participant's account balance with interest at a rate
announced in advance of each calendar year. Benefits of this plan are paid out
of the general assets of the corporation.

     Land O'Lakes maintains three non-qualified excess benefit plans for its
officers. Benefits for all three of these plans are paid out of the general
assets of the corporation.

NON-QUALIFIED EXECUTIVE EXCESS BENEFIT SAVINGS PLAN

     The Non-Qualified Executive Excess Benefit Savings Plan provides a benefit
to officers who participate in this savings plan by crediting an amount to a
deferred compensation account which represents 3% of total compensation, net of
any deferred compensation, less the amount of the Company match contributed to
the qualified savings plan. Account balances are credited with interest
quarterly. Distributions are made under the same circumstances and on the same
terms as the individual has elected under the Land O'Lakes Non-Qualified
Deferred Compensation Plan, or according to the default provisions of the Land
O'Lakes Non-Qualified Deferred Compensation Plan in the absence of an election.

NON-QUALIFIED EXECUTIVE EXCESS BENEFIT PLAN (IRS LIMITS)

     The Non-Qualified Executive Excess Benefit Plan (IRS Limits) provides a
non-qualified benefit to officers which is the equivalent of the difference
between the benefit that would have been payable to the executive if the Land
O'Lakes Employee Retirement Plan benefit formula were applied to the executive's
actual compensation, without regard for limitations on compensation or benefits
imposed by the Internal Revenue Code, and the benefit actually payable under the
Land O'Lakes Employee Retirement Plan with IRS compensation limits in place.

NON-QUALIFIED EXECUTIVE EXCESS BENEFIT PLAN (1989 FORMULA)

     The Non-Qualified Executive Excess Benefit Plan (1989 Formula) provides a
non-qualified benefit to individuals who were officers as of January 1, 1989 at
the time the defined benefit formula was changed. This excess benefit plan
provides a benefit representing the difference between the accrued benefit using
the 1989 Formula to the executive's actual compensation, without regard for
limitations on compensation or benefits imposed by the Internal Revenue Code,
and the benefit actually payable under the Land O'Lakes Employee Retirement Plan
with IRS compensation limits in place.


                                       64



LAND O'LAKES EMPLOYEE RETIREMENT PLAN

     The Land O'Lakes Employee Retirement Plan is a qualified defined benefit
pension plan. All full-time, non-union Land O'Lakes employees are eligible to
participate. Union employees may participate if their participation is specified
by their collective bargaining agreement. An employee is fully vested in the
plan after five years of vesting service. For most employees, the plan provides
for a monthly benefit for the employee's lifetime beginning at normal retirement
age (social security retirement age), calculated according to the following
formula: [[1.08% x Final Average Pay] + [.52% x (Final Average Pay-Covered
Compensation)]] x years of credited service (up to a maximum of 30 years). These
estimated benefit amounts are illustrated by Table A below. Due to provisions of
this plan providing that certain benefits existing in a previous version of the
plan will not be reduced, certain employees, including Mr. Gherty, will instead
receive the compensation at levels previously in effect for the retirement plan
under the 1989 Formula. These approximate benefit amounts are described in Table
B below.

     Final Average Pay is average monthly compensation for the highest paid 60
consecutive months of employment out of the last 132 months worked. Covered
Compensation is an amount used to coordinate pension benefits with Social
Security benefits. It is adjusted annually to reflect changes in the Social
Security Taxable Wage Base, and varies with the employee's year of birth and the
year in which employment ends. The normal form of benefit for a single employee
is a life-only annuity; for a married employee, the normal form is a 50% joint
and survivor annuity. There are other optional annuity forms available.
Terminated or retired employees who are at least 55 with 10 years of vesting
service may elect a reduced early retirement benefit.

     As of December 31, 2005, Mr. Gherty had 30 years of credited service (the
maximum credited service allowed under the Land O'Lakes Employee Retirement
Plan), Mr. Policinski had 8 years and 7 months of credited service, Mr. Knutson
had 28 years of credited service, Mr. Palacios had 5 years and 2 months of
credited service, Ms. Grabow had 4 years and 4 months of credited service, and
Mr. Seehusen had 33 years and 9 months of credited service (Through prior
participation in the F.G.D.A. Retirement Plan II, Mr. Seehusen is entitled to
credited service beyond 30 years).

SAMPLE PENSION PLAN TABLE



                FINAL                 YEARS OF SERVICE AT RETIREMENT
             AVERAGE PAY   ----------------------------------------------------
               (ANNUAL)       10         15         20         25         30
             -----------   --------   --------   --------   --------   --------
                                                     
TABLE A...    $  200,000   $ 30,100   $ 45,100   $ 60,100   $ 75,200   $ 90,200
                 400,000     62,100     93,100    124,100    155,200    186,200
                 600,000     94,100    141,100    188,100    235,200    282,200
                 800,000    126,100    189,100    252,100    315,200    378,200
               1,000,000    158,100    237,100    316,100    395,200    474,200
               1,200,000    190,100    285,100    380,100    475,200    570,200

TABLE B...    $  200,000   $ 34,700   $ 52,000   $ 69,400   $ 86,700   $104,100
                 400,000     76,000    114,000    152,100    190,100    228,100
                 600,000    117,400    176,000    234,700    293,400    352,100
                 800,000    158,700    238,000    317,400    396,700    476,100
               1,000,000    200,000    300,000    400,100    500,100    600,100
               1,200,000    241,400    362,000    482,700    603,400    724,100


     The amounts illustrated are a combination of the Land O'Lakes Employee
Retirement Plan and the Non-Qualified Executive Excess Benefit Plan.

COMPENSATION OF DIRECTORS

     Beginning in July 2005, the compensation paid to directors was modified. In
previous years, the Chairman was paid $30,000 annually, and each director
received $10,000 annually. Starting on July 1, 2005, on a pro rated basis, the
Chairman will now receive $50,000 annually, and each director will receive
$30,000 annually. The non-voting members may also receive additional
compensation at the discretion of the board of directors. In addition, all
directors receive a $300 per diem and are reimbursed for their reasonable
expenses incurred in attending board of directors meetings.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     At December 31, 2005 no person, either individually or as a member of a
group, beneficially owned in excess of five percent of any class of our voting
securities, and our directors and executive officers did not, either
individually or as a member of a group, beneficially own in excess of one
percent of any class of our voting securities.


                                       65



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Land O'Lakes transacts business in the ordinary course with our directors
and with our local cooperative members with which the directors are associated
on terms no more favorable than those available to our other members.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     The following table presents fees for professional audit services rendered
by KPMG LLP for the audit of the Company's annual financial statements for 2005
and 2004, and fees billed for other services rendered by KPMG LLP.



                                       2005     2004
                                     -------   ------
                                     ($ IN THOUSANDS)
                                         
Audit fees .......................    $  869   $  943
Audit-related fees(1) ............        61      102
                                      ------   ------
   Audit and audit-related fees ..       930    1,045
Tax fees(2) ......................       105      110
                                      ------   ------
   Total fees ....................    $1,035   $1,155
                                      ======   ======


(1)  Audit-related fees consist principally of fees for audits of financial
     statements of certain employee benefit plans in 2005 and 2004 and the
     restatement of the consolidated financial statements in 2004.

(2)  Tax fees in 2005 and 2004 consist of benefit plan filings and international
     services.

     The Audit Committee's policy on pre-approval of services performed by the
independent auditor is to approve all audit and permissible non-audit services
to be provided by the independent auditor during the calendar year. The Audit
Committee reviews each non-audit service to be provided and assesses the impact
of the service on the auditor's independence.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

     (A) Documents filed as part of this Annual Report on Form 10-K:

- -    Consolidated Financial Statements:

                                                                          
LAND O'LAKES, INC.
Financial Statements for the years ended December 31, 2005, 2004 and 2003
Report of KPMG LLP, Independent Registered Public Accounting Firm ........    72
Consolidated Balance Sheets as of December 31, 2005 and 2004 .............    73
Consolidated Statements of Operations for the years ended
   December 31, 2005, 2004 and 2003 ......................................    74
Consolidated Statements of Cash Flows for the years ended
   December 31, 2005, 2004 and 2003 ......................................    75
Consolidated Statements of Equities for the years ended
   December 31, 2005, 2004 and 2003 ......................................    76
Notes to Consolidated Financial Statements ...............................    77

MOARK, LLC
Financial Statements for the year ended December 24, 2005,
   December 25, 2004 and the eleven months ended December 27, 2003
Report of Moore Stephens Frost, Independent Registered Public Accounting
   Firm ..................................................................   107
Consolidated Balance Sheets as of December 24, 2005 and
   December 25, 2004 .....................................................   108
Consolidated Statement of Operations for the year ended
   December 24, 2005, December 25, 2004 and the eleven months ended
   December 27, 2003 .....................................................   109
Consolidated Statement of Members' Equity for the year ended
   December 24, 2005, December 25, 2004 and the eleven months
   ended December 27, 2003 ...............................................   110
Consolidated Statement of Cash Flows for the year ended
   December 24, 2005, December 25, 2004 and the eleven months
   ended December 27, 2003 ...............................................   111
Notes to Consolidated Financial Statements ...............................   112




                                       66



                                                                          
AGRILIANCE LLC
Financial Statements (unaudited) for the three months ended
   November 30, 2005 and 2004
Consolidated Balance Sheets as of November 30, 2005 and August 31, 2005 ..   124
Consolidated Statements of Operations for the three months ended
   November 30, 2005 and 2004 ............................................   125
Consolidated Statements of Cash Flows for the three months ended
   November 30, 2005 and 2004 ............................................   126
Notes to Consolidated Financial Statements ...............................   127

Financial Statements for the years ended August 31, 2005, 2004 and 2003
Report of KPMG LLP, Independent Registered Public Accounting Firm ........   128
Consolidated Balance Sheets as of August 31, 2005 and 2004 ...............   129
Consolidated Statements of Operations for the years ended
   August 31, 2005, 2004 and 2003 ........................................   130
Consolidated Statements of Cash Flows for the years ended
   August 31, 2005, 2004 and 2003 ........................................   131
Consolidated Statements of Members' Equity for the years ended
   August 31, 2005, 2004 and 2003 ........................................   132
Notes to Consolidated Financial Statements ...............................   133



(B) Exhibits

                                  EXHIBIT INDEX



Exhibit   Description
- -------   -----------
       
3.1       Restated Articles of Incorporation of Land O'Lakes, Inc., as amended,
          August 1998.(1)

3.2       By-Laws of Land O'Lakes Inc., as amended, February 2003 (3).

4.1       Credit Agreement among Land O'Lakes, Inc., the Lenders party thereto
          and The Chase Manhattan Bank, dated as of October11, 2001.(1)

4.2       First Amendment dated November 6, 2001 to the Credit Agreement dated
          October 11, 2001.(1)

4.3       Second Amendment dated February 15, 2002 to the Credit Agreement dated
          October 11, 2001.(1)

4.4       Guarantee and Collateral Agreement among Land O'Lakes, Inc. and
          certain of its subsidiaries and The Chase Manhattan Bank, dated as of
          October 11, 2001.(1)

4.5       Indenture dated as of November 14, 2001, among Land O'Lakes, Inc. and
          certain of its subsidiaries, and U.S. Bank, including Form of 8 3/4%
          Senior Notes due 2011 and Form of 8 3/4% Senior Notes due 2011.(1)

4.6       Registration Rights Agreement dated November 14, 2001 by and among
          Land O'Lakes, Inc. and certain of its subsidiaries, J.P. Morgan
          Securities Inc., SPP Capital Partners, LLC, SunTrust Robinson Capital
          Markets, Inc., Tokyo-Mitsubishi International plc and U.S. Bancorp
          Piper Jaffray, Inc.(1)

4.7       Purchase Agreement by and between Land O'Lakes, Inc., and certain of
          its subsidiaries, J.P. Morgan Securities Inc., SPP Capital Partners,
          LLC, SunTrust Robinson Capital Markets, Inc., Tokyo-Mitsubishi
          International plc and U.S. Bancorp Piper Jaffray, Inc., dated as of
          November 8, 2001.(1)

4.8       Form of Old Note under the Indenture dated as of November14, 2001
          (included as part of Exhibit 4.5).(1)

4.9       Form of New Note under the Indenture dated as of November14, 2001
          (included as part of Exhibit 4.5).(1)

4.10      Indenture dated as of December 23, 2003, among Land O'Lakes, Inc., and
          certain of its subsidiaries, and U.S. Bank, National Association,
          including Form of 9% Senior Notes due 2010. (3)

4.11      Registration Rights Agreement dated as of December 23, 2003, by and
          among Land O'Lakes, Inc., and certain of its subsidiaries, and J.P.
          Morgan Securities Inc. (3)

4.12      Purchase Agreement dated as of December 23, 2003, by and between Land
          O'Lakes, Inc., and certain of its subsidiaries, and J.P. Morgan
          Securities, Inc. (3)

4.13      Lien Subordination and Inter creditor Agreement dated as of December
          23, 2003, by and among Land O'Lakes, Inc., and certain of its
          subsidiaries, JP Morgan Chase Bank and U.S. Bank, National
          Association. (3)

4.14      Third Amendment dated December 8, 2003 to the Credit Agreement dated
          October 11, 2001.(3)

4.15      Fourth Amendment dated January 13, 2004 to the Credit Agreement dated
          October 11, 2001. (3)

4.16      Form of Old Note (included as part of Exhibit 4.12). (3)

4.17      Form of New Note (included as part of Exhibit 4.12). (3)

4.18      Second Priority Collateral Agreement dated as of December 23, 2003, by
          and among Land O'Lakes, Inc. and certain of its subsidiaries, and U.S.
          Bank National Association.(3)

4.19      Amended and Restated Five Year Credit Agreement dated as of October
          11, 2001 among Land O'Lakes, Inc., The Chase Manhattan Bank, CoBank,
          ACB, and the Lenders party thereto.(1)

4.20      First Amendment dated November 6, 2001 to the Amended and Restated
          Five-Year Credit Agreement dated October 11, 2001.(1)



                                       67


       
4.21      Second Amendment dated February 15, 2002 to the Amended and Restated
          Five-Year Credit Agreement dated October 11, 2001.(1)

4.22      Purchase and Sale Agreement dated as of December 18, 2001, among Land
          O'Lakes, Inc., Land O'Lakes Farmland Feed LLC, Purina Mills, LLC and
          LOL Farmland Feed SPV, LLC.(1)

4.23      Receivables Purchase Agreement dated as of December 18, 2001, among
          Land O'Lakes Farmland Feed LLC, LOL Farmland Feed SPV, LLC, and
          CoBank, ACB.(1)

4.24      Indenture dated as of March 25, 1998 for the 7.45% Capital Securities
          due March 25, 2028.(3)

4.25      Third Amendment dated December 8, 2003 to the Five-Year Amended and
          Restated Credit Agreement dated October 11, 2001.(3)

4.26      Fourth Amendment dated January 13, 2004 to the Amended and Restated
          Five-Year Credit Agreement dated October 11, 2001.(3)

4.27      Fifth Amendment, dated April 1, 2005, to the Amended and Restated
          Five-Year Credit Agreement, dated October 11, 2001.*

4.28      Sixth Amendment, dated June 15, 2005, to the Amended and Restated
          Five-Year Credit Agreement, dated October 11, 2001.*

4.29      Seventh Amendment, dated August 9, 2005, to the Amended and Restated
          Five-Year Credit Agreement, dated October 11, 2001.*

4.30      Eighth Amendment, dated January 10, 2006, to the Amended and Restated
          Five-Year Credit Agreement, dated October 11, 2001.*

10.1      Joint Venture Agreement by and between Farmland Industries, Inc. and
          Land O'Lakes, Inc. dated as of July 18, 2000.(1)

10.2      Operating Agreement of Agriliance LLC among United Country Brands,
          LLC, Cenex Harvest States Cooperatives, Farmland Industries, Inc. and
          Land O'Lakes, Inc. dated as of January 4, 2000.(1)

10.3      Joint Venture Agreement among Cenex Harvest States Cooperatives,
          Farmland Industries, Inc. and Land O'Lakes Inc. dated as of January 1,
          2000.(1)

10.4      Operating Lease between Arden Hills Associates and Land O'Lakes, Inc.
          dated as of May 31, 1980.(1)

10.5      Ground Lease between Land O'Lakes, Inc. and Arden Hills Associates
          dated as of May 31, 1980.(1)

10.6      License Agreement among Ralston Purina Company, Purina Mills, Inc. and
          BP Nutrition Limited dated as of October 1, 1986.(1)

10.7      License Agreement between Land O'Lakes, Inc. and Land O'Lakes Farmland
          Feed LLC dated September 25, 2000.(1)

10.8      Trademark License Agreement by and between Land O'Lakes, Inc. and Dean
          Foods dated as of July 10, 2000.(1)

10.9      Asset Purchase Agreement between Land O'Lakes, Inc. and Dean Foods
          dated as of May 30, 2000.(1)

10.10     Agreement and Plan of Merger, dated as of June 17, 2001, by and among
          Purina Mills, Inc., Land O'Lakes, Inc., LOL Holdings II, Inc. and LOL
          Holdings III, Inc.(1)

10.11     Management Services Agreement, dated September 1, 2000, by and between
          Land O'Lakes and Land O'Lakes Farmland Feed LLC.(1)

10.12     Asset Purchase and Sale Agreement, dated February 15, 2005, by and
          between Land O'Lakes, Inc. and Maschhoff West, LLC.*

10.13     Purchase Agreement, dated January 27, 2006, by and between Osborne
          Investments, LLC and Land O'Lakes, Inc.*

10.14     Executive Annual Variable Compensation Plan of Land O'Lakes.(1)#

10.15     Land O'Lakes Long Term Incentive Plan.(1)#

10.16     Land O'Lakes Non-Qualified Deferred Compensation Plan.(1)#

10.17     Land O'Lakes Non-Qualified Executive Excess Benefit Plan (IRS
          Limits).(1)#

10.18     Land O'Lakes Non-Qualified Executive Excess Benefit Plan (1989
          Formula).(1)#

10.19     Land O'Lakes Non-Qualified Executive Excess Benefit Savings Plan.(1)#

10.20     California Cooperative Value Incentive Plan of Land' O'Lakes.(2)#

10.21     Amended Land O'Lakes Long Term Incentive Plan.#

10.22     Amended California Cooperative Value Incentive Plan of Land O'Lakes.#

10.23     License Agreement, by and between Land O'Lakes, Inc., Dean Foods
          Company, Morningstar Foods, Inc. and Dairy Marketing Alliance, LLC,
          dated July 24, 2002.

10.24     Land O'Lakes Cooperative Value Incentive Plan.*

10.25     Land O'Lakes Cooperative Value Incentive Plan (2005).*

12        Statement regarding the computation of ratios of earnings to fixed
          charges*

21        Subsidiaries of the Registrant*

31.1      Certification Pursuant to 15 U.S.C. Section 7241, as adopted pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002*




                                       68



       
31.2      Certification Pursuant to 15 U.S.C. Section 7241, as adopted pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1      Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2      Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002*



(1)  Incorporated by reference to the identical exhibit to the Registrant's
     Registration Statement on Form S-4 filed March 18, 2002.

(2)  Incorporated by reference to the identical exhibit to the Registrant's
     Registration Statement on Form S-4 filed May 9, 2002

(3)  Incorporated by reference to the identical exhibit filed with the Company's
     Form 10-K on March 30, 2004.

#    Management contract, compensatory plan or arrangement required to be filed
     as an exhibit to this Form 10-K

*    Filed electronically herewith.

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 20, 2006.

                                        LAND O'LAKES, INC.


                                        By /s/ DANIEL KNUTSON
                                           -------------------------------------
                                           Daniel Knutson
                                           Senior Vice President and
                                           Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 20, 2006.

                                     


/s/ CHRISTOPHER J. POLICINSKI           President and Chief Executive Officer
- -------------------------------------   (Principal Executive Officer)
Christopher J. Policinski


/s/ DANIEL KNUTSON                      Senior Vice President and Chief
- -------------------------------------   Financial Officer (Principal Financial
Daniel Knutson                          and Accounting Officer)


/s/ ROBERT BIGNAMI                                      Director
- -------------------------------------
Robert Bignami


/s/ LYNN BOADWINE                                       Director
- -------------------------------------
Lynn Boadwine


/s/ HARLEY BUYS                                         Director
- -------------------------------------
Harley Buys


/s/ DENNIS CIHLAR                                       Director
- -------------------------------------
Dennis Cihlar


/s/ BEN CURTI                                           Director
- -------------------------------------
Ben Curti


/s/ RICHARD EPARD                                       Director
- -------------------------------------
Richard Epard




                                       69



                                     


/s/ JIM HAGER                                           Director
- -------------------------------------
Jim Hager


/s/ GORDON HOOVER                                       Director
- -------------------------------------
Gordon Hoover


/s/ PETE KAPPELMAN                                      Director
- -------------------------------------
Pete Kappelman


/s/ CORNELL KASBERGEN                                   Director
- -------------------------------------
Cornell Kasbergen


/s/ PAUL KENT, JR.                                      Director
- -------------------------------------
Paul Kent, Jr.


/s/ LARRY KULP                                          Director
- -------------------------------------
Larry Kulp


/s/ CHARLES LINDNER                                     Director
- -------------------------------------
Charles Lindner


/s/ MANUEL MACIEL, JR.                                  Director
- -------------------------------------
Manuel Maciel, Jr.


/s/ ROBERT MARLEY                                       Director
- -------------------------------------
Robert Marley


/s/ JIM MILLER                                          Director
- -------------------------------------
Jim Miller


/s/ RONNIE MOHR                                         Director
- -------------------------------------
Ronnie Mohr


/s/ RON MUZZAL                                          Director
- -------------------------------------
Ron Muzzal


/s/ ART PERDUE                                          Director
- -------------------------------------
Art Perdue


/s/ DOUGLAS REIMER                                      Director
- -------------------------------------
Douglas Reimer


/s/ RICHARD RICHEY                                      Director
- -------------------------------------
Richard Richey


/s/ FLOYD TRAMMELL                                      Director
- -------------------------------------
Floyd Trammell


/s/ THOMAS WAKEFIELD                                    Director
- -------------------------------------
Thomas Wakefield


/s/ JOHN ZONNEVELD, JR.                                 Director
- -------------------------------------
John Zonneveld, Jr.




                                       70




SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15 (D) OF THE ACT BY REGISTRANT WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT

     No proxy statement, form of proxy or other proxy soliciting material with
respect to any annual or other meeting of security holders has been or will be
sent to security holders.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                          
LAND O'LAKES, INC.
Financial Statements for the years ended December 31, 2005, 2004 and 2003
Report of KPMG LLP, Independent Registered Public Accounting Firm ........    72
Consolidated Balance Sheets as of December 31, 2005 and 2004 .............    73
Consolidated Statements of Operations for the years ended December 31,
   2005, 2004 and 2003 ...................................................    74
Consolidated Statements of Cash Flows for the years ended December 31,
   2005, 2004 and 2003 ...................................................    75
Consolidated Statements of Equities for the years ended December 31, 2005,
   2004 and 2003 .........................................................    76
Notes to Consolidated Financial Statements ...............................    77

MOARK, LLC
Financial Statements for the year ended December 24, 2005, December 25,
   2004 and the eleven months ended December 27, 2003
Report of Moore Stephens Frost, Independent Registered Public Accounting
   Firm ..................................................................   107
Consolidated Balance Sheets as of December 24, 2005 and December 25,
   2004 ..................................................................   108
Consolidated Statement of Operations for the years ended December 24,
   2005, December 25, 2004 and the eleven months ended December 27,
   2003 ..................................................................   109
Consolidated Statement of Members' Equity for the years ended December 24,
   2005, December 25, 2004 and the eleven months ended December 27,
   2003 ..................................................................   110
Consolidated Statement of Cash Flows for the years ended December 24,
   2005, December 25, 2004 and the eleven months ended December 27,
   2003 ..................................................................   111
Notes to Consolidated Financial Statements ...............................   112

AGRILIANCE LLC
Financial Statements (unaudited) for the three months ended November 30,
   2005 and 2004
Consolidated Balance Sheets as of November 30, 2005 and August 31, 2005 ..   124
Consolidated Statements of Operations for the three months ended November
   30, 2005 and 2004 .....................................................   125
Consolidated Statements of Cash Flows for the three months ended November
   30, 2005 and 2004 .....................................................   126
Notes to Consolidated Financial Statements ...............................   127

Financial Statements for the years ended August 31, 2005, 2004 and 2003
Report of KPMG LLP, Independent Registered Public Accounting Firm ........   128
Consolidated Balance Sheets as of August 31, 2005 and 2004 ...............   129
Consolidated Statements of Operations for the years ended August 31, 2005,
   2004 and 2003 .........................................................   130
Consolidated Statements of Cash Flows for the years ended August 31, 2005,
   2004 and 2003 .........................................................   131
Consolidated Statements of Members' Equity for the years ended August 31,
   2005, 2004 and 2003 ...................................................   132
Notes to Consolidated Financial Statements ...............................   133




                                       71


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Land O'Lakes, Inc.:

     We have audited the accompanying consolidated balance sheets of Land
O'Lakes, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related
consolidated statements of operations, cash flows and equities for each of the
years in the three-year period ended December 31, 2005. 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 did not audit the consolidated financial
statements of MoArk, LLC, a majority-owned subsidiary, which financial
statements reflect total assets constituting eight percent and eight percent as
of December 31, 2005 and 2004, respectively, and total revenues constituting
five percent, seven percent and five percent for each of the years in the
three-year period ended December 31, 2005, respectively, of the related
consolidated totals. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for MoArk, LLC, is based solely on the report of the other
auditors.

     We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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 and the report of other auditors provide a reasonable basis for our
opinion.

     In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Land O'Lakes, Inc. and subsidiaries
as of December 31, 2005 and 2004, and the results of their operations and their
cash flows for each of the years in the three-year period ended December 31,
2005 in conformity with U.S. generally accepted accounting principles.

     As discussed in Note 1 to the consolidated financial statements, in 2003,
the Company adopted the provisions of the Financial Accounting Standards Board's
Interpretation No. 46, "Consolidation of Variable Interest Entities, an
Interpretation of ARB 51."

                                        /s/ KPMG LLP

Minneapolis, Minnesota
February 10, 2006


                                       72



                               LAND O'LAKES, INC.

                           CONSOLIDATED BALANCE SHEETS



                                                                  DECEMBER 31,
                                                            -----------------------
                                                               2005         2004
                                                            ----------   ----------
                                                                ($ IN THOUSANDS)
                                                                   
                                     ASSETS

Current assets:
   Cash and cash equivalents ............................   $  179,704   $   73,136
   Restricted cash ......................................           --       20,338
   Receivables, net .....................................      591,445      558,841
   Inventories ..........................................      453,135      454,015
   Prepaid expenses .....................................      333,023      284,484
   Other current assets .................................       81,075       73,560
                                                            ----------   ----------
      Total current assets ..............................    1,638,382    1,464,374

Investments .............................................      263,786      470,550
Property, plant and equipment, net ......................      658,208      610,012
Property under capital lease, net .......................       10,442      100,179
Goodwill, net ...........................................      327,059      331,582
Other intangibles, net ..................................       96,767       99,016
Other assets ............................................      100,414      124,069
                                                            ----------   ----------
      Total assets ......................................   $3,095,058   $3,199,782
                                                            ==========   ==========

                            LIABILITIES AND EQUITIES

Current liabilities:
   Notes and short-term obligations .....................   $   76,465   $   51,753
   Current portion of long-term debt ....................       22,245       10,680
   Current portion of obligations under capital lease ...        1,676       10,378
   Accounts payable .....................................      976,959      813,328
   Accrued expenses .....................................      265,924      228,435
   Patronage refunds and other member equities payable ..       29,622       22,317
                                                            ----------   ----------
      Total current liabilities .........................    1,372,891    1,136,891

Long-term debt ..........................................      639,168      933,236
Obligations under capital lease .........................        7,634       90,524
Employee benefits and other liabilities .................      165,796      174,877
Minority interests ......................................        6,012        9,350
Equities:
   Capital stock ........................................        1,967        2,059
   Member equities ......................................      893,518      852,759
   Accumulated other comprehensive loss .................      (75,163)     (73,792)
   Retained earnings ....................................       83,235       73,878
                                                            ----------   ----------
      Total equities ....................................      903,557      854,904
                                                            ----------   ----------

Commitments and contingencies ...........................           --           --
Total liabilities and equities ..........................   $3,095,058   $3,199,782
                                                            ==========   ==========


           See accompanying notes to consolidated financial statements.


                                       73



                               LAND O'LAKES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                             YEARS ENDED DECEMBER 31,
                                                                       ------------------------------------
                                                                          2005         2004         2003
                                                                       ----------   ----------   ----------
                                                                                 ($ IN THOUSANDS)
                                                                                        
Net sales ..........................................................   $7,556,677   $7,656,826   $6,256,101
Cost of sales ......................................................    6,971,660    7,063,118    5,671,869
                                                                       ----------   ----------   ----------
Gross profit .......................................................      585,017      593,708      584,232
Selling, general and administrative ................................      494,971      500,935      464,610
Restructuring and impairment charges ...............................        6,381        7,815        6,342
                                                                       ----------   ----------   ----------
Earnings from operations ...........................................       83,665       84,958      113,280

Interest expense, net ..............................................       79,873       83,114       80,972
Other expense (income), net ........................................        9,295       (7,476)     (24,428)
Gain on sale of investment in CF Industries, Inc. ..................     (102,446)          --           --
Loss on impairment of investment in CF Industries, Inc. ............           --       36,500           --
Equity in earnings of affiliated companies .........................      (36,692)     (58,412)     (57,249)
Minority interest in earnings of subsidiaries ......................        1,354        1,648        6,366
                                                                       ----------   ----------   ----------
Earnings before income taxes and discontinued operations ...........      132,281       29,584      107,619
Income tax expense .................................................        5,505        1,404       20,703
                                                                       ----------   ----------   ----------
Net earnings from continuing operations ............................      126,776       28,180       86,916
Earnings (loss) from discontinued operations, net of income taxes ..        2,167       (6,747)      (4,922)
                                                                       ----------   ----------   ----------
Net earnings .......................................................   $  128,943   $   21,433   $   81,994
                                                                       ==========   ==========   ==========

Applied to:
   Member equities
      Allocated patronage ..........................................   $  118,273   $   23,636   $   40,045
      Deferred equities ............................................        1,847        1,920         (312)
                                                                       ----------   ----------   ----------
                                                                          120,120       25,556       39,733
      Retained earnings ............................................        8,823       (4,123)      42,261
                                                                       ----------   ----------   ----------
                                                                       $  128,943   $   21,433   $   81,994
                                                                       ==========   ==========   ==========


           See accompanying notes to consolidated financial statements.


                                       74



                               LAND O'LAKES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                                                   YEARS ENDED DECEMBER 31,
                                                                                              ---------------------------------
                                                                                                 2005        2004        2003
                                                                                              ---------   ---------   ---------
                                                                                                       ($ IN THOUSANDS)
                                                                                                             
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings ...........................................................................   $ 128,943   $  21,433   $  81,994
      (Earnings) loss from discontinued operations, net of income taxes ...................      (2,167)      6,747       4,922
      Adjustments to reconcile net earnings to net cash provided by operating activities:
      Depreciation and amortization .......................................................      99,312     107,214     111,500
      Amortization of deferred financing costs ............................................       8,733       5,625       7,736
         Loss on extinguishment of debt ...................................................      11,014          --          --
      Bad debt expense ....................................................................       1,967       2,351       5,214
      Proceeds from patronage revolvement received ........................................       8,123       6,043       5,000
      Non-cash patronage income ...........................................................      (1,852)     (1,355)     (3,578)
      Receivable from legal settlement ....................................................          --          --      96,707
      Deferred income tax expense (benefit) ...............................................       5,177      (4,977)     11,675
      Decrease in other assets ............................................................      13,246       5,740       5,865
      Increase (decrease) in other liabilities ............................................       3,570      (3,499)     (2,216)
      Restructuring and impairment charges ................................................       6,381      44,315       6,342
      Gain from divestiture of businesses .................................................          --      (1,438)       (684)
      Gain on sale of investment in CF Industries, Inc. ...................................    (102,446)         --          --
      Equity in earnings of affiliated companies ..........................................     (36,692)    (58,412)    (57,249)
      Minority interests ..................................................................       1,354       1,648       6,366
      Other ...............................................................................      (7,389)     (1,239)    (12,125)
      Changes in current assets and liabilities, net of acquisitions and divestitures:
      Receivables .........................................................................     (38,964)     37,586     (46,484)
      Inventories .........................................................................      (6,058)     15,105     (14,314)
      Other current assets ................................................................     (50,468)    (36,152)    (56,926)
      Accounts payable ....................................................................     164,155      72,378      36,345
      Accrued expenses ....................................................................      17,143     (17,089)     44,400
                                                                                              ---------   ---------   ---------
   Net cash provided by operating activities ..............................................     223,082     202,024     230,490

CASH FLOWS FROM INVESTING ACTIVITIES:
      Additions to property, plant and equipment ..........................................     (70,424)    (96,099)    (71,651)
      Acquisitions, net of cash acquired ..................................................     (46,101)    (12,150)         --
      Payments for investments ............................................................      (5,566)       (703)    (10,047)
      Net proceeds from divestiture of businesses .........................................       2,635      13,068       1,815
      Proceeds from sale of investments ...................................................     316,900       2,342       3,000
      Proceeds from sale of property, plant and equipment .................................      22,197      11,990      21,727
      Dividends from investments in affiliated companies ..................................      35,250      47,846      37,356
      Decrease (increase) in restricted cash ..............................................      20,338        (220)    (20,118)
      Other ...............................................................................         543         860       3,667
                                                                                              ---------   ---------   ---------
   Net cash provided (used) by investing activities .......................................     275,772     (33,066)    (34,251)

CASH FLOWS FROM FINANCING ACTIVITIES:
      Increase (decrease) increase in short-term debt .....................................      21,256     (28,616)     11,683
      Proceeds from issuance of long-term debt ............................................       2,022      17,416     185,037
      Principal payments on long-term debt ................................................    (287,344)   (146,011)   (304,910)
      Principal payments on obligations under capital lease ...............................     (92,556)    (10,367)     (9,590)
      Payments for debt extinguishment costs ..............................................     (11,014)         --          --
      Payments for debt issuance costs ....................................................          --      (4,323)     (3,486)
      Payments for redemption of member equities ..........................................     (68,714)    (34,615)    (24,380)
      Other ...............................................................................      (1,993)       (304)       (688)
                                                                                              ---------   ---------   ---------
   Net cash used by financing activities ..................................................    (438,343)   (206,820)   (146,334)
   Net cash provided (used) by operating activities of discontinued operations (revised) ..       3,922      (1,449)     (2,987)
   Net cash provided by investing activities of discontinued operations (revised) .........      42,135       2,173        (971)
                                                                                              ---------   ---------   ---------
Net increase (decrease) in cash and cash equivalents ......................................     106,568     (37,138)     45,947
Cash and cash equivalents at beginning of year ............................................      73,136     110,274      64,327
                                                                                              ---------   ---------   ---------
   Cash and cash equivalents at end of year ...............................................   $ 179,704   $  73,136   $ 110,274
                                                                                              =========   =========   =========


           See accompanying notes to consolidated financial statements.


                                       75


                               LAND O'LAKES, INC.

                       CONSOLIDATED STATEMENTS OF EQUITIES




                                                                                                ACCUMULATED
                                                                      MEMBER EQUITIES              OTHER
                                                   CAPITAL   --------------------------------  COMPREHENSIVE   RETAINED     TOTAL
                                                    STOCK    ALLOCATED   DEFERRED      NET     INCOME (LOSS)   EARNINGS   EQUITIES
                                                    -----    ---------   --------   --------- --------------  ---------   --------
                                                                                                    
BALANCE, DECEMBER 31, 2002 .......................  $2,190   $884,697    $(25,701)  $858,996    $   (622)      $35,201   $895,765
Capital stock issued .............................       3         --          --         --          --            --          3
Capital stock redeemed ...........................     (68)        --          --         --          --            --        (68)
2003 earnings, as applied ........................      --     40,045        (312)    39,733          --        42,261     81,994
   Less portion stated as current liability ......      --    (11,640)         --    (11,640)         --            --    (11,640)
Portion of member equities stated as current
   liability .....................................      --     (7,809)         --     (7,809)         --            --     (7,809)
Cash patronage and redemption of member equities .      --    (24,380)         --    (24,380)         --            --    (24,380)
Redemption included in prior year's liabilities ..      --     12,388          --     12,388          --            --     12,388
Minimum pension liability adjustment, net of
   income taxes ..................................      --         --          --         --     (65,617)           --    (65,617)
Unrealized gain on available-for-sale investment
   securities ....................................      --         --          --         --       1,062            --      1,062
Foreign currency translation adjustment ..........      --         --          --         --        (508)           --       (508)
Other, net .......................................      --       (702)         --       (702)         --        (1,124)    (1,826)
                                                    ------   --------    --------   --------    --------       -------   --------
BALANCE, DECEMBER 31, 2003 .......................   2,125    892,599     (26,013)   866,586     (65,685)       76,338    879,364

Capital stock issued .............................       2         --          --         --          --            --          2
Capital stock redeemed ...........................     (68)        --          --         --          --            --        (68)
2004 earnings, as applied ........................      --     23,636       1,920     25,556          --        (4,123)    21,433
   Less portion stated as current liability ......      --    (15,757)         --    (15,757)         --            --    (15,757)
Portion of member equities stated as current
   liability .....................................      --     (6,560)         --     (6,560)         --            --     (6,560)
Cash patronage and redemption of member equities .      --    (34,615)         --    (34,615)         --            --    (34,615)
Redemption included in prior year's liabilities ..      --     19,449          --     19,449          --            --     19,449
Minimum pension liability adjustment, net of
   income taxes ..................................      --         --          --         --      (7,402)           --     (7,402)
Unrealized loss on available-for-sale
   investment securities .........................      --         --          --         --        (521)           --       (521)
Foreign currency translation adjustment ..........      --         --          --         --        (184)           --       (184)
Other, net .......................................      --     (1,615)       (285)    (1,900)         --         1,663       (237)
                                                    ------   --------    --------   --------    --------       -------   --------
BALANCE, DECEMBER 31, 2004 .......................   2,059    877,137     (24,378)   852,759     (73,792)       73,878    854,904

Capital stock issued .............................       9         --          --         --          --            --          9
Capital stock redeemed ...........................    (101)        --          --         --          --            --       (101)
2005 earnings, as applied ........................      --    118,273       1,847    120,120          --         8,823    128,943
   Less portion stated as current liability ......      --    (23,655)         --    (23,655)         --            --    (23,655)
Portion of member equities stated as current
   liability .....................................      --     (5,967)         --     (5,967)         --            --     (5,967)
Cash patronage and redemption of member equities .      --    (68,714)         --    (68,714)         --            --    (68,714)
Redemption included in prior year's liabilities ..      --     22,317          --     22,317          --            --     22,317
Minimum pension liability adjustment, net of
   income taxes ..................................      --         --          --         --      (2,603)           --     (2,603)
Unrealized loss on available-for-sale investment
   securities ....................................      --         --          --         --        (155)           --       (155)
Foreign currency translation adjustment, net of
   income taxes ..................................      --         --          --         --       1,387            --      1,387
Other, net .......................................      --     (3,181)       (161)    (3,342)         --           534     (2,808)
                                                    ------   --------    --------   --------    --------       -------   --------
BALANCE, DECEMBER 31, 2005 .......................  $1,967   $916,210    $(22,692)  $893,518    $(75,163)      $83,235   $903,557
                                                    ======   ========    ========   ========    ========       =======   ========


          See accompanying notes to consolidated financial statements.


                                       76



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           ($ IN THOUSANDS IN TABLES)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

     Land O'Lakes, Inc. is a diversified member-owned food and agricultural
cooperative serving agricultural producers throughout the United States. Through
its five operating segments of Dairy Foods, Feed, Seed, Agronomy and Layers,
Land O'Lakes, Inc. procures approximately 12 billion pounds of member milk
annually, markets more than 300 dairy products and provides member cooperatives,
farmers and ranchers with an extensive line of agricultural supplies (including
feed, seed, crop nutrients and crop protection products).

REVENUE RECOGNITION

     Revenue is recognized when products are shipped and the customer takes
ownership and assumes risk of loss, collection of the relevant receivables is
probable, persuasive evidence of an arrangement exists and the sales price is
fixed or determinable. Sales are reduced by certain coupon, trade promotion and
other costs, some of which are recorded by estimating expense based on the
Company's historical experience. Estimated product returns in Seed are deducted
from sales at the time of shipment.

STATEMENT PRESENTATION

     The consolidated financial statements include the accounts of Land O'Lakes,
Inc. and wholly owned and majority owned subsidiaries and limited liability
companies ("Land O'Lakes" or the "Company"). Intercompany transactions and
balances have been eliminated. Certain reclassifications have been made to the
2004 and 2003 consolidated financial statements to conform to the 2005
presentation. These reclassifications had no effect on gross profit or net
earnings. The reclassifications relate to the presentation of certain customer
discounts as seed sales deductions in the consolidated statements of operations.
In addition, in 2005, the Company has separately disclosed the operating and
investing portions of the cash flows attributable to its discontinued operations
which in prior periods were reported on a combined basis as a single amount.

CASH AND CASH EQUIVALENTS

     Cash and cash equivalents include short-term, highly liquid investments
with original maturities of three months or less.

INVENTORIES

     Inventories are valued at the lower of cost or market. Cost is determined
on a first-in, first-out or average cost basis.

DERIVATIVE COMMODITY INSTRUMENTS

     In the normal course of operations, the Company purchases commodities such
as milk, butter and soybean oil in Dairy Foods; soybean meal and corn in Feed;
and soybeans in Seed. Derivative commodity instruments, consisting primarily of
futures contracts offered through regulated commodity exchanges, are used to
reduce exposure to changes in commodity prices. These contracts are not
designated as hedges under Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
futures contracts are marked-to-market each month and gains and losses
("unrealized hedging gains and losses") are recognized in cost of sales. The
Company has established formal position limits to monitor its hedging activities
and generally does not use derivative commodity instruments for speculative
purposes.

     The Company uses interest rate swaps to help manage its exposure to
interest rate fluctuations. The objective of the swaps is to maintain an
appropriate balance between fixed and floating interest rate exposures. Both
changes in the fair value of the interest rate swaps designated and effective as
fair value hedges and changes in the fair value of the underlying hedged debt
are recorded as adjustments to interest expense.


                                       77



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INVESTMENTS

     Investments in other cooperatives are stated at cost plus unredeemed
patronage refunds received, or estimated to be received, in the form of capital
stock and other equities. Estimated patronage refunds are not recognized for tax
purposes until notices of allocation are received. The equity method of
accounting is used for investments in other companies in which Land O'Lakes
voting interest is 20 to 50 percent. Investments in less than 20-percent-owned
companies are stated at cost as the Company does not have the ability to exert
significant influence.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost. Depreciation is
calculated using the straight-line method over the estimated useful life (10 to
30 years for land improvements and buildings and building equipment, 3 to 10
years for machinery and equipment and 3 to 5 years for software) of the
respective assets in accordance with the straight-line method. Accelerated
methods of depreciation are used for income tax purposes.

GOODWILL AND OTHER INTANGIBLE ASSETS

     Goodwill represents the excess of the purchase price of an acquired entity
over the amounts assigned to assets acquired and liabilities assumed. Other
intangible assets consist primarily of trademarks, patents and agreements not to
compete. Certain trademarks are not amortized because they have indefinite
lives. The remaining other intangible assets are amortized using the
straight-line method over the estimated useful lives, ranging from 3 to 17
years.

RECOVERABILITY OF LONG-LIVED ASSETS

     The test for goodwill impairment is a two-step process and is performed on
at least an annual basis. The first step is a comparison of the fair value of
the reporting unit with its carrying amount, including goodwill. If this step
reflects impairment, then the loss would be measured as the excess of recorded
goodwill over its implied fair value. Implied fair value is the excess of fair
value of the reporting unit over the fair value of all identified assets and
liabilities. The Company assesses the recoverability of other long-lived assets
annually or whenever events or changes in circumstance indicate that expected
future undiscounted cash flows might not be sufficient to support the carrying
amount of an asset. The Company deems an asset to be impaired if a forecast of
undiscounted future operating cash flows is less than its carrying amount. If an
asset is determined to be impaired, the loss is measured as the amount by which
the carrying value of the asset exceeds its fair value.

INCOME TAXES

     Land O'Lakes is a non-exempt agricultural cooperative and is taxed on all
non-member earnings and any member earnings not paid or allocated to members by
qualified written notices of allocation as that term is used in section 1388(c)
of the Internal Revenue Code. The Company files a consolidated tax return with
its fully taxable subsidiaries. The Company establishes deferred income tax
assets and liabilities based on the difference between the financial and income
tax carrying values of assets and liabilities using existing tax rates.

ADVERTISING AND PROMOTION COSTS

     Advertising and promotion costs are expensed as incurred. Advertising and
promotion costs were $54.0 million, $52.9 million and $52.1 million in 2005,
2004 and 2003, respectively.

RESEARCH AND DEVELOPMENT

     Expenditures for research and development are charged to administrative
expense in the year incurred. Total research and development expenses were $30.3
million, $29.6 million and $29.0 million in 2005, 2004 and 2003, respectively.


                                       78



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK-BASED COMPENSATION

     The Company offers a Value Appreciation Right Awards (VAR) plan to certain
eligible employees. Participants are granted an annual award of VAR "Units,"
which are not traditional stock and do not provide the employee any voting right
or right to receive assets of Land O'Lakes. This plan is accounted for in
accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," using
the fair-value method. Units are issued as of January 1 and valued based on a
formula reflecting the fair value of the Company at the close of the preceding
year. Compensation cost is recognized for the appreciation in the value of the
Units over a four-year vesting period, including participant awards which become
fully vested upon retirement, using the graded vesting method as described in
SFAS Interpretation No. 28, "Accounting for Stock Appreciation Rights and Other
Variable Stock Option or Award Plans." Stock-based compensation expenses were
$2.3 million in 2005, $0.8 million in 2004 and $0 in 2003, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2004, the Financial Accounting Standards Board ("FASB") issued
FASB Staff Position (FSP) No. 109-1, "Application of FASB Statement No. 109,
Accounting for Income Taxes, to the Tax Deduction on Qualified Production
Activities Provided by the American Jobs Creation Act of 2004." FSP No. 109-1
states that the tax deduction on qualified domestic production activities should
be accounted for as a special deduction under SFAS No. 109, "Accounting for
Income Taxes," and not be treated as a rate reduction. Accordingly, any benefit
from the deduction should be reported in the period in which the deduction is
claimed on the tax return. This FSP was effective January 1, 2005, and the
Company has included a $0.6 million income tax benefit related to this deduction
in its consolidated financial statements for the year ended December 31, 2005.

     In December 2004, the FASB issued Statement No. 123(R), "Share-Based
Payment." This Statement eliminated the alternative of accounting for
share-based compensation under APB Opinion No. 25, "Accounting for Stock Issued
to Employees." The revised standard requires compensation expense for shares
with accelerated vesting provisions to be recognized in the period the employee
becomes eligible for the award. This Statement is effective January 1, 2006 and
is not expected to have a significant impact on the Company's consolidated
financial statements.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities, an Interpretation of ARB 51" ("FIN 46"). The primary
objectives of FIN 46 are to provide guidance on the identification and
consolidation of variable interest entities, or VIEs, which are entities for
which control is achieved through means other than through voting rights. As
permitted by the Interpretation, the Company early-adopted FIN 46 as of July 1,
2003 and began consolidating MoArk, LLC ("MoArk"), an egg production and
marketing company. FIN 46 was revised in December 2003 and was effective for the
Company on January 1, 2005 and had no material impact to the Company's
consolidated financial statements.

     In November 2004, the FASB issued Statement No. 151, "Inventory Costs."
This Statement requires that abnormal idle facility expense, spoilage, freight
and handling cost be recognized as current-period charges. In addition,
Statement No. 151 requires that allocation of fixed production overhead costs to
inventories be based on the normal capacity of the production facility. The
Company is required to adopt the provisions of this Statement prospectively
after January 1, 2006. The effect of adoption is not expected to be material to
the Company's consolidated financial statements.

ACCOUNTING ESTIMATES

     The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.


                                       79


            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2.   MOARK, LLC CONSOLIDATION AND PLANNNED ACQUISITION OF MINORITY INTEREST

     Through June 30, 2003, the Company carried its 50% ownership interest in
MoArk, LLC ("MoArk") under the equity method and the remaining interest was
owned by Osborne Investments, LLC ("Osborne"). In 2003, the Company increased
its ownership from 50% to 57.5% with an additional investment of $7.8 million;
and in accordance with the provisions of FIN 46, "Consolidation of Variable
Interest Entities," effective July 1, 2003, the Company consolidated MoArk into
its financial statements. Although Osborne held a 42.5% ownership interest in
MoArk, the Company was allocated 100% of the earnings or loss from the
operations of MoArk.

     The Company held a right to acquire (and Osborne held the right to require
the Company to acquire) the remaining 42.5% of MoArk owned by Osborne for a
$42.2 million minimum payment in 2007, plus an additional amount related to
market conditions. In 2005, the Company and Osborne agreed to accelerate the
transfer of ownership; and, in January 2006, the Company purchased the remaining
42.5% minority interest in MoArk for $71.0 million in cash. Accordingly, the
Company had a $71.0 million accrued expense liability in the consolidated
balance sheet at December 31, 2005.

3.   RESTRICTED CASH

     On March 28, 2003, Cheese & Protein International LLC ("CPI"), a
consolidated subsidiary, amended its lease for property and equipment relating
to its cheese manufacturing and whey processing plant in Tulare, California. The
amendment required Land O'Lakes to maintain a $20 million restricted cash
account to support the lease. In 2005, this amount was released to the Company
as more fully described in Note 21.

4.   RECEIVABLES

     A summary of receivables at December 31 is as follows:



                                                         2005       2004
                                                       --------   --------
                                                            
Trade accounts .....................................   $ 95,040   $ 67,687
Notes and contracts ................................     90,119     65,003
Notes from sale of trade receivables (see Note 5) ..    369,429    362,123
Other ..............................................     51,167     79,566
                                                       --------   --------
                                                        605,755    574,379
Less allowance for doubtful accounts ...............     14,310     15,538
                                                       --------   --------
Total receivables, net .............................   $591,445   $558,841
                                                       ========   ========


     A substantial portion of Land O'Lakes receivables is concentrated in
agriculture as well as in the wholesale and retail food industries. Collection
of receivables may be dependent upon economic returns in these industries. The
Company's credit risks are continually reviewed and management believes that
adequate provisions have been made for doubtful accounts.

     The Company operates a wholly owned subsidiary which provides operating
loans and facility financing to farmers and livestock producers. These loans,
which relate primarily to dairy, swine, cattle and other livestock production,
are presented as notes and contracts for the current portion and as other assets
for the noncurrent portion.

5.   RECEIVABLES PURCHASE FACILITY

     In December 2001, the Company established a $100 million (expanded to $200
million in 2004) receivables purchase facility with CoBank, ACB ("CoBank") in an
effort to reduce the Company's overall financing costs. A wholly owned,
unconsolidated special purpose entity ("SPE") was established for the limited
purpose of purchasing and obtaining financing for these receivables. The
transfers of the receivables from the Company to the SPE are structured as
sales; accordingly, the receivables transferred to the SPE are not reflected in
the Company's consolidated balance sheets. The Company sells the receivables to
the SPE in exchange for a note equal to the present value of the receivables,
adjusted for risk of loss. Amounts owing on the note are paid back to the
Company upon collection of the receivables by the SPE or when the SPE enters
into borrowings with CoBank. Accordingly, cash flows between the Company and the
SPE represent collections on the notes receivable, which were $6,626.8 million
and $5,658.4 million in 2005 and 2004, respectively. The Company is subject to
credit risk related to the repayment of the notes receivable with the SPE,
which, in turn, is dependent upon the collection of the SPE's receivables pool.
The Company has retained reserves for estimated losses. The Company expects no
significant gains or losses from the facility. At December 31, 2005 and 2004,
the SPE had no borrowings outstanding with CoBank under this facility.


                                       80



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6.   INVENTORIES

     A summary of inventories at December 31 is as follows:



                                   2005       2004
                                 --------   --------
                                      
Raw materials ................   $148,560   $159,842
Work in process ..............      2,297      9,216
Finished goods ...............    302,278    284,957
                                 --------   --------
Total inventories ............   $453,135   $454,015
                                 ========   ========


7.   INVESTMENTS

     A summary of investments at December 31 is as follows:



                                                           2005       2004
                                                         --------   --------
                                                              
Agriliance LLC .......................................   $112,932   $101,263
Ag Processing Inc. ...................................     35,831     37,461
Advanced Food Products, LLC ..........................     31,904     31,322
Agronomy Company of Canada Ltd. ......................     14,464     10,549
CoBank, ACB ..........................................     10,688     15,467
Universal Cooperatives, Inc. .........................      7,716      7,629
Melrose Dairy Proteins, LLC ..........................      7,495      7,293
Prairie Farms Dairy, Inc. ............................      4,315      4,795
MoArk/Fort Recovery Egg Marketing, LLC ...............      1,103        541
Other - principally cooperatives and joint ventures ..     37,338     41,228
CF Industries, Inc. ..................................         --    213,002
                                                         --------   --------
Total investments ....................................   $263,786   $470,550
                                                         ========   ========


     In 2005, the Company sold its entire interest in CF Industries, Inc., a
domestic manufacturer of agronomy crop nutrients, for $315.5 million in cash,
which resulted in a gain on sale of investment of $102.4 million. In 2004, the
Company sold certain investments in Feed for $2.3 million in cash.

     As of December 31, 2005, the Company has a 50-percent voting interest in
numerous joint ventures including Agriliance LLC, Agronomy Company of Canada
Ltd., Melrose Dairy Proteins, LLC, and MoArk/Fort Recovery Egg Marketing, LLC.
The Company also holds a 35-percent voting interest in Advanced Food Products,
LLC. The Company's two largest equity investments based on each investee's total
assets or earnings were Agriliance LLC and MoArk/Fort Recovery Egg Marketing,
LLC. Summarized financial information as of and for the years ended December 31
is as follows:

Agriliance LLC:



                                    2005         2004
                                 ----------   ----------
                                        
Net sales ....................   $3,819,523   $3,489,824
Gross profit .................      377,682      360,252
Net earnings .................       71,011       78,624
Current assets ...............    1,712,290    1,696,688
Non-current assets ...........      154,270      124,751
Current liabilities ..........    1,520,780    1,490,313
Non-current liabilities ......      119,917      128,631
Total equity .................      225,863      202,495



                                       81



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

MoArk/Fort Recovery Egg Marketing, LLC:



                                   2005      2004
                                 -------   -------
                                     
Net sales ....................   $61,937   $81,152
Gross (loss) profit ..........    (9,356)   12,918
Net (loss) earnings ..........    (9,776)   12,561
Current assets ...............     7,402     6,034
Non-current assets ...........        80        --
Current liabilities ..........     5,276     4,952
Non-current liabilities ......        --        --
Total equity .................     2,206     1,082


8.   PROPERTY, PLANT AND EQUIPMENT

     A summary of property, plant and equipment at December 31 is as follows:

     Owned property, plant and equipment:



                                                 2005         2004
                                              ----------   ----------
                                                     
Machinery and equipment ...................   $  698,751   $  637,394
Buildings and building equipment ..........      351,626      318,868
Land and land improvements ................       64,060       60,797
Software ..................................       61,603       61,847
Construction in progress ..................       27,778       30,452
                                              ----------   ----------
                                               1,203,818    1,109,358
Less accumulated depreciation .............      545,610      499,346
                                              ----------   ----------
Total property, plant and equipment, net ..   $  658,208   $  610,012
                                              ==========   ==========


     Property under capital lease:



                                               2005      2004
                                             -------   --------
                                                 
Machinery and equipment ..................   $ 7,599   $ 80,974
Buildings and building equipment .........     7,251     35,629
Land and land improvements ...............       200      2,346
                                             -------   --------
                                              15,050    118,949
Less accumulated depreciation ............     4,608     18,770
                                             -------   --------
Total property under capital lease, net ..   $10,442   $100,179
                                             =======   ========


9.   GOODWILL AND OTHER INTANGIBLE ASSETS

     Goodwill: The carrying amount of goodwill at December 31 is as follows:



                                   2005       2004
                                 --------   --------
                                      
Feed .........................   $115,593   $113,806
Layers .......................     79,567     79,764
Dairy Foods ..................     69,904     69,904
Agronomy .....................     51,566     57,643
Seed .........................     10,429     10,465
                                 --------   --------
Total goodwill ...............   $327,059   $331,582
                                 ========   ========


     In 2005, goodwill increased by $1.8 million in Feed due to the partial
purchase of a minority interest of a subsidiary for a price in excess of the
minority interest share acquired. Goodwill decreased by $0.2 million in Layers,
which resulted from the reclassification of $33.8 million of goodwill to assets
held for sale in other current assets, partially offset by $33.6 million of
additional goodwill from the anticipated purchase of the minority interest in
MoArk, LLC. The goodwill decrease in Agronomy resulted from amortization
associated with investments in joint ventures and cooperatives.


                                       82



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

     Other Intangible Assets: A summary of other intangible assets at December
31 is as follows:



                                                              2005      2004
                                                            -------   -------
                                                                
Amortized other intangible assets:
Patents, less accumulated amortization of
   $4,909 and $3,757, respectively ......................   $11,802   $12,960
Trademarks, less accumulated amortization of
   $2,078 and $2,048 respectively .......................     1,892     1,845
Other intangible assets, less accumulated amortization
   of $8,543 and $9,620, respectively ...................     6,448     7,586
                                                            -------   -------
Total amortized other intangible assets .................    20,142    22,391
Total non-amortized other intangible assets --
   trademarks and dealer networks .......................    76,625    76,625
                                                            -------   -------
Total other intangible assets ...........................   $96,767   $99,016
                                                            =======   =======


     Amortization expense for the years ended December 31, 2005, 2004 and 2003
was $4.7 million, $4.3 million and $5.3 million, respectively. The estimated
amortization expense related to other intangible assets subject to amortization
for the next five years will approximate $2.4 million annually. The
weighted-average life of the intangible assets subject to amortization is
approximately nine years.

10.  DEBT OBLIGATIONS

     The Company had notes and short-term obligations at December 31, 2005 and
2004 of $76.5 million and $51.8 million, respectively. The weighted average
interest rates on short-term borrowings and notes outstanding at December 31,
2005 and 2004 were 5.67% and 4.19%, respectively.

     A summary of long-term debt at December 31 is as follows:



                                                              2005       2004
                                                            --------   --------
                                                                 
Senior unsecured notes - due 2011 (8.75%) ...............   $196,452   $350,000
Senior secured notes - due 2010 (9.00%) .................    175,000    175,000
Term B loan - paid in full in 2005 ......................         --    118,373
Capital Securities of Trust Subsidiary -
   due 2028 (7.45%) .....................................    190,700    190,700
MoArk LLC debt - due 2006 through 2023
   (7.58% weighted average) .............................     59,136     73,471
Industrial development revenue bonds and other secured
   notes payable - due 2006 through 2016
   (1.65% to 6.00%) .....................................     14,893     14,917
Other debt ..............................................     25,232     21,455
                                                            --------   --------
                                                             661,413    943,916
Less current portion ....................................     22,245     10,680
                                                            --------   --------
Total long-term debt ....................................   $639,168   $933,236
                                                            ========   ========


     In November 2005, the Company completed a "modified Dutch Auction" cash
tender of its 8.75% senior unsecured notes due 2011. The Company purchased
$149.8 million in aggregate principal amount of the notes at a purchase price of
$1,070 per $1,000 principal amount.

     In September 2005, the Company initiated a par offer in accordance with the
indentures governing the 8.75% senior unsecured notes and 9.00% senior secured
notes as a result of proceeds received from the sale of its investment in CF
Industries. A total of $3.8 million of the Company's 8.75% senior unsecured
notes were tendered. None of the 9.00% senior secured notes were tendered.

     During February and March 2005, the Company paid off the remaining balance
of the Term B loan without penalty. In February 2005, the Company made a $50.0
million prepayment on the Term B loan, of which approximately $46.5 million was
mandatory based on an excess cash flow calculation for the year ended December
31, 2004, as defined in the credit agreement. The remaining $3.5 million was
optional. In March 2005, the Company made a further prepayment of the remaining
$68.4 million on the Term B loan due, in part, from cash proceeds received from
the disposal of assets related to its swine production operations.

     Land O'Lakes Capital Trust I (the "Trust") was created for the sole purpose
of issuing $200.0 million of Capital Securities and investing the proceeds
thereof in an equivalent amount of debentures of the Company. The sole assets of
the Trust, $206.2 million principal amount Junior Subordinated Deferrable
Interest Debentures (the "Debentures") of the Company, bearing interest at 7.45%
and maturing on March 15, 2028, are eliminated upon consolidation.


                                       83



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

     Interest paid on debt obligations was $78.0 million, $80.3 million and
$79.9 million in 2005, 2004 and 2003, respectively.

     At December 31, 2005, the Company also had a $200 million revolving credit
facility due January 2007, subject to a borrowing base limitation. There were no
borrowings on this facility as of December 31, 2005. As of December 31, 2005,
$147.6 million was available under the revolving credit facility after giving
effect to $52.4 million of outstanding letters of credit, which reduce
availability. Borrowings under the revolving credit facility bear interest at a
variable rate (either LIBOR or an Alternative Base Rate) plus an applicable
margin. The margin depends on Land O'Lakes leverage ratio. Based upon Land
O'Lakes leverage ratio at the end of 2005, the LIBOR margin for the revolving
credit facility is 200 basis points. Spreads for the Alternative Base Rate are
100 basis points lower than the applicable LIBOR spreads. LIBOR may be set for
one, two, three or six month periods at the election of the Company. As a result
of the Company's January 2006 purchase of the minority interest in MoArk, LLC,
the revolving credit facility was amended to allow for the continued treatment
of MoArk as an unrestricted subsidiary under this agreement.

     The Company's MoArk subsidiary had a $60 million revolving credit facility
due March 2006, subject to a borrowing base limitation. Borrowings of $19
million and $0, respectively, were outstanding at December 31, 2005 and 2004,
and are recorded as notes and short-term obligations. MoArk had outstanding
notes and term loans of $59.1 million and $73.5 million as of December 31, 2005
and 2004, respectively. The term loans and revolving credit facility are subject
to certain debt covenants, including a minimum interest coverage ratio and a
maximum net allowable capital expenditure calculation. At December 31, 2005,
MoArk was not in compliance with these covenant requirements and obtained
waivers until February 2007 for a term loan and until March 2006 for a term loan
and the revolving credit facility.

     Substantially all of the Company's assets, excluding assets of MoArk, have
been pledged to its lenders under the terms of its financing arrangements
including, but not limited to, the revolving credit facility and the senior
secured notes due 2010. Land O'Lakes debt covenants include certain minimum
financial ratios that were all satisfied as of December 31, 2005.

     The Company uses interest rate swaps to help manage exposure to interest
rate fluctuations. These swaps mirror the terms of the 8.75% senior unsecured
notes and effectively convert $102 million of such notes from a fixed 8.75% rate
to an effective rate of LIBOR plus 385 basis points. At December 31, 2005, the
aggregate notional amount of the swaps was $102 million. The fair value of the
interest rate swaps at December 31, 2005 was a liability of $1.9 million, which
is reflected in employee benefits and other liabilities, and the fair value
adjustment on the hedged debt was included in long-term debt in the consolidated
balance sheets.

     The maturity of long-term debt for the next five years and thereafter is
summarized in the table below.



YEAR                             $ AMOUNT
- ----                             --------
                              
2006 .........................     22,245
2007 .........................     11,078
2008 .........................      5,748
2009 .........................      5,437
2010 .........................    180,589
2011 and thereafter ..........    436,316



                                       84


            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. OTHER COMPREHENSIVE INCOME



                                                                                  2005       2004      2003
                                                                                --------   -------   --------
                                                                                            
Net earnings ................................................................   $128,943   $21,433   $ 81,994
Minimum pension liability adjustment (net of income taxes of $1,5921 in 2005,
   $4,698 in 2004 and $40,645 in 2003) ......................................     (2,603)   (7,402)   (65,617)
Unrealized (loss) gain on available-for-sale investment securities ..........       (155)     (521)     1,062
Foreign currency translation adjustment .....................................      1,387      (184)      (508)
                                                                                --------   -------   --------
Total comprehensive income ..................................................   $127,572   $13,326   $ 16,931
                                                                                ========   =======   ========


     The minimum pension liability adjustment for 2005, 2004 and 2003 reflects
$(5.7) million, $(8.6) million and $(60.9) million, respectively, for Land
O'Lakes defined benefit pension plans and $3.1 million, $1.2 million and $(4.7)
million, respectively, for the Company's portion of the minimum pension
liability adjustment for its joint venture in Agriliance LLC.

The components of accumulated other comprehensive loss at December 31 are as
follows:



                                                                   2005       2004
                                                                 --------   ---------
                                                                      
Minimum pension liability, net of income taxes ...............   $(76,638)  $(74,035)
Unrealized gain on available-for-sale investment securities ..        404        559
Foreign currency translation adjustment ......................      1,071       (316)
                                                                 --------   --------
Accumulated other comprehensive loss .........................   $(75,163)  $(73,792)
                                                                 ========   ========


12. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following tables provide information about the carrying amount,
notional amount and fair value of financial instruments, including derivative
financial instruments. The Company believes it is not practical to estimate the
fair value of investments in other cooperatives due to the excessive cost
involved, as there is no established market for these investments. The carrying
value of financial instruments classified as current assets and current
liabilities, such as cash and short-term investments, receivables, accounts
payable and notes and short-term obligations, approximate fair value due to the
short-term maturity of the instruments. The carrying value of MoArk's
LIBOR-based debt also approximates fair value since the interest rate
automatically adjusts every one to three months and credit spreads are not
believed to have changed materially since the facilities were established. The
fair value of fixed rate long-term debt was estimated through a present value
calculation based on available information on prevailing market interest rates
for similar securities on the respective reporting dates and is summarized at
December 31, as follows:



                                                             2005                  2004
                                                     -------------------   -------------------
                                                     CARRYING     FAIR     CARRYING     FAIR
                                                      AMOUNT      VALUE     AMOUNT      VALUE
                                                     --------   --------   --------   --------
                                                                          
Senior unsecured notes due 2011 ..................   $196,452   $205,601   $350,000   $348,406
Senior secured notes due 2010 ....................    175,000    192,021    175,000    191,329
MoArk fixed rate debt ............................     37,843     36,744     50,943     51,986
Capital Securities of Trust Subsidiary due 2028 ..    190,700    153,031    190,700     78,957


     The Company enters into futures and options contract derivatives to reduce
risk on the market value of inventory and fixed or partially fixed purchase and
sale contracts. The notional or contractual amount of derivatives provides an
indication of the extent of the Company's involvement in such instruments at
that time but does not represent exposure to market risk or future cash
requirements under certain of these instruments. A summary of the notional or
contractual amounts of these instruments at December 31 is as follows:



                                                    2005                 2004
                                             ------------------   ------------------
                                             NOTIONAL     FAIR    NOTIONAL     FAIR
                                              AMOUNT     VALUE     AMOUNT     VALUE
                                             --------   -------   --------   -------
                                                                 
Derivative financial instruments:
   Commodity futures and options contracts
   Commitments to purchase ...............   $177,507   $  (433)  $147,965   $(3,790)
   Commitments to sell ...................    (61,162)   (4,477)   (62,224)   (4,171)



                                       85



           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. INCOME TAXES

The components of the income tax provision are summarized as follows:



                                   2005      2004      2003
                                  ------   -------   -------
                                            
Current expense (benefit)
   Federal ....................   $ (584)  $ 5,071   $ 7,999
   State ......................      912     1,310     1,029
                                  ------   -------   -------
                                     328     6,381     9,028
Deferred expense (benefit) ....
   Federal ....................    4,377    (4,368)    9,279
   State ......................      800      (609)    2,396
                                  ------   -------   -------
                                   5,177    (4,977)   11,675
                                  ------   -------   -------
Income tax expense ............   $5,505   $ 1,404   $20,703
                                  ======   =======   =======


     The effective tax rate differs from the statutory rate primarily as a
result of the following:



                                               2005     2004     2003
                                              ------   ------   ------
                                                       
Statutory rate ............................    35.0%    35.0%    35.0%
Patronage refunds .........................   (31.3)   (28.0)   (13.0)
State income tax, net of federal benefit ..     0.8      1.5      2.1
Amortization of goodwill ..................      --      1.6      0.3
Effect of foreign operations ..............    (0.7)    (4.0)    (1.4)
Disposal of investment ....................      --     (4.2)      --
Additional taxes provided (benefited) .....     1.4      0.9     (5.0)
Meals and entertainment ...................     0.6      3.3      1.3
Tax credits ...............................    (0.6)    (2.9)    (0.6)
Other, net ................................    (1.0)     1.5      0.5
                                              -----    -----    -----
Effective tax rate ........................     4.2%     4.7%    19.2%
                                              =====    =====    =====


     The significant components of the deferred tax assets and liabilities at
December 31 are as follows:



                                            2005       2004
                                          --------   --------
                                               
Deferred tax assets related to:
   Deferred patronage .................   $ 45,864   $ 31,889
   Accrued expenses ...................     71,438     67,389
   Allowance for doubtful accounts ....      4,973      6,125
   Inventories ........................         --      3,673
   Asset impairments ..................      4,233     16,039
   Joint ventures .....................         --     20,553
   Net operating loss carryforwards ...     36,447     32,178
   Deferred tax credits ...............      7,502      6,773
                                          --------   --------
Total deferred tax assets .............    170,457    184,619
                                          --------   --------
Deferred tax liabilities related to:
   Property, plant and equipment ......    105,162    101,022
   Inventories ........................      3,779         --
   Joint Ventures .....................        989         --
   Intangibles ........................     10,778     26,643
   Deferred revenue ...................     13,827     17,265
   Other, net .........................        787      2,123
                                          --------   --------
Total deferred tax liabilities ........    135,322    147,053
                                          --------   --------
Net deferred tax assets ...............   $ 35,135   $ 37,566
                                          ========   ========



                                       86



           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The net deferred tax assets are classified in the consolidated balance sheets as
follows:



                                     2005      2004
                                   -------   -------
                                       
Other current assets ...........   $26,402   $28,797
Other assets ...................     8,733     8,769
                                   -------   -------
Total net deferred tax assets ..   $35,135   $37,566
                                   =======   =======


     As of December 31, 2005, the Company had net operating loss carryforwards
of approximately $95.3 million for tax purposes available to offset future
taxable income. If not used, these carryforwards will expire, primarily in years
2022 and 2024.

     As of December 31, 2005, a basis difference of approximately $13.0 million
existed with respect to investments in foreign subsidiaries and foreign
corporate joint ventures that are considered to be indefinite in nature. The
underlying deferred tax liability has not been recognized due to the permanent
nature of the investment.

     SFAS No. 109, "Accounting for Income Taxes," requires consideration of a
valuation allowance if it is "more likely than not" that benefits of deferred
tax assets will not be realized. The Company has determined, based on prior
earnings history, reversal of deferred liabilities and anticipated earnings,
that no valuation allowance is necessary.

     Income taxes paid (recovered) in 2005, 2004 and 2003 were $0.1 million,
$11.1 million and $(6.6) million, respectively.

14. PENSION AND OTHER POSTRETIREMENT PLANS

     The Company has a qualified, defined benefit pension plan which generally
covers all eligible employees not participating in a labor negotiated plan. Plan
benefits are generally based on years of service and employees' highest
compensation during five consecutive years of employment. Annual payments to the
pension trust fund are determined in compliance with the Employee Retirement
Income Security Act ("ERISA"). In addition, the Company has a noncontributory,
supplemental executive retirement plan ("SERP") and a discretionary capital
accumulation plan ("CAP"), both of which are non-qualified, defined benefit
pension plans and are unfunded.

     The Company also sponsors plans that provide certain health care benefits
for retired employees. Generally, employees hired by Land O'Lakes prior to
October 1, 2002 become eligible for these benefits upon meeting certain age and
service requirements; employees hired by Land O'Lakes after September 30, 2002
are eligible for access-only retirement health care benefits at their expense.
The Company funds only the plans' annual cash requirements.

The Company uses a November 30 measurement date for its plans.


                                       87



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OBLIGATION AND FUNDED STATUS AT DECEMBER 31



                                                                               PENSION BENEFITS                      OTHER
                                                                  -----------------------------------------      POSTRETIREMENT
                                                                     QUALIFIED PLAN     NON-QUALIFIED PLANS         BENEFITS
                                                                  -------------------   -------------------   -------------------
                                                                    2005       2004       2005       2004       2005       2004
                                                                  --------   --------   --------   --------   --------   --------
                                                                                                       
Change in benefit obligation:
   Benefit obligation at beginning of year ....................   $440,637   $415,398   $ 46,666   $ 47,732   $ 71,194   $ 67,924
   Service cost ...............................................     17,143     16,957        297        154        650        804
   Interest cost ..............................................     27,084     24,627      2,939      2,745      3,913      4,079
   Plan participants' contributions ...........................         --         --         --         --      2,185      2,043
   Plan amendments ............................................         --     (3,309)        --       (199)        --         --
   Actuarial loss (gain) ......................................     44,747      5,584      6,476     (1,329)      (454)     4,481
   Benefits paid ..............................................    (20,751)   (18,620)    (2,629)    (2,437)    (7,489)    (8,137)
                                                                  --------   --------   --------   --------   --------   --------
   Benefit obligation at end of year ..........................   $508,860   $440,637   $ 53,749   $ 46,666   $ 69,999   $ 71,194
                                                                  ========   ========   ========   ========   ========   ========
Change in plan assets:
   Fair value of plan assets at beginning of year .............   $390,390   $361,265   $     --   $     --   $     --   $     --
   Actual gain on plan assets .................................     31,101     37,745         --         --         --         --
   Company contributions ......................................     25,000     10,000      2,629      2,437      5,304      6,094
   Plan participants' contributions ...........................         --         --         --         --      2,185      2,043
   Benefits paid ..............................................    (20,751)   (18,620)    (2,629)    (2,437)    (7,489)    (8,137)
                                                                  --------   --------   --------   --------   --------   --------
   Fair value of plan assets at end of year ...................   $425,740   $390,390   $     --   $     --   $     --   $     --
                                                                  ========   ========   ========   ========   ========   ========
   Funded status ..............................................   $(83,120)  $(50,247)  $(53,749)  $(46,666)  $(69,999)  $(71,194)
   Unrecognized net actuarial loss ............................    167,403    130,200     14,288      8,738     34,142     37,062
   Unrecognized prior service cost ............................        149        182     (2,076)    (2,539)     2,128      2,394
   Unrecognized transition obligation .........................         --         --         --         --      4,500      5,143
                                                                  --------   --------   --------   --------   --------   --------
   Net amount recognized ......................................   $ 84,432   $ 80,135   $(41,537)  $(40,467)  $(29,229)  $(26,595)
                                                                  ========   ========   ========   ========   ========   ========
Amounts recognized in consolidated balance sheets consist of:
   Accrued benefit liability ..................................   $(30,681)  $(28,798)  $(50,064)  $(45,934)  $(29,229)  $(26,595)
   Intangible asset ...........................................        149        182         --         --         --         --
   Accumulated other comprehensive loss before income taxes ...    114,964    108,751      8,527      5,467         --         --
                                                                  --------   --------   --------   --------   --------   --------
   Net amount recognized ......................................   $ 84,432   $ 80,135   $(41,537)  $(40,467)  $(29,229)  $(26,595)
                                                                  ========   ========   ========   ========   ========   ========


     The accumulated benefit obligation for the Company's defined benefit
pension plan was $456.4 million and $419.2 million at December 31, 2005 and
2004, respectively. The accumulated benefit pension obligation for the Company's
non-qualified, defined benefit pension plans was $50.1 million and $45.9 million
at December 31, 2005 and 2004, respectively.


                                       88


            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

     Information for pension plans with an accumulated benefit obligation in
excess of plan assets at December 31 is as follows:



                                                 PENSION BENEFITS
                                    -----------------------------------------
                                       QUALIFIED PLAN     NON-QUALIFIED PLANS
                                    -------------------   -------------------
                                      2005       2004        2005      2004
                                    --------   --------    -------   -------
                                                         
Projected benefit obligation ....   $508,860   $440,637    $53,749   $46,666
Accumulated benefit obligation ..    456,421    419,188     50,064    45,934
Fair value of plan assets .......    425,740    390,390         --        --


     Components of net periodic benefit cost are as follows:



                                                  PENSION BENEFITS          OTHER POSTRETIREMENT BENEFITS
                                           ------------------------------   -----------------------------
                                             2005       2004       2003         2005     2004     2003
                                           --------   --------   --------      ------   ------   ------
                                                                               
Service cost ...........................   $ 17,440   $ 17,111   $ 16,586      $  650   $  804   $  803
Interest cost ..........................     30,023     27,372     27,169       3,913    4,079    4,353
Expected return on assets ..............    (33,577)   (32,736)   (32,806)         --       --       --
Amortization of actuarial loss .........     10,946      5,923      1,771       2,465    2,346    2,169
Amortization of prior service cost .....       (430)       723        844         266      266      266
Amortization of transition obligation ..         --         --         --         643      643      643
                                           --------   --------   --------      ------   ------   ------
Net periodic benefit cost ..............   $ 24,402   $ 18,393   $ 13,564      $7,937   $8,138   $8,234
                                           ========   ========   ========      ======   ======   ======


     ADDITIONAL INFORMATION



                                                         PENSION BENEFITS
                                              --------------------------------------
                                               QUALIFIED PLAN    NON-QUALIFIED PLANS
                                              ----------------   -------------------
                                               2005      2004       2005     2004
                                              ------   -------     ------   ------
                                                                
(Decrease) increase in intangible asset ...   $  (33)  $(4,470)    $   --   $   --
Increase in additional minimum liability ..    6,180     7,376      3,060    2,130
                                              ------   -------     ------   ------
Increase in other comprehensive loss,
   before income taxes ....................   $6,213   $11,846     $3,060   $2,130
                                              ======   =======     ======   ======


     Weighted-average assumptions used to determine benefit obligations at
December 31:



                                                                      OTHER
                                                                 POSTRETIREMENT
                                              PENSION BENEFITS      BENEFITS
                                              ----------------   --------------
                                                2005   2004       2005   2004
                                                ----   ----       ----   ----
                                                             
Discount rate..............................     5.75%  6.00%      5.75%  6.00%
Rate of long-term return on plan assets....     8.25%  8.50%      N/A    N/A
Rate of compensation increase..............     4.25%  4.25%      N/A    N/A


     Weighted-average assumptions used to determine net periodic benefit cost
for years ended December 31:



                                               PENSION BENEFITS    OTHER POSTRETIREMENT BENEFITS
                                              ------------------   -----------------------------
                                              2005   2004   2003        2005   2004   2003
                                              ----   ----   ----        ----   ----   ----
                                                                    
Discount rate..............................   6.00%  6.25%  7.00%       6.00%  6.25%  7.00%
Rate of long-term return on plan assets....   8.50%  8.50%  8.50%       N/A    N/A    N/A
Rate of compensation increase..............   4.25%  4.25%  4.25%       N/A    N/A    N/A


     The Company employs a building block approach in determining the long-term
rate of return for the assets in the qualified, defined benefit pension plan.
Historical markets are studied and long-term historical relationships between
equities and fixed income are preserved consistent with the widely accepted
capital market principle that assets with higher volatility generate a greater
return over the long run. Current market factors, such as inflation and interest
rates, are evaluated before long-term capital market assumptions are determined.
Diversification and rebalancing of the plan assets are properly considered as
part of establishing the long-term portfolio return. Peer data and historical
returns are reviewed to check for reasonability and appropriateness. The Company
determined its discount rate assumption at year end based on market trends and
prevailing interest rates on long-term corporate bonds. Specific indicators
included long-term Treasury rates, corporate bond spreads as reported by Reuters
and the Moody's Investor Services AA corporate bond index.


                                       89



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

     Assumed health care cost trend rates at December 31:



                                                         2005    2004
                                                        -----   -----
                                                          
Health care cost trend rate assumed for next year ...   10.00%  10.00%
Rate of which the cost trend is assumed to decline
   (ultimate trend rate) ............................    5.50%   5.50%
Year that rate reaches ultimate trend rate ..........    2011    2010


     Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage point change in the
assumed health care cost trend rate at December 31, 2005 would have the
following effects:



                                                  1-PERCENTAGE   1-PERCENTAGE
                                                      POINT          POINT
                                                    INCREASE       DECREASE
                                                  ------------   ------------
                                                           
Effect on total of service and interest cost...      $  242        $  (214)
Effect on postretirement benefit obligation....      $4,316        $(3,903)


     PLAN ASSETS

     The Company's qualified, defined benefit pension plan weighted-average
asset allocations at December 31, 2005 and December 31, 2004, by asset category,
are as follows:



                                       2005   2004   TARGET
                                       ----   ----   ------
                                            
Asset category
U.S. equity securities .............    55%    55%     55%
International equity securities ....    10%    10%     10%
Fixed income securities and bonds ..    35%    35%     35%
                                       ---    ---     ---
Total ..............................   100%   100%    100%
                                       ===    ===     ===


     The Company has a Statement of Pension Investment Policies and Objectives
(the "Statement") that guides the retirement plan committee in its mission to
effectively monitor and supervise the pension plan assets. Two general
investment goals are reflected in the Statement: 1) the investment program for
the pension plan should provide returns which improve the funded status of the
plan over time and reduce the Company's pension costs, and 2) the Company
expects to receive above-average performance from the pension portfolio's
managers in exchange for the fees paid to them. As a result, the total fund's
annualized return before fees should, over a five-year horizon, exceed the
annualized, weighted total rate of return of a customized index by 1 percentage
point and rank in the top 35% on the Hewitt Associates pension fund universe.
Although not a guarantee of future results, the total fund's five-year
annualized return before fees was 5.25%, which exceeded the custom index by 2
percentage points, and ranked in the top 39% on the Hewitt Associates pension
fund universe. The 2005 total fund's annualized return was 7.34%, which exceeded
the custom index by 1.74 percentage points. The customized index contains the
S&P 500 (weighted 55%), EAFE Index (weighted 10%) and Lehman Bros. Aggregate
Bond Index (weighted 35%). Beginning April 1, 2005, the composite of the
customized index changed by eliminating the S&P (weighted 55%) and replacing it
with the Russell 1000 (weighted 45%) and Russell 2000 (weighted 10%).

     CASH FLOW

     The Company expects to contribute approximately $17.8 million to its
defined benefit pension plans and $5.9 million to its other postretirement
benefit plans in 2006.

     The benefits anticipated to be paid from the benefit plans, which reflect
expected future years of service, and the Medicare subsidy expected to be
received are as follows:



                  QUALIFIED     NON-QUALIFIED   OTHER POSTRETIREMENT   HEALTH CARE SUBSIDY
                 PENSION PLAN   PENSION PLANS         BENEFITS              RECEIPTS
                 ------------   -------------   --------------------   -------------------
                                                           
2006 .........       21,000          2,800              5,900                (1,100)
2007 .........       22,000          2,900              6,200                (1,200)
2008 .........       23,000          3,000              6,500                (1,300)
2009 .........       24,000          3,200              6,700                (1,400)
2010 .........       26,000          3,400              6,900                (1,500)
2011-2015 ....      163,000         19,900             36,000                (9,200)



                                       90



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

     OTHER BENEFIT PLANS

Certain eligible employees are covered by defined contribution plans. The
expense for these plans was $14.3 million, $14.2 million and $12.7 million for
2005, 2004 and 2003, respectively.

15.  EQUITIES

     The authorized capital stock at December 31, 2005 consists of 2,000 shares
of Class A Common, $1,000 par value; 50,000 shares of Class B Common, $1 par
value; 500 shares of nonvoting Class C Common, $1,000 par value; 10,000 shares
of nonvoting Class D Common, $1 par value; and 1,000,000 shares of nonvoting, 8%
non-cumulative Preferred, $10 par value.

     The following details the activity in membership shares during the three
years ended December 31, 2005:



                                              NUMBER OF SHARES
                                  ---------------------------------------
                                            COMMON
                                  ---------------------------   ---------
                                    A       B      C      D     PREFERRED
                                  -----   -----   ---   -----   ---------
                                                 
December 31, 2002 .............   1,127   5,207   194   1,105    86,280
   New Members ................       3     247    --     156        --
   Redemptions ................     (36)   (540)   (4)   (119)   (2,762)
                                  -----   -----   ---   -----    ------
December 31, 2003 .............   1,094   4,914   190   1,142    83,518
   New Members ................       1     188     1     141        --
   Redemptions ................     (38)   (758)   (8)   (165)   (2,130)
                                  -----   -----   ---   -----    ------
December 31, 2004 .............   1,057   4,344   183   1,118    81,388
   New Members ................       8     168    --      31        --
   Redemptions ................     (61)   (394)   (8)   (125)   (3,072)
                                  -----   -----   ---   -----    ------
December 31, 2005 .............   1,004   4,118   175   1,024    78,316
                                  =====   =====   ===   =====    ======


     Allocated patronage to members of $118.3 million, $23.6 million and $40.0
million for the years ended December 31, 2005, 2004 and 2003, respectively, is
based on earnings in specific patronage or product categories and in proportion
to the business each member does within each category. For 2005, Land O'Lakes
issued qualified patronage and non-qualified patronage equities in the amounts
of $80.8 million and $37.5 million, respectively. Qualified patronage equities
are tax deductible by the Company when qualified written notices of allocation
are issued and non-qualified patronage equities are tax deductible when redeemed
with cash.

     The allocation to retained earnings of $8.8 million in 2005, $(4.1) million
in 2004 and $42.3 million in 2003 represents earnings or (losses) generated by
non-member businesses plus amounts under the retained earnings program as
provided in the bylaws of the Company.

16.  ACQUISITIONS

     In 2005, Land O'Lakes paid $30.1 million for the final payment on the
Madison Dairy Produce Company acquisition, a private label butter business
acquired by Dairy Foods in 2000. The $30.1 million was recorded in accrued
liabilities in the consolidated balance sheet as of December 31, 2004. In
December 2005, the Company paid $3.2 million for the remaining 1.5% minority
interest in Cheese & Protein International LLC, a Dairy Foods cheese
manufacturing and whey processing plant in Tulare, California. In September
2005, Feed increased the Company's ownership in Penny-Newman Milling LLC, a
grain and feed company in Fresno, California, from 40.0% to 50.01% with an
additional investment of $4.0 million and began consolidating Penny-Newman
Milling LLC in its financial statements effective September 30, 2005. In August
2005, the Company paid $8.2 million to acquire the assets of an alfalfa seed
company. The results of operations of this Seed acquisition are included in the
consolidated financial statements since that date. Other acquisition spending
totaled $0.6 million.

     In June 2004, the Company completed the purchase of Farmland Industries 8%
ownership position in Land O'Lakes Farmland Feed LLC, which gave Land O'Lakes
100% ownership of the entity. The Company paid $12.2 million to purchase the
minority interest. Effective October 21, 2004, Land O'Lakes Farmland Feed LLC
was renamed Land O'Lakes Purina Feed LLC.


                                       91



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

17.  RESTRUCTURING AND IMPAIRMENT CHARGES

     A summary of restructuring and impairment charges is as follows:



                                                         2005     2004     2003
                                                        ------   ------   ------
                                                                 
Restructuring charges ...............................   $  328   $2,441   $3,532
Impairment charges ..................................    6,053    5,374    2,810
                                                        ------   ------   ------
Total restructuring and impairment charges ..........   $6,381   $7,815   $6,342
                                                        ======   ======   ======


     RESTRUCTURING CHARGES

     In 2005, the Company had restructuring charges of $0.3 million. As a result
of competitive conditions in the Upper Midwest, Dairy Foods will close a cheese
facility in Greenwood, Wisconsin in 2006. A $1.1 million restructuring charge
was recorded in December 2005, which represented severance for approximately 30
employees and other exit costs. The Company expects to incur an additional $1.9
million of restructuring charges in 2006 related to contract termination and
other shut-down costs for this facility. Partially offsetting this charge were
reversals of $0.4 million related to prior year restructuring charges for the
closure of the Volga, South Dakota cheese facility and $0.4 million related to
prior year restructuring charges for downsizing Feed operations. The balance
remaining to be paid at December 31, 2005 for employee severance, outplacement
and other exit costs was $1.6 million.

     In 2004, the Company had restructuring charges of $2.4 million. Feed
recorded a $2.9 million restructuring charge, which represented severance costs
for approximately 100 employees due to the downsizing of operations. Dairy Foods
had a reversal of $0.5 million related to prior year restructuring charges for
the closure of the Volga, S.D. cheese facility. The balance remaining to be paid
at December 31, 2004 for employee severance and outplacement costs was $3.8
million.

     In 2003, the Company recorded restructuring charges of $3.5 million. Of
this amount, Dairy Foods recorded restructuring charges of $2.6 million for
severance costs related to the closure of facilities in Perham, Minnesota and
Volga, S.D. Feed recorded a restructuring charge of $0.6 million for severance
costs related to the closure of feed plants, and Seed recorded a restructuring
charge of $0.3 million for severance costs related to the closure of a facility.
The balance remaining to be paid at December 31, 2003 for employee severance and
outplacement costs was $4.2 million.

     IMPAIRMENT CHARGES

     In 2005, the Company incurred $6.1 million of impairment charges as the
book values of certain fixed assets were written down to fair value based on
estimated selling prices. In Dairy Foods, a $2.5 million impairment charge was
incurred for the write-down of the Greenwood, Wisconsin cheese facility and $0.9
million was incurred for the write-down of manufacturing equipment at another
facility. In Feed, $2.3 million of impairment charges were recorded, primarily
related to the write-down of the Liberal, Kansas feed plant. This was the result
of a decision to close and sell the facility due to declines in livestock
numbers in the region. In Layers, a $0.4 million impairment charge for the
write-down of plant fixed assets was recorded.

     In 2004, the Company incurred $5.4 million of impairment charges. This
included a $1.5 million charge for goodwill impairment in Seed due to the sale
of a subsidiary as well as charges for impairments related to the write-down of
certain assets to their estimated fair value of $3.1 million in Feed, $0.6
million in Dairy Foods and $0.2 million in Other.

     In 2003, the Company recorded impairment charges of $2.8 million.
Impairment charges of $1.3 million in Feed and $0.5 million in Seed were
recognized for write-downs of certain assets to their estimated value. The
Company also recorded a goodwill impairment in Seed for $1.0 million.


                                       92


            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

18. ASSETS AND LIABILITIES HELD FOR SALE

     As part of its ongoing efforts to reposition non-strategic assets, the
Company committed to a plan in the fourth quarter of 2005 to sell a portion of
net assets in Layers. Management expects the asset repositioning to occur within
a year. Accordingly, certain assets and liabilities were presented as assets
held for sale in the consolidated financial statements. Balance sheet amounts
for assets of $48.7 million and liabilities of $0.4 million have been
reclassified to other current assets and accrued expenses, respectively, in the
consolidated balance sheet at December 31, 2005.

19. DISCONTINUED OPERATIONS

     During 2005, the Company completed the sale of its swine production assets
for net proceeds of $42.0 million which resulted in a gain, net of income taxes,
of $0.1 million. Results from operations and balance sheet information have been
classified and reported as discontinued operations and are set forth in the
table below. The balance sheet amounts listed below are classified in other
current assets and accrued expenses in the consolidated financial statements.
The Company allocated interest to discontinued operations based on the amount of
debt repaid as a result of the divestiture of these assets. Interest allocated
to discontinued operations was $0.4 million in 2005, $2.1 million in 2004 and
$1.9 million in 2003.



                                                     2005      2004       2003
                                                   -------   --------   -------
                                                               
Net sales ......................................   $10,737   $ 65,691   $56,918

Earnings (loss) from discontinued operations
   before income taxes .........................     3,509    (10,955)   (8,022)
Income tax (expense) benefit ...................    (1,342)     4,208     3,100
                                                   -------   --------   -------
Earnings (loss) from discontinued operations,
   net of income taxes .........................   $ 2,167   $ (6,747)  $(4,922)
                                                   =======   ========   =======




                                                   2005     2004
                                                   ----   -------
                                                    
Current assets of discontinued operations.......   $ --   $36,955
Current liabilities of discontinued operations..    349     6,725


20. OTHER EXPENSE (INCOME), NET



                                                     2005      2004      2003
                                                   -------   -------   --------
                                                              
Loss on extinguishment of debt .................   $11,014   $    --   $    525
Gain on legal settlements ......................      (584)   (5,415)   (22,842)
Gain on sale of investments, excluding CF
   Industries ..................................    (1,135)     (623)      (877)
Gain on divestiture of businesses ..............        --    (1,438)      (684)
Gain on sale of intangibles ....................        --        --       (550)
                                                   -------   -------   --------
Total ..........................................   $ 9,295   $(7,476)  $(24,428)
                                                   =======   =======   ========


     In 2005, the Company recorded an $11.0 million loss on extinguishment of
$149.8 million of its senior unsecured notes due 2011. In 2003, a prepayment
penalty on Term loan B resulted in a loss of $0.5 million.

     In 2005, 2004 and 2003, the Company recorded gain on legal settlements of
$0.6 million, $5.4 million and $22.8 million, respectively. The gains represent
cash received in judgment from product suppliers against whom the Company
alleged certain price-fixing claims.

     In 2005, the Company recorded a gain of $1.1 million on the sale of
investments in Feed, from which the Company received $1.5 million in cash. In
2004, the Company recorded gains of $0.6 million on the sale of investments in
Feed and received $2.3 million in cash. In 2003, the Company sold its investment
in a swine joint venture in Feed for $3.0 million in cash and recorded a $0.9
million gain on sale of investment.


                                       93



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

     In 2005, Feed divested of a subsidiary and received $2.6 million in cash,
which resulted in no gain or loss. During 2004, Land O'Lakes divested of a Dairy
foods business for $7.5 million in cash, which resulted in a gain of $1.5
million. The Company also divested of a seed business for $5.6 million in cash,
which resulted in a loss of $0.1 million. In 2003, the divestiture of a powdered
cocoa business in Dairy Foods resulted in a gain of $1.4 million and $1.4
million in cash, which was partially offset by a $0.7 million loss on a
divestiture of a Feed business in Taiwan, from which the Company received $0.4
million.

     In 2003, the Company recorded a $0.6 million gain on the sale of a customer
list relating to the divestiture of a joint venture in Taiwan.

21. COMMITMENTS AND CONTINGENCIES

     The Company leases various equipment and real properties under long-term
operating leases. Total rental expense was $53.1 million in 2005, $51.5 million
in 2004 and $51.7 million in 2003. Most of the leases require payment of
operating expenses applicable to the leased assets. Management expects that in
the normal course of business most leases that expire will be renewed or
replaced by other leases.

     Minimum lease commitments under noncancelable operating leases at December
31, 2005 totaled $103.8 million composed of $31.4 million for 2006, $24.8
million for 2007, $18.6 million for 2008, $13.9 million for 2009, $10.3 million
for 2010 and $4.8 million for later years.

     At December 31, 2005, the Company had $9.3 million in obligations under
capital lease which represents the present value of the future minimum lease
payments for the leases of MoArk, LLC. MoArk leases machinery, buildings and
equipment at various locations. In July 2005, the Company voluntarily prepaid
the remaining $85.9 million balance on its capital lease obligation for Cheese &
Protein International LLC. This prepayment permitted the release of $20.3
million of restricted cash, which the Company had pledged to support the lease.
Simultaneous with the prepayment of the CPI lease, the Company elected to
designate CPI as a restricted subsidiary under the Land O'Lakes senior bond
indentures and a loan party under the Company's revolving credit facility. In
2005, CPI was included in the Company's covenant calculations for the senior
debt facilities and CPI now guarantees the Company's obligations under the
revolving credit facility, the 8.75% senior unsecured notes and the 9.00% senior
secured notes. CPI's assets have also been pledged to support the revolving
credit facility and the 9.00% senior secured notes.

     Minimum commitments under obligations under capital leases at December 31,
2005 total $9.3 million, including $1.2 million of interest, composed of $1.7
million for 2006, $1.7 million for 2007, $1.4 million for 2008, $1.4 million for
2009, $1.3 million for 2010 and $1.8 million for later years.

     At December 31, 2005, the Company had a commitment to purchase the
remaining 49.9% minority interest of Penny-Newman Milling LLC, a consolidated
subsidiary. In January 2006, the Company paid $13.2 million in cash to increase
its ownership of the entity to 100%.

     At December 31, 2005, the Company had a commitment to issue allocated
member equities to patrons from the 1998 acquisition of Dairyman's Cooperative
Creamery Association (DCCA). The amount of this commitment is estimated at
approximately $13 million as of December 31, 2005 and is contingent on milk
supplies received from DCCA members through December 31, 2006. The equities are
to be allocated to members by 2007.

     The Company has contracted commitments to purchase weaner and feeder pigs
which are sold to producers or local cooperatives under long-term supply
contracts. At December 31, 2005 these commitments total $87.5 million, composed
of $42.2 million in 2006, $28.2 million in 2007, $10.8 million in 2008, $3.8
million in 2009, $1.8 million in 2010, and $0.7 million thereafter.

     The Company's MoArk, LLC subsidiary has guaranteed certain loan agreements
for an equity investee. MoArk is responsible for 50% of the outstanding balance
of these guaranteed notes totaling $11.3 million as of December 31, 2005. These
notes are fully secured by collateral of the equity investee.

     The Company is currently and from time to time involved in litigation and
environmental claims incidental to the conduct of business. The damages claimed
in some of these cases are substantial. Although the amount of liability that
may result from these matters cannot be ascertained, the Company does not
currently believe that, in the aggregate, they will result in liabilities
material to the Company's consolidated financial condition, future results of
operations or cash flows.


                                       94



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

     On February 24, 2004, Cache La Poudre Feeds, LLC ("Cache") filed a lawsuit
in the United States District Court for the District of Colorado against the
Company, Land O'Lakes Farmland Feed LLC and certain named individuals claiming
trademark infringement with respect to certain animal feed sales under the
Profile trade name. Cache seeks damages of at least $132.8 million, which, it
claims, is the amount the named entities generated in gains, profits and
advantages from using the Profile trade name. In response to Cache's complaint,
the Company denied any wrongdoing and pursued certain counterclaims against
Cache relating to trademark infringement, and other claims against Cache for,
among other things, defamation and libel. In addition, the Company believes that
Cache's calculation of the Company's gains, profits and advantages allegedly
generated from the use of the Profile trade name are grossly overstated. The
Company believes that sales revenue generated from the sale of products carrying
the Profile trade name was immaterial. Although the amount of any loss that may
result from this matter cannot be ascertained with certainty, management does
not believe that it will result in a loss material to the Company's consolidated
financial condition, future results of operations or cash flow. The trial is
scheduled for June 2007.

     In 2003, several lawsuits were filed against the Company by Ohio alpaca
producers in which it was alleged that the Company manufactured and sold animal
feed that caused the death of, or damage to, certain of the producers' alpacas.
The two remaining lawsuits are scheduled to go to trial in 2006.

     In a letter dated January 18, 2001, the Company was identified by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party for cleanup costs in connection with hazardous substances and
wastes at the Hudson Refinery Superfund Site in Cushing, Oklahoma. The letter
invited the Company to enter into negotiations with the EPA for the performance
of a remedial investigation and feasibility study at the site and also demanded
that the Company reimburse the EPA approximately $8.9 million for remediation
expenses already incurred at the site. In March 2001, the Company responded to
the EPA denying any responsibility. No further communication has been received
from the EPA.

22. SEGMENT INFORMATION

     The Company operates in five segments: Dairy Foods, Feed, Seed, Agronomy
and Layers.

     Dairy Foods produces, markets and sells products such as butter, spreads,
cheese, and other dairy related products. Products are sold under
well-recognized national brand names including LAND O LAKES, the Indian Maiden
logo and Alpine Lace, as well as under regional brand names such as New Yorker.

     Feed is largely comprised of the operations of Land O'Lakes Purina Feed LLC
("Land O'Lakes Purina Feed"), the Company's wholly owned subsidiary. Land
O'Lakes Purina Feed develops, produces, markets and distributes animal feeds
such as ingredient feed, formula feed, milk replacers, vitamins and additives.

     Seed is a supplier and distributor of crop seed products in the United
States. A variety of crop seed is sold, including alfalfa, soybeans, corn and
forage and turf grasses.

     Agronomy consists primarily of the Company's 50% ownership interest in
Agriliance LLC ("Agriliance"), which is accounted for under the equity method.
Agriliance markets and sells two primary product lines: crop protection
(including herbicides and pesticides) and crop nutrients (including fertilizers
and micronutrients).

     Layers consists of the Company's MoArk subsidiary, which was consolidated
as of July 1, 2003. MoArk produces and markets shell eggs and egg products that
are sold to retail and wholesale customers for consumer and industrial use
throughout the United States.


                                       95


            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

     The Company allocates corporate administrative expense to all of its
business segments, both directly and indirectly. Corporate staff functions that
are able to determine actual services provided to each segment allocate expense
on a direct and predetermined basis. All other corporate staff functions
allocate expense indirectly based on each segment's percentage of total invested
capital. A majority of corporate administrative expense is allocated directly.



                                                                                                            OTHER/
                                           DAIRY FOODS      FEED        SEED      AGRONOMY     LAYERS    ELIMINATIONS   CONSOLIDATED
                                           -----------   ----------   --------   ---------    --------   ------------   ------------
                                                                                                   
FOR THE YEAR ENDED DECEMBER 31, 2005
Net sales ................................  $3,904,618   $2,586,870   $653,871   $      --    $406,965     $  4,353      $7,556,677
Cost of sales(1) .........................   3,718,051    2,296,280    569,503          --     385,062        2,764       6,971,660
Selling, general and administrative ......     151,147      227,433     53,827      27,574      32,588        2,402         494,971
Restructuring and impairment charges .....       4,121        1,770         --          --         433           57           6,381
Interest expense, net ....................      34,889       26,320      1,146       6,248      14,235       (2,965)         79,873
Other expense (income), net ..............         (14)      (1,603)        --      11,014          --         (102)          9,295
Gain on sale of investment in CF
   Industries, Inc........................          --           --         --    (102,446)         --           --        (102,446)
Equity in (earnings) loss of affiliated
   companies .............................      (3,969)      (1,341)        --   $ (37,870)   $  6,477     $     11      $  (36,692)
Minority interest in earnings of
   subsidiaries ..........................          --        1,349          5          --          --           --            1354
                                            ----------   ----------   --------   ---------    --------     --------      ----------
Earnings (loss) before income taxes and
   discontinued operations ...............  $      393   $   36,662   $ 29,390   $  95,480    $(31,830)    $  2,186      $  132,281
                                            ==========   ==========   ========   =========    ========     ========      ==========
FOR THE YEAR ENDED DECEMBER 31, 2004
Net sales ................................  $3,956,883   $2,626,577   $518,754   $      --    $541,318     $ 13,294      $7,656,826
Cost of sales(1) .........................   3,759,134    2,370,029    448,383          --     476,039        9,533       7,063,118
Selling, general and administrative ......     160,705      237,687     48,953      12,846      38,499        2,245         500,935
Restructuring and impairment charges .....          54        6,040      1,480          --          --          241           7,815
Interest expense, net ....................      28,142       26,676      3,938       9,273      14,127          958          83,114
Other expense (income), net ..............      (1,006)      (6,169)       146          --        (448)           1          (7,476)
Loss on impairment of investment in
   CF Industries, Inc. ...................          --           --         --      36,500          --           --          36,500
Equity in (earnings) loss of affiliated
   companies .............................      (6,614)      (2,007)        --     (41,923)     (7,918)          50         (58,412)
Minority interest in earnings of
   subsidiaries ..........................          --        1,641          8          --          --           (1)          1,648
                                            ----------   ----------   --------   ---------    --------     --------      ----------
Earnings (loss) before income taxes and
   discontinued operations ...............  $   16,468   $   (7,320)  $ 15,846   $ (16,696)   $ 21,019     $    267      $   29,584
                                            ==========   ==========   ========   =========    ========     ========      ==========
FOR THE YEAR ENDED DECEMBER 31, 2003
Net sales ................................  $2,975,027   $2,467,207   $466,225   $      --    $317,829     $ 29,813      $6,256,101
Cost of sales(1) .........................   2,804,770    2,179,115    403,129          --     264,727       20,128       5,671,869
Selling, general and administrative ......     141,368      229,989     46,354      13,993      24,598        8,308         464,610
Restructuring and impairment charges .....       2,605        1,962      1,775          --          --           --           6,342
Interest expense, net ....................      29,107       28,133      3,384       9,019       9,869        1,460          80,972
Other expense (income), net ..............      (1,487)     (23,156)        --          --        (310)         525         (24,428)
Equity in (earnings) loss of affiliated
   companies .............................      (4,952)      (1,641)        --     (36,237)    (14,480)          61         (57,249)
Minority interest in earnings of
   subsidiaries ..........................          --        6,366         --          --          --           --           6,366
                                            ----------   ----------   --------   ---------    --------     --------      ----------
Earnings (loss) before income taxes and
   discontinued operations ...............  $    3,616   $   46,439   $ 11,583   $  13,225    $ 33,425     $   (669)     $  107,619
                                            ==========   ==========   ========   =========    ========     ========      ==========
2005
Total assets .............................  $  899,019   $  920,956   $471,121   $ 187,565    $311,558     $304,839      $3,095,058
Depreciation and amortization ............      42,697       35,196      2,257       6,088      10,251       11,556         108,045
Capital expenditures .....................      20,462       25,912      2,374          --      17,714        3,962          70,424

2004
Total assets .............................  $  976,788   $  890,304   $398,924   $ 391,532    $276,859     $265,375      $3,199,782
Depreciation and amortization ............      39,551       38,544      2,546       6,101      10,825       15,272         112,839
Capital expenditures .....................      53,130       26,342      1,571          --       8,878        6,178          96,099

2003
Total assets .............................  $  939,610   $  945,497   $423,927   $ 423,341    $315,555     $325,199      $3,373,129
Depreciation and amortization ............      42,958       44,895      2,156       6,101       6,326       16,800         119,236
Capital expenditures .....................      28,220       24,049        542          --       3,769       15,071          71,651

(1) Cost of sales includes unrealized
   hedging (gains) of:
2005 .....................................  $    4,201   $   (5,815)  $   (518)  $      --    $   (844)    $     --      $   (2,976)
2004 .....................................       2,601       13,551      2,992          --       1,106           --          20,250
2003 .....................................      (3,035)     (11,802)    (2,645)         --          --           --         (17,482)


Unrealized hedging (gains) losses are also recognized in earnings (loss) from
discontinued operations, net of income taxes.


                                       96


            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)

23. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)



                            FIRST       SECOND        THIRD       FOURTH
                           QUARTER      QUARTER      QUARTER      QUARTER     FULL YEAR
                         ----------   ----------   ----------   ----------   ----------
                                                              
2005
Net sales ............   $2,031,234   $1,806,659   $1,717,509   $2,001,275   $7,556,677
Gross profit .........      181,969      126,962      127,229      148,857      585,017
Net earnings (loss) ..       24,296       25,847       80,438       (1,638)     128,943




                            FIRST       SECOND        THIRD       FOURTH
                           QUARTER      QUARTER      QUARTER      QUARTER     FULL YEAR
                         ----------   ----------   ----------   ----------   ----------
                                                              
2004
Net sales ............   $1,994,199   $1,991,394   $1,779,598   $1,891,635   $7,656,826
Gross profit .........      199,802      113,372       93,337      187,197      593,708
Net earnings (loss) ..       45,125       16,744      (29,883)     (10,553)      21,433


In the third quarter of 2005, the Company sold its investment in CF Industries,
Inc. for a gain on sale of $102.4 million.

24. RELATED PARTY TRANSACTIONS

     The Company has related party transactions, primarily with equity
investees. The Company purchases products from and sells products to Melrose
Dairy Proteins, LLC, a 50% voting interest joint venture with Dairy Farmers of
America formed in 2001. The Company sells seed products to and purchases from
and sells services to Agriliance LLC, a 50% voting interest joint venture with
CHS Inc. formed in 2000. The Company's MoArk subsidiary purchases product from
and sells product to equity investees and other related parties. In addition,
the Company has financing arrangements with Melrose Dairy Proteins, LLC, and
Agriliance LLC.

     Related party transactions as of and for the years ended December 31, 2005,
2004 and 2003 are as follows:



                                     2005       2004       2003
                                   --------   --------   --------
                                                
Sales...........................   $156,172   $155,726   $123,203
Purchases.......................     61,215     72,507     31,114
Services provided (purchased)...     19,540     14,432     12,645
Notes receivable................     25,600      3,080      5,600


25. ALLOWANCE FOR DOUBTFUL ACCOUNTS

     The activity in the allowance for doubtful accounts is as follows:



                                   BALANCE AT
                                    BEGINNING   CHARGES TO               BALANCE AT
           DESCRIPTION               OF YEAR      EXPENSE    OTHER(a)   END OF YEAR
           -----------             ----------   ----------   --------   -----------
                                                            
Year ended December 31, 2005....     15,538        1,967      (3,241)      14,310
Year ended December 31, 2004....     19,544        2,351      (6,357)      15,538
Year ended December 31, 2003....     18,255        5,214      (3,925)      19,544


- ----------
(a)  Includes accounts written-off, recoveries, acquisitions, and the impact of
     consolidations.


                                       97



            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

26. CONSOLIDATING FINANCIAL INFORMATION

     The Company has entered into financing arrangements which are guaranteed by
the Company and certain of its wholly owned and majority owned subsidiaries (the
"Guarantor Subsidiaries"). Such guarantees are full, unconditional and joint and
several.

     In conjunction with the purchase of the minority interest in MoArk, in
January of 2006 the Company amended its revolving credit facility to allow for
the continued treatment of MoArk as a nonguarantor subsidiary.

     On July 1, 2005, the Company voluntarily prepaid the remaining $85.9
million balance on a capital lease held by Cheese & Protein International (CPI),
a consolidated joint venture of Land O'Lakes. Simultaneous with the lease
prepayment, the Company elected to designate CPI as a restricted subsidiary
under the Land O'Lakes senior bond indentures, and a loan party under the
Company's revolving credit facility. Consistent with such designations, CPI now
guarantees the Company's obligations arising under these facilities.
Accordingly, the CPI financial information has been combined with the
consolidated guarantors in the following supplemental financial information as
of and for the six-month period ended December 31, 2005.

     In June 2004, the Company completed the purchase of Farmland Industries 8%
ownership position in Land O'Lakes Farmland Feed LLC, which gave Land O'Lakes
100% ownership of the entity; effective October 21, 2004, Land O'Lakes Farmland
Feed LLC was renamed Land O' Lakes Purina Feed LLC. Accordingly, the Land
O'Lakes Purina Feed LLC financial information, except for its majority-owned
subsidiaries which are excluded from the guarantee, has been combined with the
consolidated guarantors in the following supplemental financial information as
of and for the years ended December 31, 2005 and 2004. Financial information for
2003 has not been restated.

     The following supplemental financial information sets forth, on an
unconsolidated basis, balance sheet, statement of operations and cash flow
information for the Company, Guarantor Subsidiaries and the Company's other
subsidiaries and limited liability companies (the "Non-Guarantor Subsidiaries").
The supplemental financial information reflects the investments of the Company
in the Guarantor and Non-Guarantor Subsidiaries using the equity method of
accounting.


                                       98



                               LAND O'LAKES, INC.

                    SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 2005



                                                               LAND
                                                          O'LAKES, INC.                    NON-
                                                              PARENT     CONSOLIDATED    GUARANTOR
                                                             COMPANY      GUARANTORS   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                                          -------------  ------------  ------------  ------------  ------------
                                                                                                    
                                     ASSETS
Current assets:
   Cash and cash equivalents ...........................   $  157,445     $       --     $ 22,259     $      --     $  179,704
   Receivables, net ....................................      325,878        185,356      110,550       (30,339)       591,445
   Inventories .........................................      240,388        173,849       38,898            --        453,135
   Prepaid expenses ....................................      321,843          8,494        2,686            --        333,023
   Other current assets ................................       29,806         11,747       39,522            --         81,075
                                                           ----------     ----------     --------     ---------     ----------
      Total current assets .............................    1,075,360        379,446      213,915       (30,339)     1,638,382

Investments ............................................    1,019,020         43,743        8,077      (807,054)       263,786
Property, plant and equipment, net .....................      182,905        387,752       87,551            --        658,208
Property under capital lease, net ......................           --             --       10,442            --         10,442
Goodwill, net ..........................................      201,037         82,686       43,336            --        327,059
Other intangibles, net .................................        4,192         90,269        2,306            --         96,767
Other assets ...........................................       27,718         35,008       45,932        (8,244)       100,414
                                                           ----------     ----------     --------     ---------     ----------
   Total assets ........................................   $2,510,232     $1,018,904     $411,559     $(845,637)    $3,095,058
                                                           ==========     ==========     ========     =========     ==========

                            LIABILITIES AND EQUITIES
Current liabilities:
   Notes and short-term obligations ....................   $      300     $    2,269     $109,484     $ (35,588)    $   76,465
   Current portion of long-term debt ...................        6,659            390       15,196            --         22,245
   Current portion of obligations under capital lease ..           --             --        1,676            --          1,676
   Accounts payable ....................................      692,907        242,397       45,124        (3,469)       976,959
   Accrued expenses ....................................      168,397         79,940       17,113           474        265,924
   Patronage refunds and other member equities
      payable ..........................................       29,622             --           --            --         29,622
                                                           ----------     ----------     --------     ---------     ----------
      Total current liabilities ........................      897,885        324,996      188,593       (38,583)     1,372,891

Long-term debt .........................................      579,032         11,019       49,117            --        639,168
Obligations under capital lease ........................           --              2        7,632            --          7,634
Employee benefits and other liabilities ................      128,042         27,198       10,556            --        165,796
Minority interests .....................................        1,716            711        3,585            --          6,012

Equities:
   Capital stock .......................................        1,967        497,811       15,974      (513,785)         1,967
   Member equities .....................................      893,518             --           --            --        893,518
   Accumulated other comprehensive loss ................      (75,163)          (460)          --           460        (75,163)
   Retained earnings ...................................       83,235        157,627      136,102      (293,729)        83,235
                                                           ----------     ----------     --------     ---------     ----------
      Total equities ...................................      903,557        654,978      152,076      (807,054)       903,557
                                                           ----------     ----------     --------     ---------     ----------
Commitments and contingencies
      Total liabilities and equities ...................   $2,510,232     $1,018,904     $411,559     $(845,637)    $3,095,058
                                                           ==========     ==========     ========     =========     =========



                                       99



                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2005



                                                               LAND
                                                          O'LAKES, INC.                    NON-
                                                              PARENT     CONSOLIDATED    GUARANTOR
                                                             COMPANY      GUARANTORS   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                                          -------------  ------------  ------------  ------------  ------------
                                                                                                     
Net sales ..............................................   $3,634,582     $3,227,703    $694,392       $     --     $7,556,677
Cost of sales ..........................................    3,393,820      2,915,261     662,579             --      6,971,660
                                                           ----------     ----------    --------       --------     ----------
Gross profit ...........................................      240,762        312,442      31,813             --        585,017

Selling, general and administrative ....................      215,731        240,958      38,282             --        494,971
Restructuring and impairment charges ...................        4,179          1,769         433             --          6,381
                                                           ----------     ----------    --------       --------     ----------
Earnings (loss) from operations ........................       20,852         69,715      (6,902)            --         83,665

Interest expense, net ..................................       72,846          1,471       5,556             --         79,873
Other expense(income), net .............................       10,335         (1,040)         --             --          9,295
Gain on sale of investment in CF Industries, Inc. ......     (102,446)            --          --                      (102,446)
Equity in (earnings) loss of affiliated companies ......      (92,019)        (1,369)      6,477         50,219        (36,692)
Minority interest in earnings of subsidiaries ..........          240            142         972             --          1,354
                                                           ----------     ----------    --------       --------     ----------
Earnings (loss) before income taxes and discontinued
   operations ..........................................      131,896         70,511     (19,907)       (50,219)       132,281
Income tax expense (benefit) ...........................        5,120          2,844      (2,459)            --          5,505
                                                           ----------     ----------    --------       --------     ----------
Net earnings (loss) from continuing operations .........      126,776         67,667     (17,448)       (50,219)       126,776
Earnings from discontinued operations, net of income
   taxes ...............................................        2,167             --          --             --          2,167
                                                           ----------     ----------    --------       --------     ----------
Net earnings(loss) .....................................   $  128,943     $   67,667    $(17,448)      $(50,219)    $  128,943
                                                           ==========     ==========    ========       ========     ==========



                                       100


                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2005



                                                                LAND
                                                              O'LAKES,
                                                            INC. PARENT   CONSOLIDATED   NON-GUARANTOR
                                                              COMPANY      GUARANTORS     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                            -----------   ------------   -------------   ------------   ------------
                                                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings (loss)...................................    $ 128,943     $  67,667       $(17,448)      $ (50,219)     $ 128,943
   Earnings from discontinued operations, net of
      income tax benefit.................................       (2,167)           --             --              --         (2,167)
      Adjustments to reconcile net earnings to net cash
         provided by operating activities:
         Depreciation and amortization...................       42,237        38,434         18,641              --         99,312
         Amortization of deferred financing costs........        7,188         1,222            323              --          8,733
         Loss on extinguishment of debt..................       11,014            --             --              --         11,014
         Bad debt expense................................          762         1,029            176              --          1,967
         Proceeds from patronage revolvement received....        5,551         2,572             --              --          8,123
         Non-cash patronage income.......................         (408)       (1,444)            --              --         (1,852)
         Deferred income tax expense.....................        5,177            --             --              --          5,177
         Decrease (increase) in other assets.............       11,021         2,150           (256)            331         13,246
         Increase (decrease) in other liabilities........        4,554          (984)            --              --          3,570
         Restructuring and impairment charges............        4,179         1,769            433              --          6,381
         Gain on sale of investment in CF Industries.....     (102,446)           --             --              --       (102,446)
         Equity in (earnings) loss of affiliated
            companies....................................      (92,019)       (1,369)         6,477          50,219        (36,692)
         Minority interests..............................          240           142            972              --          1,354
            Other........................................         (420)       (1,678)        (5,291)             --         (7,389)
      Changes in current assets and liabilities, net of
         acquisitions and divestitures:
         Receivables.....................................     (279,140)       70,286          9,857         160,033        (38,964)
         Inventories.....................................          283       (19,278)        12,937              --         (6,058)
         Other current assets............................      (17,449)       (2,180)       (30,839)             --        (50,468)
         Accounts payable................................       95,909        74,987          6,524         (13,265)       164,155
         Accrued expenses................................       (7,063)       26,037         (1,357)           (474)        17,143
                                                             ---------     ---------       --------       ---------      ---------
   Net cash provided by operating activities.............     (184,054)      259,362          1,149         146,625        223,082

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property, plant and equipment............      (17,882)      (26,669)       (25,873)             --        (70,424)
   Acquisitions, net of cash acquiredt...................      (38,304)       (7,797)            --              --        (46,101)
   Payments for investments..............................      (93,616)           --         (5,450)         93,500         (5,566)
   Net proceeds from divestitures of businesses..........           --            --          2,635              --          2,635
   Proceeds from sale of investments.....................      315,900         1,000             --              --        316,900
   Proceeds from sale of property,
      plant and equipment................................          397         9,218         12,582              --         22,197
   Dividends from investments in affiliated companies....       33,201         1,323            726              --         35,250
   Increase in restricted cash...........................       20,338            --             --              --         20,338
   Other.................................................          723            (1)          (179)             --            543
                                                             ---------     ---------       --------       ---------      ---------
   Net cash provided (used) by investing activities......      220,757       (22,926)       (15,559)         93,500        275,772

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase (decrease) in short-term debt................      172,787       (36,594)        22,688        (137,625)        21,256
   Proceeds from issuance of long-term debt..............         (129)          629          1,522              --          2,022
   Principal payments on long-term debt..................     (264,247)           --        (14,097)         (9,000)      (287,344)
   Principal payments on obligations under capital
      lease..............................................           --            --        (92,556)             --        (92,556)
   Payments for debt extinguishment costs................      (11,014)           --             --              --        (11,014)
   Distribution to members...............................      183,830      (183,830)            --              --             --
   Payments for redemption of member equities............      (68,714)           --             --              --        (68,714)
   Other.................................................       (2,957)            2         94,462         (93,500)        (1,993)
                                                             ---------     ---------       --------       ---------      ---------
Net cash (used) provided by financing activities.........        9,556      (219,793)        12,019        (240,125)      (438,343)
Net cash provided by operating activities of
   discontinued operations...............................        3,922            --             --              --          3,922
Net cash provided by investing activities of
   discontinued operations...............................       42,135            --             --              --         42,135
                                                             ---------     ---------       --------       ---------      ---------
Net increase (decrease) in cash..........................       92,316        16,643         (2,391)             --        106,568
Cash and cash equivalents at beginning of year...........       65,129       (16,643)        24,650              --         73,136
                                                             ---------     ---------       --------       ---------      ---------
Cash and cash equivalents at end of year.................    $ 157,445     $      --       $ 22,259       $      --      $ 179,704
                                                             =========     =========       ========       =========      =========



                                      101



                               LAND O'LAKES, INC.

                    SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 2004



                                                              LAND
                                                          O'LAKES, INC.
                                                             PARENT       CONSOLIDATED   NON-GUARANTOR
                                                             COMPANY       GUARANTORS     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                          -------------   ------------   -------------   ------------   ------------
                                                                                                         
                         ASSETS
Current assets:
   Cash and cash equivalents...........................     $   65,129      $(16,643)       $ 24,650     $        --    $   73,136
   Restricted cash.....................................         20,338            --              --              --        20,338
   Receivables, net....................................        380,149       259,080         109,984        (190,372)      558,841
   Inventories.........................................        247,609       154,571          51,835              --       454,015
   Prepaid expenses....................................        270,717         6,835           6,932              --       284,484
   Other current assets................................         57,897        11,226           4,437              --        73,560
                                                            ----------      --------        --------     -----------    ----------
      Total current assets.............................      1,041,839       415,069         197,838        (190,372)    1,464,374

Investments............................................      1,283,735        17,254           9,651        (840,090)      470,550
Property, plant and equipment, net.....................        213,786       235,286         160,940              --       610,012
Property under capital lease, net......................             15            --         100,164              --       100,179
Goodwill, net..........................................        184,323        83,098          64,161              --       331,582
Other intangibles, net.................................          2,484        93,373           3,159              --        99,016
Other assets...........................................         46,607        33,943          52,094          (8,575)      124,069
                                                            ----------      --------        --------     -----------    ----------
      Total assets.....................................     $2,772,789      $878,023        $588,007     $(1,039,037)   $3,199,782
                                                            ==========      ========        ========     ===========    ==========

                LIABILITIES AND EQUITIES

Current liabilities:
   Notes and short-term obligations....................     $   90,944      $    990        $ 94,827     $  (135,008)   $   51,753
   Current portion of long-term debt...................          3,457        38,263           7,165         (38,205)       10,680
   Current portion of obligations under capital lease..             --            --          10,378              --        10,378
   Accounts payable....................................        654,660       131,798          43,604         (16,734)      813,328
   Accrued expenses....................................        156,062        53,903          18,470              --       228,435
   Patronage refunds and other member equities
      payable..........................................         22,245            72              --              --        22,317
                                                            ----------      --------        --------     -----------    ----------
      Total current liabilities........................        927,368       225,026         174,444        (189,947)    1,136,891

Long-term debt.........................................        856,070         9,474          76,692          (9,000)      933,236
Obligations under capital lease........................             --            --          90,524              --        90,524
Employee benefits and other liabilities................        134,447        28,289          12,141              --       174,877
Minority interests.....................................             --         3,192           6,158              --         9,350

Equities:
   Capital stock.......................................          2,059       463,941         134,536        (598,477)        2,059
   Member equities.....................................        852,759            --              --              --       852,759
   Accumulated other comprehensive loss................        (73,792)         (500)             --             500       (73,792)
   Retained earnings...................................         73,878       148,601          93,512        (242,113)       73,878
                                                            ----------      --------        --------     -----------    ----------
      Total equities...................................        854,904       612,042         228,048        (840,090)      854,904
                                                            ----------      --------        --------     -----------    ----------
Commitments and contingencies
      Total liabilities and equities...................     $2,772,789      $878,023        $588,007     $(1,039,037)   $3,199,782
                                                            ==========      ========        ========     ===========    ==========



                                      102



                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2004



                                                              LAND
                                                          O'LAKES, INC.
                                                             PARENT       CONSOLIDATED   NON-GUARANTOR
                                                             COMPANY       GUARANTORS     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                          -------------   ------------   -------------   ------------   ------------
                                                                                                         
Net sales .............................................    $3,897,673      $2,872,181      $886,972        $     --      $7,656,826
Cost of sales .........................................     3,637,366       2,608,479       817,273              --       7,063,118
                                                           ----------      ----------      --------        --------      ----------
Gross profit ..........................................       260,307         263,702        69,699              --         593,708

Selling, general and administrative ...................       208,829         246,751        45,355              --         500,935
Restructuring and impairment charges ..................           105           7,710            --              --           7,815
                                                           ----------      ----------      --------        --------      ----------
Earnings from operations ..............................        51,373           9,241        24,344              --          84,958

Interest expense (income), net ........................        77,150          (1,658)        7,622              --          83,114
Other income, net .....................................        (4,338)         (2,690)         (448)             --          (7,476)
Equity in (earnings) loss of affiliated companies .....       (84,960)         (1,876)       (7,918)         36,342         (58,412)
Loss on impairment of investment in CF
   Industries, Inc. ...................................        36,500              --            --              --          36,500
Minority interest in earnings of subsidiaries .........           459             678           511              --           1,648
                                                           ----------      ----------      --------        --------      ----------
Earnings (loss) before income taxes and
   discontinued operations ............................        26,562          14,787        24,577         (36,342)         29,584
Income tax (benefit) expense ..........................        (1,618)             59         2,963              --           1,404
                                                           ----------      ----------      --------        --------      ----------
Net earnings (loss) from continuing operations ........        28,180          14,728        21,614         (36,342)         28,180
Loss from discontinued operations, net of
   income tax benefit .................................        (6,747)             --            --              --          (6,747)
                                                           ----------      ----------      --------        --------      ----------
Net earnings(loss) ....................................    $   21,433      $   14,728      $ 21,614        $(36,342)     $   21,433
                                                           ==========      ==========      ========        ========      ==========



                                      103


                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS

                      FOR THE YEAR ENDED DECEMBER 31, 2004



                                                               LAND
                                                             O'LAKES,
                                                            INC. PARENT   CONSOLIDATED   NON-GUARANTOR
                                                              COMPANY      GUARANTORS     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                            -----------   ------------   -------------   ------------   ------------
                                                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings (loss) ..................................    $  21,433      $ 14,728       $ 21,614        $(36,342)     $  21,433
   Loss from discontinued operations, net of income tax
      benefit
   Adjustments to reconcile net earnings (loss) to net
      cash provided by operating activities: ............        6,747            --             --              --          6,747
      Depreciation and amortization .....................       47,133        36,192         23,889              --        107,214
      Amortization of deferred financing costs ..........        5,004            --            621              --          5,625
      Bad debt expense ..................................          696         1,191            464              --          2,351
      Proceeds from patronage revolvement received ......        6,043            --             --              --          6,043
      Non-cash patronage income .........................       (1,355)           --             --              --         (1,355)
      Deferred income tax expense .......................       (4,977)           --             --              --         (4,977)
      (Increase) decrease in other assets ...............       22,543        (6,096)            (3)        (10,704)         5,740
      (Decrease) increase in other liabilities ..........        1,977            --         (6,108)            632         (3,499)
      Restructuring and impairment charges ..............       36,605         7,710             --              --         44,315
      (Gain) loss from divestitures of businesses .......       (1,584)          146             --              --         (1,438)
      Equity in (earnings) loss of affiliated companies .      (84,960)       (1,876)        (7,918)         36,342        (58,412)
      Minority interests ................................          459           678            511              --          1,648
         Other ..........................................       (2,131)         (623)         1,515              --         (1,239)
      Changes in current assets and  liabilities, net of
         acquisitions and divestitures:
      Receivables .......................................       (5,460)        2,312          9,616          31,118         37,586
      Inventories .......................................       (4,352)       18,398          1,059              --         15,105
      Other current assets ..............................      (29,328)       (6,025)          (799)             --        (36,152)
      Accounts payable ..................................      109,203       (38,061)         4,898          (3,662)        72,378
      Accrued expenses ..................................       (5,741)      (11,611)           263              --        (17,089)
                                                             ---------      --------       --------        --------      ---------
   Net cash provided by operating activities ............      117,955        17,063         49,622          17,384        202,024

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property, plant and equipment ...........      (27,909)      (28,673)       (39,517)             --        (96,099)
   Acquisition of minority interest .....................      (12,150)           --             --              --        (12,150)
   Payments for investments .............................      (39,203)           --             --          38,500           (703)
   Net proceeds from divestitures of businesses .........        7,500         5,568             --              --         13,068
   Proceeds from sale of investments ....................           --         2,342             --              --          2,342
   Proceeds from sale of property, plant and equipment ..        8,483         1,716          1,791              --         11,990
   Dividends from investments in affiliated companies ...       47,100         1,784          9,562         (10,600)        47,846
   Increase in restricted cash ..........................         (220)           --             --              --           (220)
   Other ................................................          999           (71)           (68)             --            860
                                                             ---------      --------       --------        --------      ---------
   Net cash (used) provided by investing activities .....      (15,400)      (17,334)       (28,232)         27,900        (33,066)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase (decrease) in short-term debt ...............       28,418       (20,269)       (19,381)        (17,384)       (28,616)
   Proceeds from issuance of long-term debt .............          404            80         16,932              --         17,416
   Principal payments on long-term debt .................     (127,735)         (138)       (18,138)             --       (146,011)
   Principal payments on obligations under capital
      lease .............................................           --            --        (10,367)             --        (10,367)
   Payments for debt issuance costs .....................       (4,323)           --             --              --         (4,323)
   Payments for redemption of member equities ...........      (34,615)           --             --              --        (34,615)
   Other ................................................          (52)         (252)        27,900         (27,900)          (304)
                                                             ---------      --------       --------        --------      ---------
   Net cash used by financing activities ................     (137,903)      (20,579)        (3,054)        (45,284)      (206,820)
   Net cash provided by operating activities of
      discontinued operations ...........................       (1,449)           --             --              --         (1,449)
   Net cash provided by investing activities of
      discontinued operations ...........................        2,173            --             --              --          2,173
                                                             ---------       --------       --------        --------      ---------
   Net (decrease) increase in cash and cash
      equivalents .......................................      (34,624)      (20,850)        18,336              --        (37,138)
   Cash and cash equivalents at beginning of year .......       99,753         4,207          6,314              --        110,274
                                                             ---------      --------       --------        --------      ---------
Cash and cash equivalents at end of year ................    $  65,129      $(16,643)      $ 24,650        $     --      $  73,136
                                                             =========      ========       ========        ========      =========



                                      104



                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2003



                                              LAND                       MAJORITY-
                                            O'LAKES,    WHOLLY-OWNED       OWNED
                                          INC. PARENT   CONSOLIDATED   CONSOLIDATED   NON-GUARANTOR
                                            COMPANY      GUARANTORS     GUARANTORS     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                          -----------   ------------   ------------   -------------   ------------   ------------
                                                                                                   
Net sales .............................   $3,130,810      $227,445      $2,349,658      $548,188        $     --      $6,256,101
Cost of sales .........................    2,875,665       220,353       2,074,563       501,288              --       5,671,869
                                          ----------      --------      ----------      --------        --------      ----------
Gross profit ..........................      255,145         7,092         275,095        46,900              --         584,232
Selling, general and administrative ...      198,687        13,246         220,856        31,821              --         464,610
Restructuring and impairment charges ..        3,605           775           1,962            --              --           6,342
                                          ----------      --------      ----------      --------        --------      ----------
Earnings (loss) from operations .......       52,853        (6,929)         52,277        15,079              --         113,280
Interest expense (income), net ........       73,865         2,517            (941)        5,531              --          80,972
Other income, net .....................      (20,343)           --          (4,085)           --              --         (24,428)
Equity in (earnings) loss of affiliated
   companies ..........................     (110,570)           --          (1,421)      (10,179)         64,921         (57,249)
Minority interest in earnings (loss) of
   subsidiaries .......................        4,935            --              (8)        1,439              --           6,366
                                          ----------      --------      ----------      --------        --------      ----------
Earnings (loss) before income taxes and
    discontinued operations ...........      104,966        (9,446)         58,732        18,288         (64,921)        107,619
Income tax (benefit) expense ..........       18,050        (2,935)             84         5,504              --          20,703
                                          ----------      --------      ----------      --------        --------      ----------
Net earnings (loss) from continuing
   operations .........................       86,916        (6,511)         58,648        12,784         (64,921)         86,916
Loss from discontinued operations, net
   of income tax benefit ..............       (4,922)           --              --            --              --          (4,922)
                                          ----------      --------      ----------      --------        --------      ----------
Net earnings (loss) ...................   $   81,994      $ (6,511)     $   58,648      $ 12,784        $(64,921)     $   81,994
                                          ==========      ========      ==========      ========        ========      ==========



                                      105



                               LAND O'LAKES, INC.

               SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2003



                                                LAND                       MAJORITY-
                                              O'LAKES,    WHOLLY-OWNED       OWNED
                                            INC. PARENT   CONSOLIDATED   CONSOLIDATED   NON-GUARANTOR
                                              COMPANY      GUARANTORS     GUARANTORS     SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                            -----------   ------------   ------------   -------------   ------------   ------------
                                                                                                     
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings (loss) ..................    $  81,994      $ (6,511)      $ 58,648       $ 12,784        $(64,921)     $  81,994
   Loss from discontinued operations
      net of income tax benefit .........        4,922            --             --             --              --          4,922
   Adjustments to reconcile net
      earnings (loss) to net cash
      provided by operating activities:
      Depreciation and amortization .....       53,919         1,956         39,549         16,076              --        111,500
      Amortization of deferred
         financing costs ................        7,092            --             --            644              --          7,736
      Bad debt expense ..................        1,875           134          1,889          1,316              --          5,214
      Proceeds from patronage
         revolvement received ...........        5,000            --             --             --              --          5,000
      Non-cash patronage income .........       (3,578)           --             --             --              --         (3,578)
      Receivable from legal settlement...       90,707            --          6,000             --              --         96,707
      Deferred income tax expense .......       11,675            --             --             --              --         11,675
      (Increase) decrease in other
         assets .........................       (8,955)        4,628          1,475          3,375           5,342          5,865
      (Decrease) increase in other
         liabilities ....................       (1,081)          (77)         3,265         (3,691)           (632)        (2,216)
      Restructuring and impairment
         charges ........................        3,605           775          1,962             --              --          6,342
      Gain from divestitures of
         businesses .....................         (684)           --             --             --              --           (684)
      Equity in (earnings) loss of
         affiliated companies ...........     (110,570)           --         (1,421)       (10,179)         64,921        (57,249)
      Minority interests ................        4,935            --             (8)         1,439              --          6,366
      Other .............................      (11,249)           --           (876)            --              --        (12,125)
   Changes in current assets and
      liabilities, net of acquisitions
      and divestitures:
      Receivables .......................       27,969       (34,801)       (55,601)       (12,843)         28,792        (46,484)
      Inventories .......................      (14,813)       28,416        (23,534)        (4,383)             --        (14,314)
      Other current assets ..............      (58,632)        3,268         (3,350)         1,788              --        (56,926)
      Accounts payable ..................       57,583        (8,708)        (7,325)         1,357          (6,562)        36,345
      Accrued expenses ..................       21,396        22,266         (6,537)         2,050           5,225         44,400
                                             ---------      --------       --------       --------        --------      ---------
   Net cash provided by operating
      activities ........................      163,110        11,346         14,136          9,733          32,165        230,490

CASH FLOWS FROM INVESTING ACTIVITIES:
      Additions to property, plant and
         equipment ......................      (33,654)         (871)       (24,068)       (13,058)             --        (71,651)
      Payments for investments ..........      (41,421)           --             --             --          31,374        (10,047)
      Net proceeds from divestitures of
         businesses .....................        1,815            --             --             --              --          1,815
      Proceeds from sale of
         investments ....................           --            --          3,000             --              --          3,000
      Proceeds from sale of property,
         plant and equipment ............       16,370            --          5,357             --              --         21,727
      Dividends from investments in
         affiliated companies ...........       29,420            --          1,956          5,980              --         37,356
      Increase in restricted cash .......      (20,118)           --             --             --              --        (20,118)
      Other .............................        2,380            --          1,287             --              --          3,667
                                             ---------      --------       --------       --------        --------      ---------
   Net cash (used) provided by
      investing activities ..............      (45,208)         (871)       (12,468)        (7,078)         31,374        (34,251)

CASH FLOWS FROM FINANCING ACTIVITIES:
      Increase (decrease) in short-term
         debt ...........................       60,600           109           (207)       (16,654)        (32,165)        11,683
      Proceeds from issuance of
         long-term debt .................      185,037            --             --             --              --        185,037
      Principal payments on long-term
         debt .........................       (289,608)       (8,961)            --         (6,341)             --       (304,910)
      Principal payments on obligations
         under capital lease ............           --            --             --         (9,590)             --         (9,590)
      Payments for debt issuance costs          (3,486)           --             --             --              --         (3,486)
      Payments for redemption of member
         equities .......................      (24,380)           --             --             --              --        (24,380)
      Other ...........................           (688)           --             --         31,374         (31,374)          (688)
                                             ---------      --------       --------       --------        --------      ---------
   Net cash used by financing
      activities ........................      (72,525)       (8,852)          (207)        (1,211)        (63,539)      (146,334)
   Net cash used by operating
      activities of discontinued
      operations ........................       (2,987)           --             --             --              --         (2,987)
   Net cash provided by investing
      activities of discontinued
      operations ........................         (971)           --             --             --              --           (971)
                                             ---------      --------       --------       --------        --------      ---------
   Net increase in cash and cash
      equivalents .......................       41,419         1,623          1,461          1,444              --         45,947
   Cash and cash equivalents at
      beginning of year .................       58,334         2,584         (1,461)         4,870              --         64,327
                                             ---------      --------       --------       --------        --------      ---------
   Cash and cash equivalents at end of
      year ..............................    $  99,753      $  4,207       $     --       $  6,314        $     --      $ 110,274
                                             =========      ========       ========       ========        ========      =========



                                      106


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Members and Management
Moark, LLC and Subsidiaries
Chesterfield, Missouri

     We have audited the accompanying consolidated balance sheet of Moark, LLC
and Subsidiaries as of December 24, 2005 and December 25, 2004, and the related
consolidated statements of operations, members' equity and cash flows for the
years ended December 24, 2005 and December 25, 2004 and the eleven months ended
December 27, 2003. 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated 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 consolidated financial position of
MoArk, LLC and Subsidiaries as of December 24, 2005 and December 25, 2004, and
the consolidated results of their operations and their cash flows for the years
ended December 24, 2005 and December 25, 2004 and the eleven months ended
December 27, 2003, in conformity with U.S. generally accepted accounting
principles.


                                        /s/ Moore Stephens Frost
                                        ----------------------------------------

Little Rock, Arkansas
January 19, 2006


                                      107



                           MOARK, LLC AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                     DECEMBER 24, 2005 AND DECEMBER 25, 2004



                                                                           DECEMBER 24,   DECEMBER 25,
                                                                               2005           2004
                                                                           ------------   ------------
                                                                                    
                                 ASSETS

Current assets
   Cash and cash equivalents ...........................................   $  6,032,290   $ 22,320,743
   Accounts receivable -- trade, less allowance for doubtful accounts
      of $1,699,494 and $1,940,087, respectively .......................     39,629,709     40,346,090
   Inventories .........................................................     30,434,202     30,899,635
   Refundable income taxes .............................................             --        863,258
   Current portion of notes receivable .................................        140,942        141,425
   Prepaid expenses and other current assets ...........................      2,462,016      2,399,959
   Assets held for sale ................................................     35,890,108     36,070,076
                                                                           ------------   ------------
Total current assets ...................................................    114,589,267    133,041,186
                                                                           ------------   ------------
Property, plant and equipment
   Land ................................................................      6,776,034      7,483,582
   Land improvements ...................................................        650,169        843,783
   Buildings and leasehold improvements ................................     39,202,937     37,748,766
   Machinery and equipment .............................................     57,102,336     53,760,517
   Vehicles ............................................................      6,107,315      5,723,362
   Furniture and fixtures ..............................................      1,356,590      1,036,485
   Construction in progress ............................................      4,610,695      2,815,366
                                                                           ------------   ------------
                                                                            115,806,076    109,411,861
   Less accumulated depreciation .......................................    (34,090,370)   (29,155,686)
                                                                           ------------   ------------
Net property, plant and equipment ......................................     81,715,706     80,256,175
                                                                           ------------   ------------
Investments, intangibles and other assets
   Notes receivable, less current portion ..............................      3,255,061      3,385,827
   Investment in affiliates ............................................      5,652,780      7,358,051
   Other assets ........................................................         69,940        197,088
   Intangible assets -- finite-lived, net ..............................      2,130,608      2,504,770
   Goodwill ............................................................     43,223,768     42,973,768
                                                                           ------------   ------------
Total investments, intangibles and other assets ........................     54,332,157     56,419,504
                                                                           ------------   ------------
Total assets ...........................................................   $250,637,130   $269,716,865
                                                                           ============   ============

                    LIABILITIES AND MEMBERS' EQUITY

Current liabilities
   Notes payable .......................................................   $ 19,000,000   $         --
   Accounts payable ....................................................     21,034,575     24,220,462
   Accrued expenses and other current liabilities ......................     13,705,556      9,168,514
   Income taxes payable ................................................        742,200             --
   Liabilities held for sale ...........................................        351,210        541,657
   Current maturities of long-term debt and capital lease obligations ..     16,629,382      8,369,727
   Current deferred income taxes .......................................        123,354      2,144,000
                                                                           ------------   ------------
Total current liabilities ..............................................     71,586,277     44,444,360
                                                                           ------------   ------------
Long-term debt and capital lease obligations, less current maturities ..     51,804,841     75,086,465
Deferred income taxes ..................................................     10,321,162     15,500,000
Members' equity ........................................................    116,924,850    134,686,040
                                                                           ------------   ------------
Total liabilities and members' equity ..................................   $250,637,130   $269,716,865
                                                                           ============   ============


   The accompanying notes are an integral part of these consolidated
                         financial statements.


                                  108



                       MOARK, LLC AND SUBSIDIARIES

                  CONSOLIDATED STATEMENT OF OPERATIONS

        FOR THE YEARS ENDED DECEMBER 24, 2005, DECEMBER 25, 2004
             AND THE ELEVEN MONTHS ENDED DECEMBER 27, 2003



                                          DECEMBER 24,   DECEMBER 25,   DECEMBER 27,
                                             2005            2004           2003
                                          ------------   ------------   ------------
                                                               
Net sales .............................   $406,965,095   $549,648,703   $515,455,221
Cost of sales .........................    385,673,833    484,864,691    446,665,872
                                          ------------   ------------   ------------
Gross profit ..........................     21,291,262     64,784,012     68,789,349
Expenses
   General and administrative .........     23,159,719     24,545,410     25,937,184
   Selling ............................     14,982,068     11,067,885      9,794,678
                                          ------------   ------------   ------------
Total expenses ........................     38,141,787     35,613,295     35,731,862
                                          ------------   ------------   ------------
Operating income(loss) ................    (16,850,525)    29,170,717     33,057,487

Other income (expense)
   Interest expense ...................     (5,737,363)    (6,190,652)    (6,580,460)
   Interest and other income ..........      2,004,171      1,455,163      1,893,880
   Equity in earnings of affiliates ...     (6,477,425)     7,918,034     11,282,607
   Gain (loss) on sale of assets ......      5,718,015     (1,354,141)       553,903
                                          ------------   ------------   ------------
Total other income (expense) ..........     (4,492,602)     1,828,404      7,149,930
                                          ------------   ------------   ------------

Income (loss) before income taxes .....    (21,343,127)    30,999,121     40,207,417
Income tax expense (benefit) ..........     (3,581,937)     2,342,666      4,054,164
                                          ------------   ------------   ------------
Net income (loss) .....................   $(17,761,190)  $ 28,656,455   $ 36,153,253
                                          ============   ============   ============


   The accompanying notes are an integral part of these consolidated
                         financial statements.


                                  109



                       MOARK, LLC AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF MEMBERS' EQUITY

        FOR THE YEARS ENDED DECEMBER 24, 2005, DECEMBER 25, 2004
             AND THE ELEVEN MONTHS ENDED DECEMBER 27, 2003



                                     MEMBERS'
                                      EQUITY
                                   ------------
                                
Balance -- February 2, 2003 ....   $ 89,076,332
Net income .....................     36,153,253
Distributions to members, net ..     (8,600,000)
                                   ------------
Balance -- December 27, 2003 ...    116,629,585
Net income .....................     28,656,455
Distributions to members, net ..    (10,600,000)
                                   ------------
Balance -- December 25, 2004 ...    134,686,040
Net loss .......................    (17,761,190)
                                   ------------
Balance -- December 24, 2005 ...   $116,924,850
                                   ============


   The accompanying notes are an integral part of these consolidated
                         financial statements.


                                      110


                           MOARK, LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

 FOR THE YEARS ENDED DECEMBER 24, 2005, DECEMBER 25, 2004 AND THE ELEVEN MONTHS
                             ENDED DECEMBER 27, 2003



                                                            DECEMBER 24,   DECEMBER 25,   DECEMBER 27,
                                                                2005           2004           2003
                                                            ------------   ------------   ------------
                                                                                 
Cash flows from operating activities
Net income (loss) .......................................   $(17,761,190)  $ 28,656,455   $ 36,153,253
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities
   Depreciation .........................................      7,406,448      8,470,773      6,744,317
   Amortization .........................................        374,162        276,954      1,041,625
   Gain on sale of assets ...............................     (6,043,797)      (111,421)      (566,062)
   Loss on sale of assets held for sale .................             --      1,454,728             --
   Equity in loss (income) of affiliates ................      6,477,425     (7,918,034)   (11,282,607)
   Net change in operating assets held for sale .........        (10,479)     6,102,669     (1,853,046)
   Change in deferred income taxes ......................     (7,199,484)    (2,281,000)     3,491,700
Change in operating assets and liabilities
   Accounts receivable -- trade .........................        716,381     19,652,751    (16,310,829)
   Inventories ..........................................        465,433      2,701,468       (909,843)
   Refundable income taxes ..............................        863,258       (863,258)        63,380
   Prepaid expenses and other current assets ............        (62,057)        30,972        (49,071)
   Accounts payable .....................................     (3,185,887)    (6,911,921)     7,690,293
   Accrued expenses and other current liabilities .......      4,537,041     (1,422,691)     2,211,517
   Income taxes payable .................................        742,200       (580,224)       580,224
                                                            ------------   ------------   ------------
Net cash provided (used) by operating activities ........    (12,680,546)    47,258,221     27,004,851
                                                            ------------   ------------   ------------
Cash flows from investing activities
   Proceeds from sale of property, plant and equipment ..     12,539,058      1,350,105      1,321,185
   Purchase of property, plant and equipment ............    (15,310,448)    (6,262,813)    (4,374,684)
   Purchase of subsidiaries, net of cash acquired .......       (250,000)            --     (1,750,000)
   Distributions from affiliates ........................             --      9,561,677      5,980,000
   Investments of affiliates ............................     (4,772,154)            --             --
   Proceeds from sale of assets held for sale ...........             --        530,000             --
   Other assets .........................................        127,149        589,396        500,004
   Collections on notes receivable ......................        131,249        256,591        186,745
                                                            ------------   ------------   ------------
Net cash provided (used) by investing activities ........     (7,535,146)     6,024,956      1,863,250
                                                            ------------   ------------   ------------
Cash flows from financing activities
   Net borrowings (repayments) on notes payable .........     19,000,000    (19,977,518)    (8,299,978)
   Proceeds from long-term debt .........................             --     16,065,771         21,581
   Repayments of long-term debt .........................    (13,653,172)   (18,728,213)   (14,121,980)
   Repayments of capital lease obligations ..............     (1,419,589)    (1,329,868)    (2,781,003)
   Distributions to members, net ........................             --    (10,600,000)    (8,600,000)
                                                            ------------   ------------   ------------
Net cash provided (used) by financing activities ........      3,927,239    (34,569,828)   (33,781,380)
                                                            ------------   ------------   ------------
Net increase (decrease) in cash and cash equivalents ....    (16,288,453)    18,713,349     (4,913,279)
Cash and cash equivalents -- beginning of year ..........     22,320,743      3,607,394      8,520,673
                                                            ------------   ------------   ------------
Cash and cash equivalents -- end of year ................   $  6,032,290   $ 22,320,743   $  3,607,394
                                                            ============   ============   ============
Supplementary disclosures of cash flow information
   Cash paid during the year for
      Interest ..........................................   $  5,666,853   $  6,055,538   $  6,586,193
      Income taxes (net of refunds received) ............      1,046,453      6,067,148        581,195
Supplementary disclosure of non-cash transactions
Purchase of property, plant and equipment through
   capital lease obligations ............................   $     50,792   $  1,758,108   $         --


   The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       111



                           MOARK, LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION - On February 2, 2000, Land O'Lakes, Inc. and the
     Moark group of affiliated companies established a new joint venture
     ("Moark, LLC") to facilitate the strategy of becoming a top tier marketer
     and producer of shell eggs and processed egg products in the United States.
     In connection with the formation of this venture, Land O'Lakes, Inc.
     contributed cash and a commitment to provide additional funding and the
     Moark group contributed their existing egg and egg product operations.

     PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
     the accounts of Moark, LLC and all subsidiaries in which Moark, LLC has the
     ability to exercise significant control over operating and financial
     policies. The entities (collectively referred to as the "Company") which
     are included in the consolidated financial statements are Moark, LLC,
     Premier Farms, LLC, Moark Egg Corporation, Norco Ranch Holding Company,
     Inc., Norco Ranch, Inc., Hi Point Industries, LLC, L&W Egg Products, Inc.,
     Kofkoff Egg Farm, LLC, Whip-O-Will Egg Farms, LLC, Pacheco Egg Farms, LLC,
     Kofkoff Feed, Inc., Colchester Foods, Inc., Fitchville Realty, Inc., Egg
     Express, Inc., McAnally Enterprises, LLC, Southern New England Egg, LLC,
     Cutler at Philadelphia, LLC (disposed of in 2004 - see Note 7), Cutler at
     Abbeville, LLC, Sunbest Farms of Iowa, LLC, and Sunbest Foods of Iowa, Inc.
     All significant intercompany balances and transactions have been
     eliminated.

     BUSINESS ENVIRONMENT - The Company operates as a marketer and producer of
     shell eggs and egg products covering the majority of the United States. As
     such, it operates in an environment wherein the commodity nature of both
     its products for sale and its primary raw materials causes sales prices and
     production costs to fluctuate, often on a short-term basis, due to the
     world-wide supply and demand situation for those commodities. The supply
     and demand factors for its products for sale and the supply and demand
     factors for its primary raw materials correlate to a degree, but are not
     the same, thereby causing margins between sales prices and production costs
     to increase, to decrease, or to invert, often on a short-term basis.

     LIMITED LIABILITY COMPANY - Since Moark, LLC is a limited liability
     company, no interest holder of the Company shall be personally liable for
     the debts, obligations or liabilities of Moark, LLC, unless the individual
     has signed a specific personal guarantee. Moark, LLC shall dissolve upon
     the sale of all or substantially all of the property of Moark, LLC; the
     vote by the managers to dissolve, wind up and liquidate the Company; entry
     of a decree of judicial dissolution pursuant to a legal authority; on
     December 31, 2050.

     FISCAL YEAR - During the eleven months ended December 27, 2003, the Company
     changed its fiscal year end to use a 52-53 week fiscal year ending during
     December. Prior to this change, the Company's fiscal year ended on the
     Saturday closest to January 31. The years ended December 24, 2005 and
     December 25, 2004 consisted of 52 week periods and the eleven months ended
     December 27, 2003 consisted of a 48 week period.

     REVENUE RECOGNITION - Revenue is recognized by the Company when the
     following criteria are met: persuasive evidence of an agreement exists;
     delivery has occurred or services have been rendered; the Company's price
     to the buyer is fixed and determinable; and collectibility is reasonably
     assured.

     CASH EQUIVALENTS - For purposes of the consolidated statement of cash
     flows, the Company considers all highly liquid instruments with an original
     maturity of three months or less to be cash equivalents.

     ACCOUNTS RECEIVABLE - The Company reviews their customer accounts on a
     periodic basis and records a reserve for specific amounts that the Company
     feels may not be collected. In addition, the Company has established a
     general reserve based on historical percentages of bad debts. Amounts will
     be written off at the point when collection attempts on the accounts have
     been exhausted. Management uses significant judgment in estimating
     uncollectible amounts. In estimating uncollectible amounts, management
     considers factors such as current overall economic conditions,
     industry-specific economic conditions, historical customer performance and
     anticipated customer performance. Past due status is determined based upon
     contractual terms. While management believes the Company's processes
     effectively address its exposure to doubtful accounts, changes in economic,
     industry or specific customer conditions may require adjustment to the
     allowance recorded by the Company.


                                       112



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

     INVENTORIES - Layer flock inventories are valued at amortized cost. All
     other inventories are stated at the lower of cost, determined using the
     first-in, first-out method, or market.

     PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment contributed
     in connection with the initial establishment of the Company was recorded at
     its estimated fair values at the date of contribution. Additions to
     property, plant and equipment are recorded at original cost. Depreciation
     is provided by the straight-line method over the estimated useful lives of
     the related assets.

     LONG-LIVED ASSETS -Statement of Financial Accounting Standards ("SFAS") No.
     144 "Accounting for the Impairment or Disposal of Long-Lived Assets"
     requires that long-lived assets and certain identifiable intangibles be
     reviewed for impairment whenever events or changes in circumstances
     indicate that the carrying amounts of any asset may not be recoverable.
     Recoverability of assets to be held and used is measured by a comparison of
     the carrying amount of an asset to future net cash flows expected to be
     generated by the asset. If such assets are considered to be impaired, the
     impairment to be recognized is measured by the amount the carrying amount
     of the assets exceeds the fair value of the assets. During 2005, the
     Company adopted a plan to dispose of a certain piece of equipment and its
     egg products subsidiaries. Based upon management's assessment of the
     existing assets, management recorded an impairment loss of approximately
     $423,000, which represents the excess of the carrying value of the asset
     over its fair value. The impairment change is included in the Company's
     general and administrative expense in the statement of operations for 2005.
     The carrying value of the assets that are held for sale is presented in the
     balance sheet in the caption "assets held for sale", and these assets are
     no longer depreciated.

     GOODWILL - As a result of certain acquisition and merger transactions, the
     Company has recorded goodwill for the excess of the amount paid over the
     fair value of the assets acquired at the date of the acquisition or merger.

     SFAS No. 142 "Goodwill and Other Intangible Assets" requires companies to
     evaluate goodwill for impairment at least on an annual basis. No impairment
     loss resulted from the impairment test completed, using a discounted cash
     flow analysis that requires certain assumptions and estimates be made
     regarding industry economic factors and future profitability, during the
     year ended December 24, 2005.

     FRANCHISE AGREEMENTS - Fees paid to acquire franchises are reported as
     intangible assets-finite-lived, net of accumulated amortization and are
     being amortized to operations over the life of the franchise on the
     straight-line method. The franchise agreements granted certain rights to
     the Company to produce, sell and distribute certain product lines for an
     initial term of twenty years with options to renew. The agreements required
     an initial payment and monthly service fees based on a percentage of net
     sales of the products sold. The Company has also agreed to comply with
     franchise requirements relating to insurance limits, feed additives,
     packaging supplies and promotional materials.

     OTHER ASSETS - Other assets consist primarily of long-term grower advances,
     the long-term portion of a prepaid lease agreement and deposits. The
     prepaid lease agreement is being expensed over the term of the lease.

     INCOME TAXES - The Company utilizes the liability method of accounting for
     income taxes. This method requires the Company to recognize deferred tax
     assets and liabilities for the expected future tax consequences of events
     that have been recognized in its financial statements or tax returns. Under
     this method, deferred tax assets and liabilities are determined based on
     the difference between the financial statement basis of assets and
     liabilities and their related tax basis using enacted tax rates in effect
     for the years in which the differences are expected to be recovered.

     A portion of the Company's inventory has been valued using the farm price
     method for income tax reporting purposes. This results in these inventories
     being reflected at a lower value in the tax returns with lower taxable
     income reported. Current deferred income taxes relate primarily to this
     difference between financial statement and taxable income. Net operating
     loss carryforwards have been used to reduce current deferred income taxes.


                                       113



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

          Timing differences exist for depreciation on certain assets due to the
     use of the accelerated cost recovery system of depreciation for income tax
     reporting purposes. In addition, certain of the Company's incorporated
     subsidiaries utilized the cash basis method of accounting for income tax
     reporting prior to being acquired. The difference between this method and
     the accrual method is being recorded in taxable income over a ten year
     period. Long-term deferred income taxes relate primarily to these
     differences.

          Moark, LLC and several of its subsidiaries are limited liability
     companies and as such, are treated as partnerships for income tax purposes.
     Accordingly, the taxable income or loss of these entities is reported on
     the individual income tax returns of their members. No provisions for
     income taxes or deferred income tax liability related to these entities are
     included in the accompanying consolidated financial statements.

     ADVERTISING - The Company expenses the costs of advertising as incurred.
     Advertising costs for the periods ended December 24, 2005, December 25,
     2004 and December 27, 2003 were approximately $6,900,000, $3,144,000 and
     $2,793,000, respectively.

     SHIPPING AND HANDLING - All shipping and handling costs are expensed as
     incurred and are included in cost of sales in the accompanying consolidated
     statement of operations.

     ESTIMATES - The preparation of consolidated financial statements in
     conformity with accounting principles generally accepted in the United
     States of America requires management to make estimates and assumptions
     that affect the reported amounts of certain assets and liabilities and
     disclosures of contingent assets and liabilities at the date of the
     consolidated financial statements and the amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.

     FAIR VALUE - As of December 24, 2005 and December 25, 2004, the stated
     value of the Company's long-term receivables approximates their fair value
     based on current market rates for financial instruments of the same
     remaining maturities and with similar credit quality.

          The following table sets forth the carrying amounts and fair values of
     the Company's significant financial instruments where the carrying amount
     differs from the fair value.



                                                              DECEMBER 24, 2005                DECEMBER 25, 2004
                                                       ------------------------------   ------------------------------
                                                       CARRYING AMOUNT    FAIR VALUE    CARRYING AMOUNT    FAIR VALUE
                                                         OF LIABILITY    OF LIABILITY     OF LIABILITY    OF LIABILITY
                                                       ---------------   ------------   ---------------   ------------
                                                                                              
Long-term debt and capital lease obligations .......     $68,434,223      $67,593,022     $83,456,192      $4,498,916


     DERIVATIVE COMMODITY INSTRUMENTS - The Company uses derivative commodity
     instruments, primarily futures contracts, to reduce the exposure to changes
     in grain commodity prices. These contracts are not designated as hedges
     under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
     Activities." The futures contracts are marked to market each month and
     gains and losses ("unrealized gains and losses") are recognized in
     earnings.

     RECLASSIFICATIONS - Certain reclassifications have been made to the
     December 25, 2004 and December 27, 2003 amounts to conform to the December
     24, 2005 presentation. The reclassifications had no impact on net income
     (loss).


                                       114



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - In December 2004, the Financial
     Accounting Standards Board ("FASB") issued SFAS No. 151, "Inventory Costs."
     SFAS No. 151 requires abnormal amounts of inventory costs related to idle
     facility, freight handling and wasted material expenses to be recognized as
     current period charges. Additionally, SFAS No. 151 requires that allocation
     of fixed production overheads to the costs of conversion be based on the
     normal capacity of the production facilities. The standard is effective for
     fiscal years beginning after June 15, 2005. The Company believes the
     adoption of SFAS No. 151 will not have a material impact on its
     consolidated financial statements.

2.   INVENTORIES

     Inventories consist of:



                              DECEMBER 24,   DECEMBER 25,
                                  2005           2004
                              ------------   ------------
                                       
Layer flocks and pullets...   $ 21,426,338   $$22,254,045
Feed and feed ingredients..      3,733,473      2,906,693
Eggs and egg products......      2,080,432      3,121,701
Supplies and other.........      3,193,959      2,617,196
                              ------------   ------------
                              $$30,434,202   $$30,899,635
                              ============   ============


3.   NOTES RECEIVABLE

     Notes receivable consist of the following:



                                                                           DECEMBER 24,   DECEMBER 25,
                                                                               2005           2004
                                                                           ------------   ------------
                                                                                    
Note receivable from an individual; interest at 8%; due in monthly
   installments of  $34,942, including interest, through January 2019...    $3,396,003     $3,527,252
Less current portion ...................................................       140,942        141,425
                                                                            ----------     ----------
Notes receivable, less current portion..................................    $3,255,061     $3,385,827
                                                                            ==========     ==========


     Principal and contractual maturities on the notes receivable are as
follows:

            
2006........   $  140,942
2007........      165,875
2008........      179,643
2009........      194,553
2010........      210,701
Thereafter..    2,504,289
               ----------
               $3,369,003
               ==========



          The Company reviews their notes receivable on a periodic basis and
     records a reserve for specific amounts that the Company feels may not be
     collected. At the point the Company records this amount in reserve,
     interest income will no longer be accrued. Amounts will be written off when
     collection attempts on the amounts have been exhausted. All notes
     receivable are considered fully collectible, and accordingly, no provisions
     have been made at December 24, 2005 and December 25, 2004.


                                       115


                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

4. CAPITAL LEASES

     The Company is obligated for certain property, plant and equipment under
capital leases that expire at various dates during the next several years.
Assets under capital leases, excluding land, are being amortized over their
useful lives which range from five to twenty years. The amortization expense is
included with depreciation expense in the accompanying consolidated statement of
operations and cash flows.

     Assets under capital leases consist of the following:



                                      DECEMBER 24,    DECEMBER 25,
                                          2005            2004
                                      ------------    ------------
                                                
Land ..............................   $    200,000     $    200,000
Buildings .........................      7,199,618        7,199,618
Machinery and equipment ...........      7,574,914        7,523,322
Accumulated amortization ..........     (4,535,629)      (3,283,095)
                                      ------------     ------------
Net assets under capital leases ...   $ 10,438,903     $ 11,639,845
                                      ============     ============


     As of December 24, 2005, the future minimum lease payments under capital
leases are as follows:

                                                  
2006 .............................................   $ 2,285,301
2007 .............................................     2,215,798
2008 .............................................     1,709,658
2009 .............................................     1,545,917
2010 .............................................     1,424,000
Thereafter .......................................     1,661,333
                                                     -----------
Total minimum lease payments .....................    10,842,007
Less amounts representing interest ...............     1,172,031
                                                     -----------
Present value of future minimum lease payments ...   $ 9,669,976
                                                     ===========



5. INTANGIBLE ASSETS - FINITE-LIVED

     Intangible assets - finite-lived consisted of the following:



                                                   FRANCHISE
                                                     FEES         OTHER        TOTAL
                                                  ----------   ----------   ----------
                                                                   
Original cost .................................   $3,073,985   $1,364,125   $4,438,110
                                                  ----------   ----------   ----------
Accumulated amortization, December 27, 2003 ...      735,696      920,692    1,656,388
Amortization ..................................      120,506      156,446      276,952
                                                  ----------   ----------   ----------
Accumulated amortization, December 25, 2004 ...      856,202    1,077,138    1,933,340
Amortization ..................................      174,556      199,606      374,162
                                                  ----------   ----------   ----------
Accumulated amortization, December 24, 2005 ...    1,030,758    1,276,744    2,307,502
                                                  ----------   ----------   ----------
Net intangible assets -- finite-lived .........   $2,043,227   $   87,381   $2,130,608
                                                  ==========   ==========   ==========


     These intangible assets - finite-lived are being amortized over the term of
the agreement or the estimated useful period. These lives range from 4 to 20
years. Estimated future amortization expense at December 24, 2005 is as follows:


                                      116



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

              
2006 .........   $  261,937
2007 .........      174,556
2008 .........      174,556
2009 .........      174,556
2010 .........      174,556
Thereafter ...    1,170,447
                 ----------
                 $2,130,608
                 ==========



6. GOODWILL

     The changes in the carrying value of goodwill during the periods ended
December 24, 2005 and December 25, 2004 are as follows:



                                          DECEMBER 24,   DECEMBER 25,
                                              2005           2004
                                          ------------   ------------
                                                   
Balance -- beginning of the period ....    $42,973,768    $42,973,768
Goodwill acquired during the period ...        250,000             --
                                           -----------    -----------
Balance -- end of the period ..........    $43,223,768    $42,973,768
                                           ===========    ===========


7. DISPOSAL OF A SUBSIDIARY

     In November 2004, the Company disposed of its wholly-owned subsidiary,
Cutler at Philadelphia, LLC, in an asset sale. The Company sold 100% of
Philadelphia's inventories and property, plant and equipment, along with certain
receivables, in exchange for cash and a note receivable. The sale resulted in a
loss of approximately $1,450,000 during the year ended December 25, 2004 , which
has been included in gain (loss) on sale of assets in the accompanying
consolidated statement of operations. As part of the terms of the sale, the
Company signed a long-term supply agreement with the acquiring entity.

     As of December 27, 2003, the assets and liabilities of Cutler at
Philadelphia, LLC were reflected as assets and liabilities held for sale in the
accompanying consolidated balance sheet. Previously, the Company had reported
the operations of Cutler at Philadelphia, LLC as discontinued operations in the
consolidated statement of operations. As part of the terms of the sale, the
long-term supply agreement with the acquiring entity will enable the Company to
have significant continuing cash flows. Therefore, the Company has determined
that classification as a discontinued operation would not be appropriate and has
reclassified the operating results for the year ended December 27, 2003 to
conform to the December 25, 2004 presentation.

8. ASSETS AND LIABILITIES HELD FOR SALE

     The Company committed to a plan to reposition a portion of its operations.
Management expects the repositioning to occur within a year. Accordingly,
certain assets and liabilities were presented as assets held for sale in the
consolidated financial statements. At December 24, 2005, balance sheet amounts
for assets of $35.8 million and liabilities of $0.4 million have been
reclassified to other current assets and accrued expenses, respectively.

9. INVESTMENT IN AFFILIATES

     The Company owns fifty percent of Grand Mesa Eggs, Inc., which operates as
a commercial egg producer with operations located in Colorado. The Company owns
fifty percent of Delta Egg Farm, LLC ("Delta") which operates as a producer of
shell eggs with operations located in Utah. In addition, the Company owns a
fifty percent interest in Moark/Fort Recovery Egg Marketing, LLC, which operates
as a wholesale egg distributor. The Company accounts for these investments under
the equity method. The investment reflects the initial price paid for the
ownership and there has been no amortization of any differences between the
level of investment and the underlying net assets. The following is summarized
information regarding one hundred percent of the affiliated companies' assets,
liabilities, equity and results of operations:


                                      117



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED



                                                      YEAR ENDED DECEMBER 24, 2005
                                         -------------------------------------------------------
                                                                      MOARK/FORT
                                                                     RECOVERY EGG
                                          GRAND MESA    DELTA EGG     MARKETING,
                                          EGGS, INC.    FARM, LLC         LLC           TOTAL
                                         -----------   -----------   ------------   ------------
                                                                        
Current assets .......................   $ 2,372,673   $ 4,910,132   $ 7,402,039    $ 14,684,844
Property, plant and equipment, net ...     1,616,384    16,463,986            --      18,080,370
Other assets .........................       156,218       279,248        80,364         515,830

Current liabilities ..................     2,323,774       667,839     5,276,164       8,267,777
Other liabilities ....................       438,429    11,278,000            --      11,716,429
Stockholders' or members' equity .....     1,383,072     9,707,527     2,206,239      13,296,838

Net sales ............................     9,952,674    14,958,481    61,937,400      86,848,555
Cost of goods sold ...................    10,720,844    15,323,125    71,292,927      97,336,896
Selling, general and administrative
   expenses ..........................       661,200       950,095       420,518       2,031,813
Net finance expense ..................        28,410       872,778            --         901,188
Income tax benefit ...................      (466,490)           --            --        (466,490)
Net loss .............................      (991,290)   (2,187,517)   (9,776,045)    (12,954,852)




                                                      YEAR ENDED DECEMBER 25, 2004
                                         -------------------------------------------------------
                                                                      MOARK/FORT
                                                                     RECOVERY EGG
                                          GRAND MESA    DELTA EGG     MARKETING,
                                          EGGS, INC.    FARM, LLC         LLC           TOTAL
                                         -----------   -----------   ------------   ------------
                                                                        
Current assets .......................   $ 2,901,099   $ 8,150,674    $ 6,034,158   $ 17,085,931
Property, plant and equipment, net ...     1,898,365    17,924,481             --     19,822,846
Other assets .........................       149,974       296,141             --        446,115

Current liabilities ..................     2,136,075     1,842,560      4,951,874      8,930,509
Other liabilities ....................       439,000    11,278,000             --     11,717,000
Stockholders' or members' equity .....     2,374,363    13,250,736      1,082,284     16,707,383

Net sales ............................    14,222,450    20,729,977     81,152,078    116,104,505
Cost of goods sold ...................    12,667,613    16,265,604     68,234,451     97,167,668
Selling, general and administrative
   expenses ..........................       704,839       814,047        356,313      1,875,199
Net finance expense (benefit) ........       (89,173)      938,943             --        849,770
Income tax expense ...................       375,800            --             --        375,800
Net income ...........................       563,371     2,711,383     12,561,314     15,836,068



                                       118



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED



                                                  ELEVEN MONTHS ENDED DECEMBER 27, 2003
                                         -------------------------------------------------------
                                                                      MOARK/FORT
                                                                     RECOVERY EGG
                                          GRAND MESA    DELTA EGG     MARKETING,
                                          EGGS, INC.    FARM, LLC         LLC           TOTAL
                                         -----------   -----------   ------------   ------------
                                                                        
Current assets .......................   $ 4,788,016   $ 7,071,326    $ 8,527,172   $ 20,386,514
Property, plant and equipment, net ...     2,172,268    19,060,973             --     21,233,241
Other assets .........................       156,945       313,034             --        469,979

Current liabilities ..................     1,875,843       671,638      4,066,054      6,613,535
Other liabilities ....................     1,630,394    13,726,000             --     15,356,394
Stockholders' or members' equity .....     3,610,992    12,047,695      4,461,118     20,119,805

Net sales ............................    12,133,716    48,769,188     77,969,744    138,872,648
Cost of goods sold ...................     9,502,318    41,015,749     62,011,274    112,529,341
Selling, general and administrative
   expenses ..........................       574,517     1,026,067        228,254      1,828,838
Net finance expense ..................        60,536     1,173,222             --      1,233,758
Other income (expense), net ..........       (89,505)           --             --        (89,505)
Income tax expense ...................       805,000            --             --        805,000
Net income ...........................     1,280,850     5,554,150     15,730,216     22,565,216


10. NOTES PAYABLE

     The Company has available a revolving line of credit with availability not
to exceed $60,000,000, subject to a borrowing base computation, payable to a
lender group made up of certain banks and agricultural credit associations.
Borrowings under the line of credit bear varying interest rates from 6.94% to
7.12%. All borrowings are collateralized by substantially all assets of the
Company and matures March 26, 2006. The outstanding balance on the line of
credit was $19,000,000 at December 24, 2005. There were no amounts outstanding
under this line of credit at December 25, 2004.

     The Company has an available line of credit with availability not to exceed
$10,000,000 to a related party. Borrowings under the line of credit bear
interest equal to LIBOR plus 200 basis points. All borrowings are unsecured,
maturing December 31, 2006. There were no amounts outstanding under this line of
credit at December 24, 2005.


                                      119


                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

11. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

     Long-term debt and capital lease obligations consist of:



                                                                           DECEMBER 24,   DECEMBER 25,
                                                                               2005           2004
                                                                           ------------   ------------
                                                                                    
Notes payable to a company and trusts; interest at 8%; secured by
   the common stock of Norco Ranch, Inc. and the membership interest
   of McAnally Enterprises, LLC and Hi Point Industries, LLC; payable
   in monthly installments ranging from $34,880 to $135,394, including
   interest, through April 2011 to February 2023 .......................    $31,743,041    $32,778,871

Credit agreements, consisting of: (1) a revolving commitment not to
   exceed $60,000,000, subject to a borrowing base computation,
   payable to a lender group made up of certain banks and agricultural
   credit associations; and (2) a term loan commitment not to exceed
   $15,000,000, to a bank; interest is to be charged as defined (8.03%
   as of December 24, 2005) with quarterly principal payments of
   $535,715; secured by substantially all assets of the Company and
   matures March 26, 2006 ..............................................     11,138,207     13,281,069

Note payable to an agricultural credit association; interest at
   6.50%; secured by certain real estate; payable in monthly
   installments of $258,550, including interest, through September
   2011 ................................................................      9,084,580     17,803,059

Capital lease obligation payable to a company; interest imputed at
   7.00%; payable in monthly installments of $118,667, including
   interest, through February 2012 .....................................      7,667,806      8,522,314

Notes payable to an agricultural credit association; interest
   ranging from 5.75% to 7.15%; secured by certain accounts
   receivable, inventories, and property and equipment; monthly
   installments ranging from $1,449 to $75,593, including interest,
   through dates ranging from June 2008 to June 2011 ...................      6,532,357      8,038,022

Various capital lease obligations with a financing company;
   interest ranging from 5.92% to 8.95%; secured by certain equipment;
   payable in monthly installments ranging from $313 to $17,457,
   including interest, through dates ranging from April 2007 through
   January 2009 ........................................................      2,002,170      2,685,888

Various notes payable to financing companies; secured by certain
   equipment; payable in various monthly installments, including
   interest, through dates ranging from December 2006 to August
   2009 ................................................................        266,062        346,969
                                                                            -----------    -----------
                                                                             68,434,223     83,456,192
Less current maturities ................................................     16,629,382      8,369,727
                                                                            -----------    -----------
Long-term debt and capital lease obligations, less current maturities ..    $51,804,841    $75,086,465
                                                                            ===========    ===========



                                       120



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

          Annual maturities of long-term debt and capital lease obligations are
     as follows:



                  LONG-TERM    CAPITAL LEASE
                     DEBT       OBLIGATIONS       TOTAL
                 -----------   -------------   -----------
                                      
2006 .........   $14,883,669    $ 1,745,713    $16,629,382
2007 .........     4,087,317      1,751,544      5,838,861
2008 .........     4,190,699      1,334,481      5,525,180
2009 .........     4,268,131      1,252,482      5,520,613
2010 .........     4,437,579      1,211,372      5,648,951
Thereafter ...    26,896,852      2,374,384     29,271,236
                 -----------    -----------    -----------
                 $58,764,247    $ 9,669,976    $68,434,223
                 ===========    ===========    ===========


          The Company's notes payable and revolving line of credit agreements
     with certain banks, agricultural credit associations, and certain
     individuals require compliance with certain restrictive covenants,
     including the maintenance of minimum levels of equity and working capital.
     In addition, these covenants restrict dividend payments, capital
     expenditures, investments, stockholder loans, fundamental changes in
     ownership, and the granting of loans or extensions of credit. As of
     December 24, 2005, the Company had obtained waivers for any non-compliance
     with these restrictions and covenants.

12. BANK OVERDRAFTS

          The Company had outstanding checks in excess of bank balances on
     certain of its subsidiaries of approximately $3,780,000 and $2,079,000 as
     of December 24, 2005 and December 25, 2004, respectively. The bank accounts
     utilized by the subsidiaries do not automatically draft funds from Moark,
     LLC's corporate bank, therefore, these outstanding checks were reclassified
     into accounts payable for the consolidated financial statement
     presentation.

13. INCOME TAXES

          Income taxes consist of:



                                           DECEMBER 24,   DECEMBER 25,   DECEMBER 27,
                                               2005           2004           2003
                                           ------------   ------------   ------------
                                                                
Current provision ......................   $ 3,617,546    $ 4,623,666     $  562,464
Deferred provision (benefit) ...........    (7,199,483)    (2,281,000)     3,491,700
                                           -----------    -----------     ----------
                                           $(3,581,937)   $ 2,342,666     $4,054,164
                                           ===========    ===========     ==========


          The Company's provision for income taxes varies from the statutory
     U.S. tax rate primarily due to the effect of state income taxes, certain
     nondeductible expenses and the partnership tax treatment for certain of the
     entities.

          Total gross deferred tax assets and liabilities are as follows:



                                    DECEBER 24,   DECEMBER 25,
                                        2005          2004
                                    -----------   ------------
                                            
Gross deferred tax liabilities ..   $12,841,112   $19,680,000
Gross deferred tax assets .......     2,396,596     2,036,000
                                    -----------   -----------
Net deferred tax liability ......   $10,444,516   $17,644,000
                                    ===========   ===========


          At December 24, 2005, the Company has net operating loss carryforwards
     for federal income tax purposes of approximately $10,000,000 available to
     offset future taxable income. Unless utilized, these carryforwards will
     begin expiring in 2024. These carryforwards have been used to reduce
     deferred tax liabilities that would otherwise exist for consolidated
     financial statement purposes.


                                       121



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

14. RELATED PARTIES

          The Company is related by common ownership to other corporations and
     proprietorships engaged in operations related to the commercial shell egg
     industry. The Company also held an equity interest in an affiliated
     Company, which was engaged in related operations. The Company sells
     products to and purchases products from certain of these related entities.
     In addition, the Company pays a member fees for environmental services and
     certain royalty fees. Activity between the Company and these related
     entities and the balances owed to and from these entities are summarized as
     follows:



                                                            DECEMBER 24,   DECEMBER 25,   DECEMBER 27,
                                                                2005           2004           2003
                                                            ------------   ------------   ------------
                                                                                 
Sales to related parties ................................    $ 3,964,000    $ 3,017,000   $ 2,424,000
Purchases from and payments of fees to related parties ..     47,172,000     70,321,000    34,141,000
Accounts receivable from related parties ................        367,000        516,000       812,000
Accounts payable to related parties .....................      5,769,000      5,823,000    11,347,000


          The Company also has guaranteed certain loan agreements for Delta Egg
     Farm, LLC of which the Company is a 50% owner. The Company is responsible
     for 50% of the outstanding balance on these guaranteed notes totaling
     approximately $11,278,000 as of December 24, 2005. It is estimated that
     these notes are fully secured by collateral of the borrower.

          In March 2003, the members of the Company advanced $5,000,000 to the
     Company. These advances, along with interest of approximately $181,000,
     were repaid to the members prior to December 25, 2004.

          The Company is a party to a consulting agreement with one of its
     members for an annual amount of approximately $1,445,000 due February 1 of
     each year. Included in the statement of operations for the periods ended
     December 24, 2005, December 25, 2004 and December 27, 2003 is $1,445,000,
     $1,445,000 and $1,325,000, respectively, related to this agreement.

          A subsidiary of one of the Company's members has written insurance
     policies for the Company providing for general liability, property and
     workers compensation insurance policies covering most of the Company's
     employees. Premiums during the periods ended December 24, 2005, December
     25, 2004 and December 27, 2003 were approximately $3,611,144, $3,020,000
     and $5,200,000, respectively.

15. COMMITMENTS AND CONTINGENCIES

     a.   Non-cancelable operating leases of certain vehicles, equipment and
          real estate expire in various years through 2013. These leases
          generally contain renewal options for periods ranging from two years
          to five years and require the Company to pay all executory costs
          (property taxes, maintenance and insurance).

               Future minimum lease payments at December 24, 2005 are as
          follows:



Fiscal Year
- -----------
             
2006 ........   $ 4,203,875
2007 ........     3,822,416
2008 ........     3,295,203
2009 ........     2,900,130
2010 ........     1,687,096
Thereafter ..     3,567,088
                -----------
                $19,475,808
                ===========


               Rent expense for all operating leases approximated $5,900,000,
          $6,751,000 and $5,399,000 for the periods ended December 24, 2005,
          December 25, 2004 and December 27, 2003, respectively. Included in
          operating leases are certain leases with related parties. Payments to
          the related parties in connection with these leases totaled
          approximately $410,000, $479,000 and $506,000, respectively.


                                      122



                           MOARK, LLC AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

15. COMMITMENTS AND CONTINGENCIES (CONT.)

     b.   The Company has a defined contribution retirement plan that contains a
          401(k) salary deferral feature that covers essentially all of the
          full-time employees of Moark, LLC and its affiliated companies. Those
          who have attained the age of eighteen and who have completed minimum
          periods of service are eligible to participate. The Company makes
          matching contributions as required by the plan document and is
          permitted to make discretionary contributions if desired by the
          Company's management.

               There were no discretionary contributions made for the periods
          ended December 24, 2005, December 25, 2004 and December 27, 2003.
          Matching contributions to the above plans during 2005, 2004, and 2003
          were approximately $774,000, $712,000 and $289,000, respectively.

     c.   The Company had a non-qualified retirement plan for certain key
          employees. The benefits under this plan require the participants to
          remain in the employment of the Company for a specified number of
          years, or until retirement age, in order to obtain any benefits and to
          observe certain covenants dealing with competition. No contributions
          were made to this plan during the periods ended December 24, 2005,
          December 25, 2004 and December 27, 2003. This plan was terminated
          effective January 2004.

     d.   The Company is self-insured for health insurance purposes. The Company
          has obtained stop-loss insurance policies to cover losses in excess of
          $150,000 per employee and aggregate losses in excess of $4,900,000 per
          plan year. Provisions have been made in these consolidated financial
          statements to cover losses incurred under this self-insurance program.

     e.   The Company is self-insured for workers compensation insurance
          purposes. Provisions have been made in these consolidated financial
          statements to cover losses incurred under this self-insurance program.

     f.   The Company has outstanding commodity contracts for the future
          purchases of grain at December 24, 2005. These commitments are not in
          excess of the current operating requirements of the Company.

16. CONCENTRATIONS OF CREDIT RISK

          Financial instruments which potentially subject the Company to
     concentrations of credit risk consist primarily of trade receivables with a
     variety of customers and cash and cash investments deposited with financial
     institutions and credit associations.

          Concentrations of credit risk with respect to accounts receivable are
     limited because a large number of geographically diverse customers make up
     the Company's customer base, thus spreading the trade credit risk. At
     December 24, 2005, four customers represent greater than 10% of total
     accounts receivable. At December 25, 2004, only one single group or
     customer represents greater than 10% of total accounts receivable. The
     Company controls credit risk through credit approvals, credit limits, and
     monitoring procedures. The Company performs ongoing credit evaluations of
     its customers but generally does not require collateral to support accounts
     receivable.

          At December 24, 2005 and December 25, 2004 and at times during the
     periods then ended, the Company maintained cash and cash investment
     balances with financial institutions in excess of Federal Deposit Insurance
     Corporation ("FDIC") insured limits.


                                      123


                                 AGRILIANCE LLC

                           CONSOLIDATED BALANCE SHEETS



                                                        (UNAUDITED)
                                                       NOVEMBER 30,   AUGUST 31,
                                                           2005          2005
                                                       ------------   ----------
                                                            ($ IN THOUSANDS)
                                                                
                       ASSETS
Current assets:
   Cash ............................................    $       --    $   31,854
   Trade receivables, net of allowance for bad debts
      of $13,558 and $12,384, respectively .........       421,759       318,238
   Rebates receivable ..............................       114,752       134,132
   Other receivables ...............................         9,967         8,149
   Receivable from Land O' Lakes, Inc. .............            --         4,243
   Receivable from CHS, Inc. .......................             4            --
   Inventories .....................................       676,551       659,213
   Vendor prepayments ..............................       321,438       171,119
   Prepaid expenses ................................         8,950        10,960
                                                        ----------    ----------
      Total current assets .........................     1,553,421     1,337,908
Property, plant and equipment:
   Land and land improvements ......................        18,878        19,117
   Buildings .......................................        70,473        70,773
   Machinery and equipment .........................       138,101       136,899
   Construction in progress ........................        26,536        20,451
                                                        ----------    ----------
      Total property, plant and equipment ..........       253,988       247,240
   Less accumulated depreciation ...................      (125,762)     (122,264)
                                                        ----------    ----------
      Net property, plant and equipment ............       128,226       124,976
Other assets .......................................        24,374        23,635
                                                        ----------    ----------
      Total assets .................................    $1,706,021    $1,486,519
                                                        ==========    ==========

          LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
   Cash overdraft ..................................    $   34,657    $       --
   Accounts payable ................................       600,893       718,774
   Customer prepayments ............................       444,041       171,518
   Accrued expenses ................................        95,917       140,363
   Payable to Land O'Lakes, Inc. ...................        18,590            --
   Payable to CHS, Inc. ............................            --         3,253
   Other current liabilities .......................         6,617         6,865
   Short-term debt .................................        99,747        23,650
                                                        ----------    ----------
      Total current liabilities ....................     1,300,462     1,064,423
   Long-term debt ..................................       100,000       100,000
   Other non-current liabilities ...................        14,620        14,850
   Minority interest in subsidiary .................         4,344         4,944
Members' equity:
   Contributed capital .............................       159,089       159,089
   Retained earnings ...............................       128,928       144,636
   Accumulated other comprehensive loss ............        (1,422)       (1,423)
                                                        ----------    ----------
      Total members' equity ........................       286,595       302,302
                                                        ----------    ----------
      Total liabilities and members' equity ........    $1,706,021    $1,486,519
                                                        ==========    ==========


          See accompanying notes to consolidated financial statements.


                                       124



                                 AGRILIANCE LLC

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                    THREE MONTHS ENDED
                                                       NOVEMBER 30,
                                                   -------------------
                                                     2005       2004
                                                   --------   --------
                                                     ($ IN THOUSANDS)
                                                       (UNAUDITED)
                                                        
Net sales ......................................   $692,461   $598,732
Cost of sales ..................................    634,896    540,925
                                                   --------   --------
   Gross profit ................................     57,565     57,807
Selling, general, and administrative expense ...     71,862     59,213
Loss (gain) on sale of assets ..................     (2,980)       (94)
                                                   --------   --------
   Loss from operations ........................    (11,317)    (1,500)
Interest expense, net ..........................      4,991      3,269
Equity in earnings of affiliated company .......       (600)         6
                                                   --------   --------
   Net loss ....................................   $(15,708)  $ (4,775)
                                                   ========   ========


          See accompanying notes to consolidated financial statements.


                                       125



                                 AGRILIANCE LLC

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                                       THREE MONTHS ENDED
                                                                                          NOVEMBER 30,
                                                                                     ---------------------
                                                                                        2005        2004
                                                                                     ---------   ---------
                                                                                        ($ IN THOUSANDS)
                                                                                          (UNAUDITED)
                                                                                           
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss ......................................................................   $ (15,708)  $  (4,775)
   Adjustments to reconcile net loss to net cash used by operating activities:
      Depreciation and amortization ..............................................       4,434       4,657
      Bad debt expense ...........................................................          53         812
      Loss (gain) on sale of assets ..............................................      (2,980)         94
      Equity earnings in affiliated company ......................................        (600)          6
      Increase (decrease) in other non-current assets ............................        (758)        330
      Increase (decrease) in other non-current liabilities .......................        (230)         47
   Changes in current assets and liabilities:
      Trade receivables ..........................................................    (103,574)   (136,705)
      Receivables/payables from related parties ..................................      19,576      (8,029)
      Rebates receivable .........................................................      19,380      14,591
      Other receivables ..........................................................      (1,818)      4,306
      Inventories ................................................................     (17,338)    (76,807)
      Vendor prepayments .........................................................    (150,319)   (215,169)
      Accounts payable and customer prepayments ..................................     154,642     439,935
      Accrued expenses ...........................................................     (44,446)    (35,613)
      Other current assets and liabilities .......................................       1,762       2,392
                                                                                     ---------   ---------
   Net cash used by operating activities .........................................    (137,924)     (9,928)
                                                                                     ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property, plant and equipment ....................................      (8,599)     (7,653)
   Proceeds from sale of property, plant and equipment ...........................       3,915       1,811
                                                                                     ---------   ---------
   Net cash used by investing activities .........................................      (4,684)     (5,842)
                                                                                     ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from short-term debt .................................................      76,097     110,000
   Increase (decrease) in cash overdrafts ........................................      34,657     (30,551)
   Distribution of earnings to members ...........................................          --     (40,000)
                                                                                     ---------   ---------
   Net cash provided by financing activities .....................................     110,754      39,449
                                                                                     ---------   ---------
Net change in cash and cash equivalents ..........................................     (31,854)     23,679
Cash and cash equivalents at beginning of period .................................      31,854          --
                                                                                     ---------   ---------
Cash and cash equivalents at end of period .......................................   $      --   $  23,679
                                                                                     =========   =========


          See accompanying notes to consolidated financial statements.


                                       126


                                 AGRILIANCE LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The unaudited consolidated financial statements reflect, in the opinion of
the management of Agriliance LLC (the "Company"), all normal recurring
adjustments necessary for a fair statement of the financial position and results
of operations and cash flows for the interim periods. The statements are
condensed and, therefore do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. These statements should be read in
conjunction with the audited consolidated financial statements and footnotes for
the year ended August 31, 2005. The results of operations and cash flows for
interim periods are not indicative of results for a full year. Certain
reclassifications have been made to the 2004 amounts to conform with the 2005
presentation.

2.   BORROWING ARRANGEMENTS

     At November 30, 2005, $74 million of short term debt was outstanding under
the Company's $270 million syndicated revolving credit agreement. The facility
is secured by the Company's inventory and the accounts receivable of its wholly
owned subsidiary, Agro Distribution, LLC. Interest on borrowings under the
facility was charged at 5.834% (LIBOR + 1.5%) as of November 30, 2005.

     The company's consolidated joint-venture, AFC-Agriliance, LLC, has a $30
million revolving credit agreement with CoBank which expires March 1, 2006 and
is secured by AFC-Agriliance, LLC's accounts receivable and inventory. There was
$25.7 million outstanding at November 30, 2005. Interest on borrowings was
charged at LIBOR + 2.5%.

     In December 2005, the company renegotiated the revolving credit agreement,
extending the facility for an additional five years and increasing the available
borrowing capacity to $325 million. The amendment also has allowed for the
issuance of letters of credit up to $75 million, and adjusted certain covenant
restrictions.

     Agriliance also has $100 million of senior secured notes in a private
placement. The private placement consists of four notes, two with fixed-rate
interest rates and two notes with floating rates. The fixed-rate notes are for
$42 million and $47 million, bearing interest at 5.66% and 6.31%, respectively,
and maturing in December 2008 and 2010. The floating rate notes are for $6
million, maturing in December 2008 and for $5 million, maturing in December
2010. Both of these notes bear interest at variable rates based on LIBOR plus
applicable margins. All of the notes are secured by the same assets which secure
the revolving credit facility, on a pari passu basis.

     In November 2005, Agriliance renegotiated its revolving receivables
securitization program allowing for borrowings of up to $225 million in advances
against eligible receivables. Under this program, Agriliance sells trade
receivables to Agriliance SPV, LLC, a wholly-owned subsidiary of Agriliance,
LLC. This subsidiary is a qualifying special purpose entity (QSPE) under
applicable accounting rules, and was established for the limited purpose of
purchasing and obtaining financing for these receivables. The transfers of the
receivables to the QSPE are structured as sales and, in accordance with
applicable accounting rules, these receivables are not reflected in the
consolidated balance sheets of Agriliance. The QSPE purchases the receivables
with a combination of cash and notes. CoBank and other banks lend funds to the
SPV based upon the value of the receivables pool, at an agreed advance rate. As
of November 30, 2005, $162 million was drawn under this securitization. The
facility is currently scheduled to terminate in November 2010.


                                      127



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Managers
Agriliance, LLC:

     We have audited the accompanying consolidated balance sheets of Agriliance,
LLC and subsidiaries as of August 31, 2005 and 2004, and the related
consolidated statements of operations, cash flows, and members' equity for each
of the years in the three-year period ended August 31, 2005. 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 the standards of the Public
Company Accounting Oversight Board (United States). 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 Agriliance,
LLC and subsidiaries as of August 31, 2005 and 2004, and the results of their
operations and their cash flows for each of the years in the three-year period
ended August 31, 2005 in conformity with U.S. generally accepted accounting
principles.

                                        /s/ KPMG LLP

October 28, 2005


                                      128



                                 AGRILIANCE, LLC

                           CONSOLIDATED BALANCE SHEETS



                                                                         AUGUST 31,
                                                                  -----------------------
                                                                     2005         2004
                                                                  ----------   ----------
                                                                      ($ IN THOUSANDS)
                                                                         
                                     ASSETS

Current assets:
   Cash .......................................................   $   31,854   $       --
   Trade receivables, net of allowance for doubtful accounts
      of $17,440 and $12,384 in 2005 and 2004, respectively ...      318,238      304,028
   Rebates receivable .........................................      134,132      146,910
   Other receivables ..........................................        8,149        9,717
   Receivable from Land O' Lakes, Inc. ........................        4,243           --
   Inventories ................................................      659,213      520,496
   Vendor prepayments .........................................      171,119      130,790
   Prepaid expenses ...........................................       10,960        3,603
                                                                  ----------   ----------
      Total current assets ....................................    1,337,908    1,115,544

Property, plant and equipment:
   Land and land improvements .................................       19,117       19,714
   Buildings ..................................................       70,773       65,997
   Machinery and equipment ....................................      136,899      115,285
   Construction in progress ...................................       20,451       16,931
                                                                  ----------   ----------
      Total property, plant and equipment .....................      247,240      217,927
   Less accumulated depreciation ..............................     (122,264)    (105,676)
                                                                  ----------   ----------
      Net property, plant and equipment .......................      124,976      112,251
Other assets ..................................................       23,635       10,865
                                                                  ----------   ----------
      Total assets ............................................   $1,486,519   $1,238,660
                                                                  ==========   ==========
                         LIABILITIES AND MEMBERS' EQUITY

Current liabilities:
   Cash overdraft .............................................   $       --   $   30,551
   Short-term debt ............................................       23,650           --
   Accounts payable ...........................................      718,774      543,501
   Customer prepayments .......................................      171,518      108,030
   Accrued expenses ...........................................      140,363      124,979
   Payable to Land O'Lakes, Inc. ..............................           --       12,581
   Payable to CHS, Inc. .......................................        3,253        4,047
   Distributions payable to members ...........................           --       40,000
   Other current liabilities ..................................        6,865        7,029
                                                                  ----------   ----------
      Total current liabilities ...............................    1,064,423      870,718
Long-term debt ................................................      100,000      100,000
Other non-current liabilities .................................       14,850       25,992
Minority interest in subsidiary ...............................        4,944        2,767

Members' equity:
   Contributed capital ........................................      159,089      159,089
   Retained earnings ..........................................      144,636       91,673
   Accumulated other comprehensive income .....................       (1,423)     (11,579)
                                                                  ----------   ----------
      Total members' equity ...................................      302,302      239,183
                                                                  ----------   ----------
      Total liabilities and members' equity ...................   $1,486,519   $1,238,660
                                                                  ==========   ==========


          See accompanying notes to consolidated financial statements.


                                      129



                                 AGRILIANCE, LLC

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                        YEARS ENDED AUGUST 31,
                                                 ------------------------------------
                                                    2005         2004         2003
                                                 ----------   ----------   ----------
                                                           ($ IN THOUSANDS)
                                                                  
Net sales ....................................   $3,735,125   $3,471,514   $3,485,623
Cost of sales ................................    3,361,682    3,121,558    3,119,287
                                                 ----------   ----------   ----------
   Gross margin ..............................      373,443      349,956      366,336
Selling, general and administrative expense ..      282,631      267,735      299,097
Gain on sale of assets .......................       (1,538)        (901)      (2,787)
                                                 ----------   ----------   ----------
   Earnings from operations ..................       92,350       83,122       70,026
Minority interests ...........................        2,177        2,762           --
Interest expense, net ........................       13,060        9,082        9,285
                                                 ----------   ----------   ----------
   Net earnings ..............................   $   77,113   $   71,278   $   60,741
                                                 ==========   ==========   ==========


          See accompanying notes to consolidated financial statements.


                                      130


                                 AGRILIANCE, LLC

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                    YEARS ENDED AUGUST 31,
                                                              ---------------------------------
                                                                 2005        2004        2003
                                                              ---------   ---------   ---------
                                                                       ($ IN THOUSANDS)
                                                                             
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings ...........................................   $  77,113   $  71,278   $  60,741
   Adjustments to reconcile net earnings to net cash
      provided by operating activities:
      Depreciation and amortization .......................      18,922      17,767      23,517
      Bad debt expense ....................................       5,599       2,780      16,832
      Minority interests ..................................       2,177       2,762          --
      Gain on disposal of property, plant and equipment ...      (1,538)       (901)     (2,787)
      Change in other non-current assets and liabilities ..     (13,833)      9,794       6,461
   Changes in current assets and liabilities:
      Trade receivables ...................................     (19,809)    143,930     (64,841)
      Receivables/payables from related parties ...........     (17,618)      2,057     (26,205)
      Rebates receivable ..................................      12,778      (4,533)    (27,833)
      Other receivables ...................................       1,568       3,392      11,966
      Inventories .........................................    (138,717)     39,147    (182,449)
      Vendor prepayments ..................................     (40,329)    (65,622)    (59,032)
      Accounts payable and customer prepayments ...........     238,761    (202,439)    344,069
      Accrued expenses ....................................      15,384      23,674      16,646
      Other current assets and liabilities ................      (7,521)        521        (906)
                                                              ---------   ---------   ---------
   Net cash provided by operating activities ..............     132,937      43,607     116,179

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property, plant and equipment .............     (35,119)    (29,887)    (16,785)
   Proceeds from sale of property, plant and equipment ....       5,087       2,446       7,970
                                                              ---------   ---------   ---------
   Net cash used by investing activities ..................     (30,032)    (27,441)     (8,815)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds / (payments) on short-term debt ...............      23,650     (15,000)    (51,500)
   Increase (decrease) in cash overdraft ..................     (30,551)     30,551          --
   Distribution of earnings to members ....................     (64,150)    (54,599)    (35,000)
                                                              ---------   ---------   ---------
   Net cash used by financing activities ..................     (71,051)    (39,048)    (86,500)
                                                              ---------   ---------   ---------
Net change in cash ........................................      31,854     (22,882)     20,864
Cash at beginning of period ...............................          --     (22,882)      2,018
                                                              ---------   ---------   ---------
Cash at end of period .....................................   $  31,854   $      --   $  22,882
                                                              =========   =========   =========


          See accompanying notes to consolidated financial statements.


                                       131



                                 AGRILIANCE, LLC

                   CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY



                                                                    ACCUMULATED
                                                                       OTHER         TOTAL
                                          CONTRIBUTED   RETAINED   COMPREHENSIVE   MEMBERS'   COMPREHENSIVE
                                            CAPITAL     EARNINGS       (LOSS)       EQUITY        INCOME
                                          -----------   --------   -------------   --------   -------------
                                                                   ($ IN THOUSANDS)
                                                                               
Balance at August 31,2002 .............     $159,089    $ 89,253            --     $248,342
Net earnings ..........................           --      60,741            --       60,741      $ 60,741
Minimum pension liability adjustment ..           --          --      $(15,331)     (15,331)      (15,331)
                                                                                                 --------
Comprehensive income ..................           --          --            --           --      $ 45,410
                                                                                                 ========
Distributions paid to members .........           --     (35,000)           --      (35,000)
                                            --------    --------      --------     --------
Balance at August 31, 2003 ............      159,089     114,994       (15,331)     258,752
Net earnings ..........................           --      71,278            --       71,278      $ 71,278
Minimum pension liability adjustment ..           --          --         3,752        3,752         3,752
                                                                                                 --------
Comprehensive income ..................                                                          $ 75,030
                                                                                                 ========
Distributions payable to members ......           --     (40,000)           --      (40,000)
Distributions paid to members .........           --     (54,599)           --      (54,599)
                                            --------    --------      --------     --------
Balance at August 31, 2004 ............      159,089      91,673       (11,579)     239,183
Net earnings ..........................           --      77,113            --       77,113      $ 77,113
Minimum pension liability adjustment ..           --          --        10,156       10,156        10,156
                                                                                                 --------
Comprehensive income ..................                                                          $ 87,269
                                                                                                 ========
Distributions paid to members .........           --     (24,150)           --      (24,150)
                                            --------    --------      --------     --------
Balance at August 31, 2005 ............     $159,089    $144,636      $ (1,423)    $302,302
                                            ========    ========      ========     ========


          See accompanying notes to consolidated financial statements.


                                       132


                                 AGRILIANCE, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A) ORGANIZATION

     Agriliance LLC, (Agriliance or the Company) is a distributor of
agricultural inputs and is owned by: Land O'Lakes, Inc. (50% voting interest)
and CHS, Inc. (50% voting interest) (the members). Prior to May 1, 2004,
Agriliance was owned by Land O'Lakes (50% voting interest), CHS, Inc (25% voting
interest) and Farmland Industries, Inc. (25% voting interest). Farmland
Industries, Inc. filed for Chapter 11 bankruptcy court protection on May 31,
2002 and subsequently sold its ownership interest to CHS, Inc. effective April
30, 2004.

     Prior to May 1, 2004, the economic interest in profits and losses of the
Company was allocated to members for wholesale crop protection business
operation as follows: 50.0%, 38.1%, and 11.9% for Land O'Lakes, Inc., CHS, Inc
and Farmland Industries, Inc., respectively. After April 30, 2004, the
allocation for wholesale crop protection business operations became 50.0% for
Land O'Lakes, Inc. and 50.0% for CHS, Inc.

     Prior to May 1, 2004, the economic interest in profits and losses of the
Company was generally allocated to members for all other business operation as
follows: 50.0%, 25.0%, and 25.0% for Land O'Lakes, Inc., CHS, Inc. and Farmland
Industries, Inc., respectively. After April 30, 2004, the allocation for all
other business operations became 50.0% for Land O'Lakes, Inc. and 50.0% for CHS,
Inc.

     The liability of each member is limited to each member's respective capital
account balance.

     (B) STATEMENT PRESENTATION

     The consolidated financial statements include the accounts of the Company
and its wholly and majority owned subsidiaries, with intercompany transactions
eliminated.

     (C) REVENUE RECOGNITION

     Revenue is recognized as it is earned, which generally occurs when
fertilizer, chemical, and agricultural products are shipped.

     (D) INCOME TAXES

     The Company's taxable operations pass directly to the joint venture owners
under the LLC organization. As a result, no provision for income taxes is
recorded in the accompanying consolidated statement of operations.

     (E) INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is determined
on a first-in, first-out or average-cost basis.

     (F) REBATES RECEIVABLE

     Rebates receivable have been estimated based on contractual agreements
combined with current sales and market data, in accordance with EITF Issue No.
02-16, "Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor."


                                       133



                                 AGRILIANCE, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     (G) PROPERTY, PLANT, AND EQUIPMENT

     Property, plant, and equipment are stated at cost. Depreciation is provided
over the estimated useful lives (10 to 20 years for land improvements and
buildings, and 3 to 5 years for machinery and equipment) of the respective
assets in accordance with the straight-line method. The Company assesses the
recoverability of long-lived assets whenever events or changes in circumstances
indicate that expected future undiscounted cash flows may not be sufficient to
support the carrying amount of an asset. The Company deems an asset to be
impaired if a forecast of undiscounted future operating cash flows is less than
its carrying amount. If an asset is determined to be impaired, the loss is
measured as the amount by which the carrying value of the asset exceeds its fair
value.

     (H) DERIVATIVE COMMODITY INSTRUMENTS

     The Company uses derivative commodity instruments, primarily futures
contracts, to reduce the exposure to changes in commodity fertilizer prices.
These contracts are not designated as hedges under Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities." The futures contracts are marked to market each month
and gains and losses are recognized in earnings.

     (I) FAIR VALUE OF FINANCIAL INSTRUMENTS

     SFAS No. 107, Disclosures about Fair Value of Financial Instruments,
requires disclosure of the fair value of all financial instruments to which the
Company is a party. All financial instruments are carried at amounts that
approximate estimated fair value.

     (J) ACCOUNTING ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

     (K) RECLASSIFICATIONS

     Certain 2004 and 2003 amounts have been reclassified to conform with the
current year presentation.

(2)  SHORT-TERM DEBT

     The Company has a $225 million revolving credit agreement with CoBank,
which expires December 4, 2006. Short-term debt is secured by the Company's
inventory and the accounts receivable of its wholly owned subsidiary, Agro
Distribution, LLC. There was no debt outstanding at August 31, 2005 or August
31, 2004 under this facility. Interest on borrowings under this revolving credit
agreement was charged at an average rate of 4.475% (LIBOR + 2.00%) and 3.17%
(LIBOR + 1.75%) for the fiscal years ended August 31, 2005 and 2004,
respectively.

     On October 6, 2005, the Company entered into a $270 million revolving
credit agreement with CoBank, which expires October 6, 2010. The short-term debt
is secured by the Company's inventory and the accounts receivable of its wholly
owned subsidiary, Argo Distribution, LLC. The loan agreement includes certain
restrictive covenants.

     The Company's consolidated joint-venture, AFC-Agriliance, LLC, has a $30
million revolving credit agreement with CoBank which expires March 1, 2006 and
is secured by AFC-Agriliance, LLC's accounts receivable and inventory. There was
$23,650,000 outstanding at August 31, 2005. Interest on borrowings under this
revolving credit agreement was charged at LIBOR + 2.5% at August 31, 2005.


                                       134



                                 AGRILIANCE, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(3)  LONG-TERM DEBT

     On December 4, 2003, the Company entered into a long-term credit agreement
comprised of private placements with six institutions. The individual loans have
terms with expiration dates ranging from December 4, 2008 to December 4, 2010.
The long-term debt is secured by the Company's inventory and the accounts
receivable of its wholly owned subsidiary, Agro Distribution, LLC. At August 31,
2005 and 2004, the total long-term debt outstanding was $100 million of which
$89 million was charged at fixed interest rates averaging 6.0%. The remaining
$11 million of long-term debt outstanding was charged at floating interest rates
averaging 4.45% (LIBOR + 1.86%) and 3.14% (LIBOR + 1.86%) at August 31, 2005 and
2004, respectively.

Future maturities of long-term debt are as follows:



Year ending August, 31:   (In thousands)
- -----------------------   --------------
                       
2006 ..................      $     --
2007 ..................            --
2008 ..................            --
2009 ..................        48,000
2010 ..................            --
2011 and thereafter ...        52,000
                             --------
Total .................      $100,000
                             ========


     The loan agreement includes certain restrictive financial covenants. At
August 31, 2005 and 2004, the Company was in compliance with these covenants.

     Interest paid on short-term and long-term debt for the years ended August
31, 2005, 2004 and 2003 totaled $9.1 million, $4.9 million and $9.6 million,
respectively.

(4)  RECEIVABLES PURCHASE FACILITY

     The Company has a $200 million receivables purchase facility with CoBank. A
wholly owned subsidiary, Agriliance SPV, LLC, purchases the receivables from
Agriliance and transfers them to CoBank. Such transactions are structured as
sales and, accordingly, the receivables transferred to CoBank without recourse
to Agriliance are not reflected in the consolidated balance sheet. At August 31,
2005 and 2004, $105 million and $120 million, respectively, were outstanding
under this facility. The total accounts receivable sold during the years ended
August 31, 2005, 2004, and 2003 were $2,990 million, $2,739 million and $2,885
million respectively.

(5)  PENSION AND OTHER POSTRETIREMENT PLANS

     The Company sponsors a defined benefit pension plan. The plan is
noncontributory and covers all employees. The benefits are based upon years of
service, age at retirement, and the employee's highest five year period of
compensation during the last ten years before retirement.

     The Company recognized additional minimum pension liability adjustments of
$10,156,000 and $3,752,000 for the fiscal years ended August 31, 2005 and 2004,
respectively. In accordance with SFAS No. 87, these adjustments were made to
other comprehensive income of the Company and did not impact current year net
earnings.


                                       135



                                 AGRILIANCE, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company also sponsors a defined benefit health care plan that provides
postretirement medical benefits to full-time employees who met minimum age and
service requirements at the time Agriliance was formed in 2000. The plan is
contributory with retiree contributions adjusted annually and contains other
cost-sharing features such as deductibles and coinsurance. Any other Agriliance
employees not meeting the original health plan qualifications are still eligible
to participate in the plan at their own expense without any Company
contributions.

     The Company uses a May 31 measurement date for its plans. The following
table sets forth the plans' benefit obligations, fair value of plan assets, and
funded status at August 31, 2005 and 2004:



                                                         YEAR ENDED AUGUST 31 (IN THOUSANDS)
                                                   ----------------------------------------------
                                                     PENSION BENEFITS     POSTRETIREMENT BENEFITS
                                                   --------------------   -----------------------
                                                      2005       2004          2005      2004
                                                   ---------   --------      -------   -------
                                                                           
Benefit obligation .............................   $(108,164)  $(88,010)     $(4,984)  $(6,299)
Fair value of plan assets ......................      99,100     59,574           --        --
                                                   ---------   --------      -------   -------
Funded status ..................................   $  (9,064)  $(28,436)     $(4,984)  $(6,299)
                                                   =========   ========      =======   =======

Prepaid (accrued) benefit cost recognized in the
   consolidated balance sheets .................   $  21,148   $ (6,876)     $(5,655)  $(5,769)


     The accumulated benefit obligation for the pension plan was $98,189,000 and
$77,457,000 at August 31, 2005 and 2004, respectively.

     Weighted-average assumptions used to determine benefit obligations at
August 31, 2005 and 2004 were as follows:



                                                                        POSTRETIREMENT
                                                     PENSION BENEFITS      BENEFITS
                                                     ----------------   --------------
                                                        2005   2004       2005   2004
                                                        ----   ----       ----   ----
                                                                     
Discount rate.....................................      5.50%  6.50%      5.50%  6.50%
Expected long-term rate of return on plan assets..      8.50%  8.50%       N/A    N/A
Rate of compensation increase.....................      2.50%  3.50%       N/A    N/A


     Weighted-average assumptions used to determine net cost for the years ended
August 31, 2005, 2004, and 2003 were as follows:



                                                                             POSTRETIREMENT
                                                       PENSION BENEFITS         BENEFITS
                                                      ------------------   ------------------
                                                      2005   2004   2003   2005   2004   2003
                                                      ----   ----   ----   ----   ----   ----
                                                                       
Discount rate .....................................   6.50%  6.00%  7.25%  6.50%  6.00%  7.25%
Expected long-term rate of return on plan assets ..   8.50%  8.50%  9.00%   N/A    N/A    N/A
Rate of compensation increase .....................   3.50%  3.00%  4.00%   N/A    N/A    N/A


     The expected long-term rate of return is based on the portfolio as a whole
and not on the sum of the returns on individual asset categories. The return is
based exclusively on historical returns, without adjustments.

     For measurement purposes, a 9.0% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 2005. The rate was assumed
to decrease gradually to 6.0% through 2008 and remain at that level thereafter.


                                       136


                                 AGRILIANCE, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                                             YEAR ENDED AUGUST 31 (IN THOUSANDS)
                                      ------------------------------------------------
                                                                     POSTRETIREMENT
                                           PENSION BENEFITS             BENEFITS
                                      -------------------------   --------------------
                                        2005     2004     2003    2005    2004    2003
                                      -------   ------   ------   ----   ------   ----
                                                                
Benefit cost ......................   $ 7,887   $6,309   $4,210   $288   $1,214   $933
Employer contribution .............    35,910    2,461    1,668    402      300    212
Plan participants' contributions ..        --       --       --     --       --     --
Benefits paid .....................     3,010    2,111    1,835    402      300    212


     PLAN ASSETS

     The weighted-average asset allocations of the Company's pension plan at
August 31, 2005 and 2004 were as follows:



                        PLAN ASSETS
                        AT AUGUST 31
                       -------------
ASSET CATEGORY          2005    2004
- --------------         -----   -----
                         
Equity securities ..    41.4%   54.0%
Debt securities ....    51.1%   35.3%
Real Estate ........     6.5%    9.4%
Other ..............     1.0%    1.3%
                       -----   -----
Total ..............   100.0%  100.0%
                       =====   =====


     The Company's investment practices and strategies for the pension plans use
target allocations as guidelines for the individual asset categories. The
Company's investment goals are to maximize returns subject to specific risk
management policies. Its risk management policies permit investments in mutual
funds, direct investments in debt and equity securities, and derivative
financial instruments. The Company addresses diversification by the use of
mutual fund investments whose underlying investments are in domestic and
international fixed income securities and domestic and international equity
securities. These mutual funds are readily marketable and can be sold to fund
benefit payment obligations as they become payable.

     CASH FLOWS

     The Company expects to contribute $0 to its pension plan and $477,000 to
its postretirement medical plan for the year ended August 31, 2006.

     Benefits expected to be paid for the pension plan in fiscal years ended
2006-2010 are $2,652,000, $2,863,000, $3,098,000, $3,340,000 and $3,605,000,
respectively. Aggregate benefits expected to be paid in the five years from
2011-2015 are $23,283,000. Expected benefits are based on the same assumptions
used to measure the Company's benefit obligation at August 31 and include
estimated future employee service.

     The postretirement medical plan is an unfunded plan. Expected benefits are
based on the same assumptions used to measure the Company's benefit obligation
at August 31. The following table sets forth the expected medical plan benefit
payments and medicare subsidy receipts:


                                      137



                                 AGRILIANCE, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



               EXPECTED BENEFIT   EXPECTED MEDICARE
                    PAYMENT         SUBSIDYPAYMENT
               ----------------   -----------------
               ($ IN THOUSANDS)    ($ IN THOUSANDS)
                            
2006........        $   477            $  (29)
2007........            468               (50)
2008........            468               (58)
2009........            473               (64)
2010........            479               (69)
2011-2015...          2,430              (444)
                    -------            ------
Total.......        $ 4,795            $ (714)
                    =======            ======


     OTHER PLANS

     The Company has a defined contribution plan in which the Company matches
50% of the first 6% of employee contributions. The Company contributed
$2,420,000, $2,120,000, and $2,293,000 to the plan for the fiscal years ended
August 31, 2005, 2004 and 2003, respectively.

     In addition to the defined benefit and defined contribution retirement
plans, the Company has a supplemental executive retirement plan, which is an
unfunded defined benefit plan. The actuarial present value of the projected
benefit obligation totaled $2,736,000 and $1,894,000 at August 31, 2005 and
2004, respectively.

(6)  RELATED PARTY TRANSACTIONS

     Land O'Lakes, Inc. and CHS, Inc. charged the Company for accounting, legal,
risk management, building, advertising, and certain employee benefit and other
employee-related expenses. Total purchased services were:



                         YEAR ENDED AUGUST 31,
                       -------------------------
                         2005     2004     2003
                       -------   ------   ------
                            ($ IN THOUSANDS)
                                 
Land O'Lakes, Inc...   $12,887   $9,693   $8,400
CHS, Inc............     5,070    4,579    3,536


     The Company made the following sales to related parties:



                                   YEAR ENDED AUGUST 31,
                              ------------------------------
                                2005       2004       2003
                              --------   --------   --------
                                     ($ IN THOUSANDS)
                                           
Land O'Lakes, Inc..........   $  9,254   $  5,219   $  1,576
CHS, Inc...................    199,852    196,175    208,706
Farmland Industries, Inc...         --        187      1,262



                                      138



                                 AGRILIANCE, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     During the year ended August 31, 2004, the Company made product purchases
from Farmland Industries, Inc. totaling $37,516,000.

     During the years ended August 31, 2005, 2004 and 2003, the Company made
product purchases from Land O'Lakes, Inc. totaling $17,815,000, $14,256,000 and
$12,278,000 respectively.

     In addition, during the years ended August 31, 2005, 2004 and 2003, the
Company made product purchases from CF Industries, Inc. (Land O'Lakes, Inc. and
CHS, Inc. held a combined 58.2% interest in CF Industries, Inc. through August
16, 2005, at which time the interests were divested) totaling $571,144,048,
$532,394,000 and $565,153,000 respectively.

(7)  LEASE COMMITMENTS

     The company has entered into noncancelable operating leases of certain real
estate, vehicles and equipment.

     Future minimum lease commitments under noncancelable operating leases are
as follows:



YEAR ENDING AUGUST 31,   ($ IN THOUSANDS)
- ----------------------   ----------------
                      
2006..................        $12,946
2007..................          9,010
2008..................          4,761
2009..................          2,566
2010..................          1,424
2011 and thereafter...          2,545


     Rent expense for the years ended August 31, 2005, 2004 and 2003 was
$24,470,000, $21,720,000 and $18,740,000, respectively.

(8)  CONTINGENCIES

(A)  ENVIRONMENTAL

     The Company is required to comply with various environmental laws and
regulations incident to its normal business operations. The Company is also a
party to environmental issues related to operations contributed to Agriliance by
Farmland Industries, Inc. To the extent these environmental costs are not paid
by the Farmland Bankruptcy Trustee, the Company may have future obligations due.
The Company has accrued for future costs of remediation of identified issues.
Additional costs for losses which may be identified in the future cannot be
presently determined; however, management does not believe any such issues would
materially affect the results of operations or the financial position of the
Company.

(B)  GUARANTEES

     The Company is contingently liable for guarantees on customer loans with
terms generally ending prior to March, 2006, totaling $10.5 million at August
31, 2005. The Company has recorded reserves for the estimated fair value of such
guarantees.

(C)  GENERAL

     Certain claims and lawsuits have been filed in the ordinary course of
business. It is management's opinion that settlement of all litigation would not
require payment of an amount which would be material to the results of
operations or to the financial position of the Company.


                                      139

EX-4.27

                                                                    Exhibit 4.27

                                                               EXECUTION VERSION

                    FIFTH AMENDMENT dated as of April 1, 2005 (this
               "Amendment"), to the CREDIT AGREEMENT dated as of October 11,
               2001 (as amended, supplemented or otherwise modified from time to
               time, the "Credit Agreement"), among LAND O'LAKES, INC., a
               cooperative corporation organized under the laws of the State of
               Minnesota (the "Borrower"), the several banks and other financial
               institutions and entities from time to time party thereto (the
               "Lenders"), and JPMORGAN CHASE BANK, N.A. (formerly known as
               "JPMorgan Chase Bank" and formerly known as "The Chase Manhattan
               Bank"), as administrative agent (in such capacity, the
               "Administrative Agent").

          A. The Borrower has requested that the Lenders agree to amend the
asset sale provision of the Credit Agreement as set forth herein.

          B. The Required Lenders are willing to effect such amendment on the
terms and subject to the conditions of this Amendment.

          C. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement, as amended hereby.

          Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:

          SECTION 1. Amendment of Section 6.05 of the Credit Agreement. The
Credit Agreement is hereby amended, effective as of the Amendment Effective Date
(as defined below), as follows:

          (a) Amendment of Section 1.01. Section 1.01 is hereby amended by:
inserting the following definitions in the appropriate alphabetical order
therein:

                    'Fifth Amendment' means the Fifth Amendment, dated as of
               April 1, 2005, to this Agreement.

                    'Fifth Amendment Effective Date' means the date on which the
               Fifth Amendment became effective in accordance with Section 3
               thereof.

          (b) Amendment of Subsection 6.05(d). Subsection 6.05(d) is amended to
read in its entirety as follows:

          "(d) sales, transfers and other dispositions of assets (other than
sales, transfers or dispositions of less than 100% of the Equity Interests in a
Restricted Subsidiary owned by the Borrower and the Restricted Subsidiaries)
that are not permitted by any other clause of this Section; provided that (i)
the aggregate fair market value of all assets sold, transferred or otherwise
disposed of in reliance upon this clause (d) shall not



                                                                               2


exceed (x) $100,000,000 during the fiscal year of the Borrower ended December
31, 2005 and (y) $50,000,000 during any fiscal year of the Borrower thereafter
and (ii) for purposes of clause (i), the fair market value of Equity Interests
in a Restricted Subsidiary shall in any event be deemed to be at least equal to
the sum of the purchase price and all Indebtedness of such Restricted Subsidiary
transferred as part of, or other Indebtedness assumed by the transferee or its
Affiliates in connection with, such sale, transfer or disposition;"

          SECTION 2. Representations and Warranties. To induce the other parties
hereto to enter into this Amendment, the Borrower represents and warrants to
each of the Lenders, the Administrative Agent and the Collateral Agent that, as
of the Amendment Effective Date:

          (a) This Amendment has been duly authorized, executed and delivered by
it and this Amendment and the Credit Agreement, as amended hereby, constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).

          (b) The representations and warranties set forth in Article III of the
Credit Agreement are, after giving effect to this Amendment, true and correct in
all material respects on and as of the Amendment Effective Date with the same
effect as though made on and as of the Amendment Effective Date, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case they were true and correct in all material respects as of such
earlier date).

          (c) No Default or Event of Default has occurred and is continuing.

          (d) After giving effect to this Amendment, the Collateral and
Guarantee Requirement has been satisfied.

          SECTION 3. Effectiveness. This Amendment and the amendment of the
Credit Agreement effected hereby shall become effective as of the first date
(the "Amendment Effective Date") on which the following conditions have been
satisfied:

          (a) The Administrative Agent (or its counsel) shall have received duly
executed counterparts hereof that, when taken together, bear the signatures of
(i) the Administrative Agent, (ii) the Borrower and (iii) the Required Lenders.

          (b) The Administrative Agent shall have received a certificate of a
Financial Officer to the effect that the representations and warranties set
forth in Section 2 hereof are true and correct on and as of the Amendment
Effective Date.

          (c) Each Loan Party that has not executed and delivered this Amendment
shall have entered into a written instrument reasonably satisfactory to the
Administrative


                                                                               3


Agent pursuant to which it confirms that it consents to this Amendment and that
the Security Documents to which it is party will continue to apply in respect of
the Credit Agreement, as amended hereby, and the Obligations thereunder.

          (d) The Administrative Agent shall have received all fees and other
amounts due from any Loan Party hereunder or under the Credit Agreement or any
other Loan Document on or prior to the Amendment Effective Date and, to the
extent invoiced on or prior to the Amendment Effective Date, reimbursement or
payment of all out-of-pocket expenses (including fees, charges and disbursements
of counsel) required to be reimbursed or paid by any Loan Party hereunder or
under the Credit Agreement or any other Loan Document.

The Administrative Agent shall notify the Borrower and the Lenders of the
Amendment Effective Date, and such notice shall be conclusive and binding.

          SECTION 4. Effect of Amendment, (a) Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of or otherwise affect the rights and remedies of the
Lenders, the Administrative Agent or the Collateral Agent under the Credit
Agreement or any other Loan Document, and shall not alter, modify, amend or in
any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Credit Agreement or any other provision of the
Credit Agreement or of any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect. Nothing
herein shall be deemed to entitle the Borrower to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other Loan Document in similar or different circumstances.

          (b) On and after the Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof, "herein", or words
of like import, and each reference to the Credit Agreement in any Loan Document
shall be deemed a reference to the Credit Agreement as amended hereby. This
Amendment shall constitute a "Loan Document" for all purposes of the Credit
Agreement and the other Loan Documents.

          SECTION 5. Costs and Expenses. The Borrower agrees to reimburse the
Administrative Agent for its reasonable out of pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent.

          SECTION 6. Indemnity. It is agreed that for all purposes of Section
9.03(b) of the Credit Agreement, the execution, delivery and performance of this
Amendment and the other transactions contemplated hereby shall all be deemed to
be transactions contemplated by the Credit Agreement.

          SECTION 7. Uniform Commercial Code Filings. The Borrower authorizes
the Collateral Agent at any time and from time to time to file in any relevant



                                                                               4


jurisdiction financing statements and amendments thereto describing the
Collateral pledged by the Borrower under the Collateral Agreement as "all
assets", "all personal property" or in any other manner deemed appropriate by
the Collateral Agent, and the Borrower hereby confirms and ratifies the filing
by the Collateral Agent prior to the date hereof of any financing statements
containing such a description.

          SECTION 8. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
Delivery of any executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.

          SECTION 9. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

          SECTION 10. Headings. The headings of this Amendment are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

EX-4.28

                                                                    Exhibit 4.28

                                                               EXECUTION VERSION

                    SIXTH AMENDMENT dated as of June 15, 2005 (this
               "Amendment"), to the AMENDED AND RESTATED FIVE-YEAR CREDIT
               AGREEMENT dated as of October 11, 2001 (as amended, supplemented
               or otherwise modified from time to time, the "Credit Agreement"),
               among LAND O'LAKES, INC., a cooperative corporation organized
               under the laws of the State of Minnesota (the "Borrower"), the
               several banks and other financial institutions and entities from
               time to time party thereto (the "Lenders"), and JPMORGAN CHASE
               BANK, N.A., as administrative agent (in such capacity, the
               "Administrative Agent") and AMENDMENT NO. 2 dated as of June 15,
               2005 to the GUARANTEE AND COLLATERAL AGREEMENT dated as of
               October 11, 2001 (as amended, supplemented or otherwise modified
               from time to time, the "Collateral Agreement") among the
               Borrower, the Subsidiaries named therein and JPMorgan Chase Bank,
               N.A., as collateral agent (in such capacity, the"Collateral
               Agent").

          A. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement, as amended hereby.

          B. The Borrower has notified the Administrative Agent that it intends
to contribute up to $88,000,000 to Cheese & Protein International LLC ("CPI"), a
Delaware limited liability company and a subsidiary of the Borrower of which, on
the date hereof, the Borrower owns approximately 97.5% of the Equity Interests,
in order to permit CPI to prepay all amounts outstanding under the CPI Lease (as
defined herein) (the foregoing transactions being referred to herein as the "CPI
Lease Transactions"). The Borrower has proposed that, in connection with the CPI
Lease Transactions, CPI will become a Restricted Subsidiary and a Subsidiary
Loan Party and will satisfy the Collateral and Guarantee Requirement.

          C. The Borrower has requested that the Lenders amend certain
provisions of the Credit Agreement in connection with the CPI Lease Transactions
as set forth herein.

          D. The Required Lenders are willing to effect such amendments on the
terms and subject to the conditions of this Amendment.

          E. Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:

          SECTION 1. Amendment of the Credit Agreement. Effective as of the
Amendment Effective Date:



                                                                               2


          (a) Section 1.01 of the Credit Agreement is amended by deleting the
definition of "Restricted Subsidiaries" and replacing it with the following:

          'Restricted Subsidiaries' means (i) Land O'Lakes Purina Feed LLC, (ii)
     each existing and subsequently acquired or organized domestic and foreign
     direct or indirect Wholly Owned Subsidiary of the Borrower, Land O'Lakes
     Purina Feed LLC or PMI, and (iii) CPI.

          (b) Section 1.01 of the Credit Agreement is amended to add definitions
of the following terms in appropriate alphabetical order:

          'CPI' means Cheese & Protein International LLC, a Delaware limited
     liability company and a Subsidiary of the Borrower.

          'CPI Contribution' means the contribution by the Borrower to CPI of up
     to $88,000,000 on or prior to July 1, 2005 in order to permit CPI to prepay
     all amounts outstanding under the CPI Lease.

          'CPI Lease' means the lease dated June 2, 2000, as heretofore amended,
     by and between CPI, as Lessee and U.S. Bank, National Association (as
     successor to State Street Bank and Trust Company of California, National
     Association) not in its individual capacity, but solely as Certificate
     Trustee under the Trust Agreement dated as of June 2, 2000, as Lessor.

          'CPI Lease Transactions' means the consummation of the CPI
     Contribution and the prepayment by CPI on July 1, 2005 of all amounts
     outstanding under the CPI Lease.

          'Pollution Control Bonds' means the $10,000,000 California Pollution
     Control Financing Authority Tax-Exempt Variable Rate Demand Solid Waste
     Disposal Revenue Bonds (Cheese & Protein International LLC Project), Series
     2001A issued on April 11, 2001 pursuant to the Trust Indenture between the
     California Pollution Control Financing Authority, as Issuer, and Wells
     Fargo Bank Minnesota, N.A., as Trustee, and the related promissory note
     issued by CPI and held by the California Pollution Control Financing
     Authority.

          'Sixth Amendment' means the Sixth Amendment, dated as of June 15,
     2005, to this Agreement.

          'Sixth Amendment Effective Date' means the date on which the Sixth
     Amendment became effective in accordance with Section 4 thereof.

          (c) Amendment of Subsection 6.01(a)(iv). Subsection 6.0l(a)(iv) of
the Credit Agreement is amended to read in its entirety as follows:

          "(iv) the Capital Securities in an aggregate amount not in excess of
     $200,000,000 at any time outstanding and the Pollution Control Bonds in an
     aggregate amount not in excess of $10,000,000 at any time outstanding;"


                                                                               3


          (d) Amendment of Section 6.04. Section 6.04 is amended by (i) deleting
the reference in paragraph (e) to "clause (m)" and replacing it with "clause
(n)", (ii) deleting the reference in paragraph (f) to "clause (m)" and replacing
it with "clause (n)", (iii) deleting the word "and" at the end of paragraph (l),
(iv) inserting a new paragraph (m) that reads in its entirety as follows:

          "(m) the CPI Contribution; and"

and (v) lettering existing paragraph (m) as paragraph (n).

          (e) Amendment of Subsection 6.08(b). Subsection 6.08(b) is amended by
(i) deleting the word "and" at the end of clause (v), (ii) deleting the period
at the end of clause (vi) and replacing it with "; and" and (iii) inserting a
new clause (vii) that reads in its entirety as follows:

          "(vii) prepayments by CPI on July 1, 2005 of all amounts outstanding
     under the CPI Lease.".

          SECTION 2. Amendment of the Collateral Agreement. Effective as of the
Amendment Effective Date,

          (a) Section 1.01 of the Collateral Agreement is amended by deleting
the definition of "Equipment" and replacing it with the following:

          'Equipment' means all Equipment (as defined in the New York UCC).

          (b) The heading of Section 3.02 of the Collateral Agreement is amended
to read as "Delivery of the Pledged Collateral; Certification of Limited
Liability Company and Limited Partnership Interests."

          (c) Section 3.02 of the Collateral Agreement is amended by adding a
new paragraph (d) that reads in its entirety as follows:

          "(d) Each interest in any unlimited liability company, limited
liability company or limited partnership required to be pledged hereunder shall
be represented by a certificate, shall be a "security" within the meaning of
Article 8 of the New York UCC and shall be governed by Article 8 of the New York
UCC and shall bear a legend to such effect that shall be satisfactory to the
Collateral Agent. The organizational document of each unlimited liability
company, limited liability company or limited partnership controlled by any
Pledgor and pledged hereunder shall contain a provision whereby it elects that
all interests in such entity are securities governed by Article 8 and references
such legend and that no change to such provision shall be effective until
outstanding certificates are surrendered and new certificates bearing such
legend are issued. The foregoing provisions shall not apply to any unlimited
liability company, limited liability company or limited partnership that is not
a Wholly Owned Subsidiary to the extent that the terms of the organizational



                                                                               4


documents of such entities would require the consents of Persons other than Loan
Parties for such pledge (other than CPI, if and to the extent that, the consent
of any such Person is necessary)."

          SECTION 3. Representations and Warranties. To induce the other parties
hereto to enter into this Amendment, the Borrower represents and warrants to
each of the Lenders, the Administrative Agent and the Collateral Agent that, as
of the Amendment Effective Date:

          (a) This Amendment has been duly authorized, executed and delivered by
it and this Amendment and the Credit Agreement, as amended hereby, constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).

          (b) The representations and warranties set forth in Article III of the
Credit Agreement are, after giving effect to this Amendment, true and correct in
all material respects on and as of the Amendment Effective Date with the same
effect as though made on and as of the Amendment Effective Date, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case they were true and correct in all material respects as of such
earlier date).

          (c) No Default or Event of Default has occurred and is continuing.

          (d) After giving effect to this Amendment, the Collateral and
Guarantee Requirement has been satisfied.

          SECTION 4. Effectiveness. This Amendment and the amendment of the
Credit Agreement effected hereby shall become effective as of the first date
(the "Amendment Effective Date") on which the following conditions have been
satisfied:

          (a) The Administrative Agent (or its counsel) shall have received duly
executed counterparts hereof that, when taken together, bear the signatures of
(i) the Administrative Agent, (ii) the Borrower and (iii) the Required Lenders.

          (b) The Administrative Agent shall have received a certificate of a
Financial Officer to the effect that the representations and warranties set
forth in Section 3 hereof are true and correct on and as of the Amendment
Effective Date.

          (c) The Administrative Agent shall have received a favorable opinion
of counsel to the Borrower and the Subsidiary Loan Parties, addressed to the
Administrative Agent and the Lenders and dated the Amendment Effective Date,
covering such matters relating to this Amendment, the Credit Agreement, as
amended hereby, and the other Loan Documents and the security interests
thereunder, and the satisfaction by CPI of the Collateral and Guarantee
Requirement as the Administrative Agent shall reasonably


                                                                               5


request, and such opinion of counsel shall be reasonably satisfactory to the
Administrative Agent.

          (d) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party,
the authorization of this Amendment and the transactions contemplated hereby
(including the satisfaction by CPI of the Collateral and Guarantee Requirement)
and any other legal matters relating to the Loan Parties, this Amendment, the
other Loan Documents and the transactions contemplated hereby, all in form and
substance reasonably satisfactory to the Administrative Agent.

          (e) At or prior to the time that the CPI Contribution is made, the
Collateral and Guarantee Requirement shall have been satisfied by CPI and with
respect to all Equity Interests of CPI owned by Loan Parties.

          (f) The Administrative Agent shall have received all fees and other
amounts due from any Loan Party hereunder or under the Credit Agreement or any
other Loan Document on or prior to the Amendment Effective Date and, to the
extent invoiced on or prior to the Amendment Effective Date, reimbursement or
payment of all out-of-pocket expenses (including fees, charges and disbursements
of counsel) required to be reimbursed or paid by any Loan Party hereunder or
under the Credit Agreement or any other Loan Document.

The Administrative Agent shall notify the Borrower and the Lenders of the
Amendment Effective Date, and such notice shall be conclusive and binding.

          SECTION 5. Effect of Amendment, (a) Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of or otherwise affect the rights and remedies of the
Lenders, the Administrative Agent or the Collateral Agent under the Credit
Agreement or any other Loan Document, and shall not alter, modify, amend or in
any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Credit Agreement or any other provision of the
Credit Agreement or of any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect. Nothing
herein shall be deemed to entitle the Borrower to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other Loan Document in similar or different circumstances.

          (b) On and after the Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof, "herein", or words
of like import, and each reference to the Credit Agreement in any Loan Document
shall be deemed a reference to the Credit Agreement as amended hereby. This
Amendment shall constitute a "Loan Document" for all purposes of the Credit
Agreement and the other Loan Documents.



                                                                               6


          SECTION 6. Costs and Expenses. The Borrower agrees to reimburse the
Administrative Agent for its reasonable out of pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent.

          SECTION 7. Indemnity. It is agreed that for all purposes of Section
9.03(b) of the Credit Agreement, the execution, delivery and performance of this
Amendment and the other transactions contemplated hereby shall all be deemed to
be transactions contemplated by the Credit Agreement.

          SECTION 8. Uniform Commercial Code Filings. The Borrower authorizes
the Collateral Agent at any time and from time to time to file in any relevant
jurisdiction financing statements and amendments thereto describing the
Collateral pledged by the Borrower or any other Loan Party under the Collateral
Agreement as "all assets", "all personal property" or in any other manner deemed
appropriate by the Collateral Agent, and the Borrower hereby confirms and
ratifies the filing by the Collateral Agent prior to the date hereof of any
financing statements containing such a description.

          SECTION 9. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
Delivery of any executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.

          SECTION 10. Applicable Law, THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

          SECTION 11. Headings. The headings of this Amendment are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

EX-4.29

                                                                    Exhibit 4.29

                                                               EXECUTION VERSION

                    SEVENTH AMENDMENT dated as of August 9, 2005 (this
               "Amendment"), to the AMENDED AND RESTATED FIVE-YEAR CREDIT
               AGREEMENT dated as of October 11, 2001 (as amended, supplemented
               or otherwise modified from time to time, the "Credit
               Agreement'"), among LAND O'LAKES, INC., a cooperative corporation
               organized under the laws of the State of Minnesota (the
               "Borrower"), the several banks and other financial institutions
               and entities from time to time party thereto (the "Lenders"), and
               JPMORGAN CHASE BANK, N.A., as administrative agent (in such
               capacity, the "Administrative Agent").

          A. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement, as amended hereby.

          B. The Borrower has notified the Administrative Agent that it intends
to effect an initial public offering pursuant to which it will offer and sell
shares of the common stock of CF Industries Holdings, Inc. ("CFI") in an
underwritten offering registered with the Securities and Exchange Commission
(the "CF IPO"). The Borrower currently owns approximately 38% of the Equity
Interests in CF Industries, Inc., a wholly owned subsidiary of CFI, and intends
to use up to the full amount of the Net Proceeds (as defined below) from the CFI
IPO to finance the repurchase of its Senior Notes, Senior Second Lien Notes
and/or Capital Securities or any combination thereof.

          C. The Borrower has requested that the Lenders amend certain
provisions of the Credit Agreement in connection with the CFI IPO and its
intended use of the Net Proceeds of the CFI IPO and certain other sales of
Equity Interests of CFI as set forth herein.

          D. The Required Lenders are willing to effect such amendments on the
terms and subject to the conditions of this Amendment.

          E. Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:

          SECTION 1. Amendment of the Credit Agreement. Effective as of the
Amendment Effective Date:

          (a) Section 1.01 of the Credit Agreement is amended to add definitions
of the following terms in appropriate alphabetical order:

          'CFI' means CF Holdings Industries, Inc., a Delaware corporation, and
     its wholly owned subsidiary, CF Industries, an Illinois corporation, in
     which the Borrower owns approximately 38% of the Equity Interests.




                                                                               2


          'CFI IPO' means an initial public offering pursuant to which the
     Borrower will offer and sell shares of the common stock of CFI in an
     underwritten offering registered with the Securities and Exchange
     Commission.

          'CFI Residual Shares' means the Equity Interests in CFI which are
     required to be retained by the Borrower in connection with the CFI IPO
     pursuant to a lock-up agreement between the Borrower and the underwriters
     managing the CFI IPO, which Equity Interests the Borrower may elect to sell
     on a date at least 12 months after the closing date of the CFI IPO.

          'Net Proceeds' means the cash proceeds received by the Borrower from
     the (a) CFI IPO and (b) the sale of any CFI Residual Shares, in each case
     net of all reasonable fees and out-of-pocket expenses, including without
     limitation legal fees, accountants' fees, underwriters' fees or placement
     agents' fees, discounts or commissions, and other fees paid by the Borrower
     to third parties (other than Affiliates) in connection with the CFI IPO.

          'Seventh Amendment' means the Seventh Amendment, dated as of August
     9,2005, to this Agreement.

          'Seventh Amendment Effective Date' means the date on which the Seventh
     Amendment became effective in accordance with Section 3 thereof.

          (b) Amendment of Subsection 6.05. Subsection 6.05 of the Credit
Agreement is amended by (i) deleting the word "and" at the end of paragraph (g),
(ii) inserting the word "and" at the end of paragraph (h) and (iii) inserting a
new paragraph (i) that reads in its entirety as follows:

          "(i) the sale by the Borrower of (x) the Equity Interests in CFI in
     connection with the CFI IPO and (y) the CFI Residual Shares;"

          (c) Amendment of Subsection 6.08(b). Subsection 6.08(b) is amended by
(i) inserting the words ", and will not" immediately following the words "The
Borrower will not" in the first line of such Subsection, and (ii) (x) deleting
the word "and" at the end of clause (vi), (y) deleting the period at the end of
clause (vii) and replacing it with"; and" and (z) inserting a new clause (viii)
that reads in its entirety as follows:

          "(viii) the Borrower may repurchase any combination of the Senior
     Notes, the Senior Second Lien Notes and/or the Capital Securities in an
     aggregate amount, including accrued and unpaid interest and any redemption
     premiums, not to exceed the greater of (a) $100,000,000 and (b) the Net
     Proceeds; provided that (x) after giving effect to any such repurchase, the
     aggregate principal amount of undrawn Letters of Credit and Loans
     outstanding under the Credit Agreement does not exceed $100,000,000 and (y)
     no Default exists at the time of any such repurchase."

          SECTION 2. Representations and Warranties. To induce the other parties
hereto to enter into this Amendment, the Borrower represents and warrants to
each


                                                                               3


of the Lenders, the Administrative Agent and the Collateral Agent that, as of
the Amendment Effective Date:

          (a) This Amendment has been duly authorized, executed and delivered by
it and this Amendment and the Credit Agreement, as amended hereby, constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).

          (b) The representations and warranties set forth in Article III of the
Credit Agreement are, after giving effect to this Amendment, true and correct in
all material respects on and as of the Amendment Effective Date with the same
effect as though made on and as of the Amendment Effective Date, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case they were true and correct in all material respects as of such
earlier date).

          (c) No Default or Event of Default has occurred and is continuing.

          (d) After giving effect to this Amendment, the Collateral and
Guarantee Requirement has been satisfied.

          SECTION 3. Effectiveness. This Amendment and the amendment of the
Credit Agreement effected hereby shall become effective as of the first date
(the "Amendment Effective Date") on which the following conditions have been
satisfied:

          (a) The Administrative Agent (or its counsel) shall have received duly
executed counterparts hereof that, when taken together, bear the signatures of
(i) the Administrative Agent, (ii) the Borrower, and (iii) the Required Lenders.

          (b) The Administrative Agent shall have received a certificate of a
Financial Officer to the effect that the representations and warranties set
forth in Section 2 hereof are true and correct on and as of the Amendment
Effective Date.

          (c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the authorization of this Amendment and the transactions
contemplated hereby and any other legal matters relating to the Loan Parties,
this Amendment, and the transactions contemplated hereby, all in form and
substance reasonably satisfactory to the Administrative Agent.

          (d) The Administrative Agent shall have received all fees and other
amounts due from any Loan Party hereunder or under the Credit Agreement or any
other Loan Document on or prior to the Amendment Effective Date and, to the
extent invoiced on or prior to the Amendment Effective Date, reimbursement or
payment of all out-of-pocket expenses (including fees, charges and
disbursements of counsel) required to be



                                                                               4


reimbursed or paid by any Loan Party hereunder or under the Credit Agreement or
any other Loan Document.

The Administrative Agent shall notify the Borrower and the Lenders of the
Amendment Effective Date, and such notice shall be conclusive and binding.

          SECTION 4. Effect of Amendment. (a) Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of or otherwise affect the rights and remedies of the
Lenders, the Administrative Agent or the Collateral Agent under the Credit
Agreement or any other Loan Document, and shall not alter, modify, amend or in
any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Credit Agreement or any other provision of the
Credit Agreement or of any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect. Nothing
herein shall be deemed to entitle the Borrower to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other Loan Document in similar or different circumstances.

          (b) On and after the Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof, "herein", or words
of like import, and each reference to the Credit Agreement in any Loan Document
shall be deemed a reference to the Credit Agreement as amended hereby. This
Amendment shall constitute a "Loan Document" for all purposes of the Credit
Agreement and the other Loan Documents.

          SECTION 5. Costs and Expenses. The Borrower agrees to reimburse the
Administrative Agent for its reasonable out of pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent.

          SECTION 6. Indemnity. It is agreed that for all purposes of Section
9.03(b) of the Credit Agreement, the execution, delivery and performance of this
Amendment and the other transactions contemplated hereby shall all be deemed to
be transactions contemplated by the Credit Agreement.

          SECTION 7. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
Delivery of any executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.

          SECTION 8. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.



                                                                               5


          SECTION 9. Headings. The headings of this Amendment are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

EX-4.30

                                                                    Exhibit 4.30

                                                               EXECUTION VERSION

                    EIGHTH AMENDMENT dated as of January 10, 2006 (this
               "Amendment"), to the AMENDED AND RESTATED FIVE-YEAR CREDIT
               AGREEMENT dated as of October 11, 2001 (as amended, supplemented
               or otherwise modified from time to time, the "Credit Agreement"),
               among LAND O'LAKES, INC., a cooperative corporation organized
               under the laws of the State of Minnesota (the "Borrower"), the
               several banks and other financial institutions and entities from
               time to time party thereto (the "Lenders"), and JPMORGAN CHASE
               BANK, N.A., as administrative agent (in such capacity, the
               "Administrative Agent").

          A. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement, as amended hereby.

          B. The Borrower currently owns 57.5% of the total outstanding
interests of MoArk, LLC ("MoArk"), a Missouri limited liability company, and
has notified the Administrative Agent that it intends to acquire the remaining
42.5% of the total outstanding interests of MoArk from Osborne Investments, LLC
(the "MoArk Acquisition").

          C. The Borrower has requested that the Lenders amend certain
provisions of the Credit Agreement in connection with the MoArk Acquisition.

          D. The Required Lenders are willing to effect such amendments on the
terms and subject to the conditions of this Amendment.

          E. Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:

          SECTION 1. Amendment of the Credit Agreement. Effective as of the
Amendment Effective Date:

          (a) Section 1.01 of the Credit Agreement is amended to add definitions
of the following terms in appropriate alphabetical order:

          'Eighth Amendment' means the Eighth Amendment, dated as of January
     10, 2006, to this Agreement.

          'Eighth Amendment Effective Date' means the date on which the Eighth
     Amendment became effective in accordance with Section 3 thereof.

          'MoArk' means MoArk, LLC, a Missouri limited liability company, and
     any successor company to MoArk.



                                                                               2


          'MoArk Acquisition' means the acquisition by the Borrower or a
     Subsidiary of 42.5% of the total outstanding interests of MoArk from
     Osborne Investments, LLC for an aggregate consideration not exceeding
     $71,000,000.

          (b) The definition of the term "Restricted Subsidiaries" in Section
1.01 of the Credit Agreement is amended to read in its entirety as follows:

          'Restricted Subsidiaries' means (i) Land O'Lakes Purina Feed LLC, (ii)
     each existing and subsequently acquired or organized domestic and foreign
     direct or indirect Wholly Owned Subsidiary of the Borrower, Land 0'Lakes
     Purina Feed LLC or PMI, and (iii) CPI; provided that, notwithstanding the
     foregoing, neither MoArk nor any of MoArk's direct or indirect wholly owned
     subsidiaries shall constitute a Restricted Subsidiary.

          (c) Clause (a) of Section 6.04 of the Credit Agreement is amended to
read in its entirety as follows:

          "(a) the Acquisition and the MoArk Acquisition;".

          (d) Section 6.09 of the Credit Agreement is amended to read in its
entirety as follows:

          "SECTION 6.09 Transactions with Affiliates. The Borrower will not, and
     will not permit any Restricted Subsidiary to, sell, lease or otherwise
     transfer any property or assets to, or purchase, lease or otherwise acquire
     any property or assets from, or otherwise engage in any other transactions
     with, any of its Affiliates, except (a) transactions in the ordinary course
     of business that are at prices and on terms and conditions not less
     favorable to the Borrower or such Restricted Subsidiary than could be
     obtained on an arm's-length basis from unrelated third parties, (b)
     transactions between or among the Borrower and the Subsidiary Loan Parties
     not involving any other Affiliate, (c) any Restricted Payment permitted by
     Section 6.08, (d) Securitizations permitted by Sections 6.01 and 6.02 and
     (e) the MoArk Acquisition."

          SECTION 2. Representations and Warranties. To induce the other parties
hereto to enter into this Amendment, the Borrower represents and warrants to
each of the Lenders, the Administrative Agent and the Collateral Agent that, as
of the Amendment Effective Date:

          (a) This Amendment has been duly authorized, executed and delivered by
it and this Amendment and the Credit Agreement, as amended hereby, constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).



                                                                               3


          (b) The representations and warranties set forth in Article III of the
Credit Agreement are, after giving effect to this Amendment, true and correct in
all material respects on and as of the Amendment Effective Date with the same
effect as though made on and as of the Amendment Effective Date, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case they were true and correct in all material respects as of such
earlier date).

          (c) No Default or Event of Default has occurred and is continuing.

          (d) After giving effect to this Amendment, the Collateral and
Guarantee Requirement has been satisfied.

          SECTION 3. Effectiveness. This Amendment and the amendment of the
Credit Agreement effected hereby shall become effective as of the first date
(the "Amendment Effective Date") on which the following conditions have been
satisfied:

          (a) The Administrative Agent (or its counsel) shall have received duly
executed counterparts hereof that, when taken together, bear the signatures of
(i) the Administrative Agent, (ii) the Borrower, and (iii) the Required Lenders.

          (b) The Administrative Agent shall have received a certificate of a
Financial Officer to the effect that the representations and warranties set
forth in Section 2 hereof are true and correct on and as of the Amendment
Effective Date.

          (c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the authorization of this Amendment and the transactions
contemplated hereby and any other legal matters relating to the Loan Parties,
this Amendment, and the transactions contemplated hereby, all in form and
substance reasonably satisfactory to the Administrative Agent.

          (d) The Administrative Agent shall have received all fees and other
amounts due from any Loan Party under the Credit Agreement or any other Loan
Document on or prior to the Amendment Effective Date and, to the extent invoiced
on or prior to the Amendment Effective Date, reimbursement or payment of all
out-of-pocket expenses (including fees, charges and disbursements of counsel)
required to be reimbursed or paid by any Loan Party under the Credit Agreement
or any other Loan Document.

The Administrative Agent shall notify the Borrower and the Lenders of the
Amendment Effective Date, and such notice shall be conclusive and binding.

          SECTION 4. Effect of Amendment. (a) Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of or otherwise affect the rights and remedies of the
Lenders, the Administrative Agent or the Collateral Agent under the Credit
Agreement or any other Loan Document, and shall not alter, modify, amend or in
any way affect any of the terms, conditions,




                                                                               4


obligations, covenants or agreements contained in the Credit Agreement or any
other provision of the Credit Agreement or of any other Loan Document, all of
which are ratified and affirmed in all respects and shall continue in full force
and effect. Nothing herein shall be deemed to entitle the Borrower to a consent
to, or a waiver, amendment, modification or other change of, any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document in similar or different circumstances.

          (b) On and after the Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof, "herein", or words
of like import, and each reference to the Credit Agreement in any Loan Document
shall be deemed a reference to the Credit Agreement as amended hereby. This
Amendment shall constitute a "Loan Document" for all purposes of the Credit
Agreement and the other Loan Documents.

          SECTION 5. Costs and Expenses. The Borrower agrees to reimburse the
Administrative Agent for its reasonable out of pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent.

          SECTION 6. Indemnity. It is agreed that for all purposes of Section
9.03(b) of the Credit Agreement, the execution, delivery and performance of this
Amendment and the other transactions contemplated hereby shall all be deemed to
be transactions contemplated by the Credit Agreement.

          SECTION 7. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
Delivery of any executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.

          SECTION 8. Applicable Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

          SECTION 9. Headings. The headings of this Amendment are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.

EX-10.12

                                                                   Exhibit 10.12

                                                                  EXECUTION COPY

                        ASSET PURCHASE AND SALE AGREEMENT

                                     Between

                               Land O'Lakes, Inc.
                                    as Seller

                                       And

                          Maschhoff West, LLC as Buyer

                         Dated as of February 15, 2005



                        ASSET PURCHASE AND SALE AGREEMENT

     This ASSET PURCHASE AND SALE AGREEMENT is made as of the 15th day of
February, 2005 by and among Land O'Lakes, Inc., a Minnesota cooperative
corporation ("Seller") and Maschhoff West, LLC, an Illinois limited liability
company ("Buyer").

                                   WITNESSETH:

     WHEREAS, the Buyer desires to purchase from the Seller and the Seller
desires to sell to the Buyer substantially all of the assets owned or leased by
Seller and used exclusively in the conduct of the business of its Swine
Production Division ("Business") and the Buyer is willing to assume obligations
of the Business, all upon the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the foregoing and the mutual
warranties, representations, covenants and agreements herein contained, the
parties hereto hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Certain capitalized terms used herein have the meanings set forth below.

     "Accounts Payable and Accrued Expenses" has the meaning set forth in
Section 2.4(c).

     "Accounts Receivable and Prepaids" has the meaning set forth in Section 2.1
(g).

     "Agreement" shall mean this Asset Purchase and Sale Agreement, including
all exhibits and schedules hereto, as it may be amended, supplemented or
modified from time to time in accordance with its terms.

     "Ancillary Agreements" shall mean those agreements set forth in Section
7.9.

     "Assigned Contracts" has the meaning set forth in Section 2.2.

     "Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement executed by the Seller and the Buyer as described in
Section 11.2(a)

     "Assumed Obligations" has the meaning set forth in Section 2.4.

     "Books and Records" has the meaning set forth in Section 2.1(e).

     "Business" has the meaning set forth in the preamble hereto.

     "Business Day" shall mean any day of the year other than (a) any Saturday
or Sunday or (b) any other day on which banks located in New York, New York are
closed for business.


                                       1


     "Business Financial Statements" shall mean those pro forma financial
statements of the Business attached hereto as Schedule 4.5.

     "Buyer" has the meaning set forth in the preamble hereto.

     "Buyer's Costs" has the meaning set forth in Section 3.1.

     "Camborough-22 Closed Herd Multiplier Agreement" shall mean that
Camborough-22 Closed Herd Multiplier Agreement dated April 1, 2000, by and
between Seller and Pig Improvement Company, Inc.

     "Cash" shall mean all cash, certificates of deposit, bank accounts and
other cash equivalents, together with all accrued but unpaid interest thereon.

     "Closing" shall mean the consummation of the transactions contemplated
herein in accordance with Article XI.

     "Closing Date" shall have the meaning set forth in Section 11.1.

     "Code" shall mean the Internal Revenue Code of 1986, as amended, and the
temporary and final regulations promulgated thereunder.

     "Confidentiality Agreement" has the meaning set forth in Section 7.5.

     "Contract" shall mean any contract, lease, easement, license, sales order,
purchase order, supply agreement, or any other agreement, commitment or
understanding whether oral or written, other than Permits.

     "Conveyance Documents" has the meaning set forth in Section 11.2(a).

     "Countyline Finishing Pig Inventory" shall mean all feeder pigs purchased
from the Countyline operations and finished under Grower Agreements.

     "Earnest Money Deposit" shall mean an amount equal to 5% of the Purchase
Price, prior to the Purchase Price Adjustment.

     "Effective Time" shall mean 12:01 a.m., Central Standard Time, on the
Closing Date.

     "Employee Plan" shall mean any "employee benefit plan" within the meaning
of Section 3(3) of ERISA, all specified fringe benefits as defined in Section
6039D of the Code, and all other retirement, savings, disability, salary
continuation, medical, dental, health, life insurance, death benefit, group
insurance, post-retirement insurance, profit-sharing, deferred compensation,
stock option, cash option, educational assistance, bonus, incentive, vacation
pay, severance, or other employee benefit or fringe benefit plan currently in
effect as of the date of this Agreement with respect to the Employees.


                                        2



     "Employee" or "Employees" shall mean all employee(s) of the Seller
principally employed in the Business and listed on Schedule 4.12(b) and shall
have the meaning set forth in Section 10.1.

     "Environment" shall mean soil, land surface, or subsurface strata, surface
waters, groundwater, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life and any other environmental medium
or natural resource.

     "Environmental Law" shall mean any Law applicable to the Purchased Assets
in respect of the Environment, including without limitation federal, state or
local law (including common law), statute, code, ordinance, rule, regulation or
other requirement relating to the pollution or protection of the Environment,
natural resources, or public or employee health and safety applicable to the
Business or the Purchased Assets, and includes without limitation the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section
1251 et seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et seq., the Oil Pollution
Act of 1990,33 U.S.C. Section 2701 et seq., Emergency Planning and Community
Right-to-Know Act ("EPCRA"), 42 U.S.C Section 1101 et. seq., and the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., as such laws
have been amended or supplemented, and the regulations promulgated pursuant
thereto, and all analogous state or local statutes.

     "Equipment and Fixed Assets" has the meaning set forth in Section 2.1 (a),

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

     "Excluded Assets" has the meaning set forth in Section 2.3.

     "Excluded Obligations" has the meaning set forth in Section 2.5.

     "Governmental Authority" shall mean the government of the United States, or
any other foreign country, or any state, provincial or political subdivision
thereof and any entity, body or authority exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

     "Grower Agreements" has the meaning set forth in Section 2.2(c).

     "Guarantees" has the meaning set forth in Section 2.4(d).


                                        3


     "Hazardous Material" shall mean any waste, pollutant, contaminant,
hazardous or toxic substance or waste, special waste, or any constituent of any
such substance or waste which is regulated by any Environmental Law due to its
properties of being toxic, hazardous, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, or mutagenic, including, without
limitation, petroleum and petroleum products or byproducts, asbestos,
asbestos-containing materials, or presumed asbestos-containing materials, urea
formaldehyde and polychlorinated biphenyls.

     "Hog Slat Maintenance Agreement" shall mean that agreement dated December
1, 2004 between Seller and Hog Slat, Inc.

     "Indemnification Basket" has the meaning set forth in Section 13.3 (c).

     "Indemnification Cap" has the meaning set forth in Section 13.3 (c).

     "Knowledge." when used with respect to the Seller, shall mean the actual
knowledge, of the fact or matter of any of the persons listed on Schedule 1.1
and any such person listed on Schedule 1.1 will be deemed to have conducted a
reasonably comprehensive investigation regarding the accuracy of the statements,
representations, warranties, facts, or matters made herein by the person.
Wieland and Miller are listed on Schedule 1.1 solely for the purposes of
Sections 4.7 and 4.13.

     "Land Sale Agreement" has the meaning set forth in Section 2.3(r),

     "Law" shall mean any law, statute, code, regulation, ordinance, or rule
enacted or promulgated by any Governmental Authority and specifically includes
any Environmental Laws.

     "Leased Real Property" shall mean the real property and interests in real
property leased by the Seller listed on Schedule 2.2(a) and shall have the
meaning set forth in Section 4.6(b)

     "Litigation" has the meaning set forth in Section 4.9.

     "Maschhoff Entities" shall mean those entities set forth on the Guaranty
Agreement attached as Exhibit B. The Maschhoff Entities shall act as guarantors
of the obligations of the Buyer hereunder.

     "Material Adverse Effect" shall mean any event or circumstance that has a
material and adverse effect on the Purchased Assets or the Business, taken as a
whole, other than events or circumstances generally applicable to the swine
industry or changes in general economic conditions, or which materially impair
the ability of Seller to consummate the transactions contemplated by this
Agreement.


                                        4



     "Monsanto Genetics Agreements" shall mean collectively all those agreements
between Seller and Monsanto relating to genetics as follows: the Confidential
Artificial Insemination Stud and Processing Center Cooperation Agreement
(Southfield) dated October 6, 2000; the Confidential Artificial Insemination
Stud and Processing Center Cooperation Agreement (Northpoint) dated October 21,
1999; the De-Kalb Land O'Lakes Swine License Agreement dated January 29, 1997 as
revised and restated by that Revised and Restated MCG-Land O'Lakes Swine License
Agreement Multiplication Farm effective January 29, 1997; and the Outsource
Semen Production & Supply Agreement dated February 13, 2003.

     "New Dominion Agreements" shall mean those Swine Production Management
Agreements between Seller and New Dominion Management dated December 22, 2000
and December 29, 1998.

     "Net Working Capital" shall be calculated using the same line items as set
forth in Section 3.1.

     "Oklahoma Facilities" has the meaning set forth in Section 2.1(a).

     "Other Inventory" has the meaning set forth in Section 2.1(c).

     "Owned Real Property" shall mean the real property owned in fee simple by
the Seller listed on Schedule 2.1(d).

     "Permits" shall mean permits, tariffs, authorizations, licenses,
certificates, variances, interim permits, approvals, franchises and rights under
any Law or otherwise issued or required by any Governmental Authority and any
applications for the foregoing which are currently used by the Seller to engage
in the Business as currently conducted.

     "Permitted Encumbrance" shall mean (i) any encumbrance related to the Owned
Real Property and used in the operation of the Business that (A) is disclosed or
otherwise reflected in the Title Commitment or any surveys to be prepared on the
Owned Real Property and accepted by the Buyer pursuant to Section 7.2, and (B)
does not interfere materially with the ownership, use, operation or value of the
Owned Real Property in question, the Business or any of the Purchased Assets.

     "Personal Property Leases" has the meaning set forth in Section 2.2(b).

     "PIC" shall mean PIC USA, Inc. or Pig Improvement Company, Inc., as
appropriate in the context.

     "PIC Genetics Agreement" shall mean that Production Nucleus Multiplier
Agreement dated July 1, 2003, between Seller and PIC USA, Inc.


                                        5


     "Post-Transfer Period" has the meaning set forth in Section 7.4(a).

     "Pre-Transfer Period" has the meaning set forth in Section 7.4(a).

     "Property Taxes" has the meaning set forth in Section 7.4(a).

     "Purchase Price" has the meaning set forth in Section 3.1.

     "Purchase Price Adjustment" has the meaning set forth in Section 3.2.

     "Purchase Price Allocation" has the meaning set forth in Section 3.4.

     "Purchased Assets" has the meaning set forth in Section 2.1.

     "Real Property" shall mean the Owned Real Property and the Leased Real
Property.

     "Real Property Leases" has the meaning set forth in Section 2.2(a).

     "Release" shall mean, with respect to the Purchased Assets, any release,
spill, emission, leaking, migration or leaching on or into the Environment or
into or out of any property. Other than as occurs in the normal course of manure
application, "Release" shall also include any pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge or dispersal.

     "Seller" has the meaning set forth in the preamble hereto.

     "Swine Inventory" has the meaning set forth in Section 2.1(b).

     "Tax" (and, with correlative meaning, "Taxes" and "Taxable") shall mean any
federal, state, provincial, county, local or foreign taxes, charges, fees,
duties (including customs duties), levies or other assessments, including
income, gross receipts, net proceeds, ad valorem, turnover, real and personal
property (tangible and intangible), sales, use, franchise, excise, value added,
alternative minimum, add-on minimum, stamp, leasing, lease, user, transfer,
fuel, excess profits, occupational, interest equalization, windfall profits,
license, payroll, environmental, capital stock, disability, severance,
employee's income withholding, other withholding, unemployment and Social
Security taxes, which are imposed by any Governmental Authority, and such term
shall include any interest, penalties, fines or additions to tax attributable
thereto or associated therewith, and shall include any transferee or successor
liability in respect of Taxes (whether by contract or otherwise).

     "Tax Return" shall mean any report, return, statement, notice, form,
declaration, claim for refund or other document or information filed, submitted
to, or required to be supplied to a Governmental Authority in connection with
the determination, assessment, collection or payment of any Tax, including any
schedule or attachment thereto, and including any amendment thereof.

     "Title Commitment" has the meaning set forth in Section 7.2(a).

     "Title Company" shall mean Caddo County Abstract as set forth in Section
7.2(a).


                                        6



     "Transferred Employees" has the meaning set forth in Section 10.1.

     "Tyson Finishing Pig Inventory" shall mean all feeder pigs purchased under
the Tyson Feeder Pig Purchase Agreement dated December 19, 1997 and finished
under Grower Agreements.

     "Tyson Marketing Agreement" shall mean that certain agreement between
Seller and Tyson/IBP dated August 17, 2000 and titled Market Hog Supply
Agreement.

     "Tyson Feeder Pig Purchase Agreement" shall mean that certain agreement
between Tyson and Seller dated December 19, 1997 pursuant to which Seller
purchases feeder pigs from Tyson.

     "Tyson VMR Agreement" shall mean that certain agreement between Tyson/IBP,
Inc. and Seller dated August 17,2000 and titled Evergreen VMR Procurement
Agreement.

                                   ARTICLE II

                     SALE AND PURCHASE OF PURCHASED ASSETS;
                        ASSUMPTION OF ASSUMED OBLIGATIONS

     2.1 Purchased Assets. Subject to and upon the terms and conditions set
forth in this Agreement, on the Closing Date, but effective as of the Effective
Time and except for the Excluded Assets, the Seller shall sell, assign, convey,
transfer and deliver to the Buyer, and the Buyer shall purchase, acquire and
take assignment and delivery of all of the right, title and interest of the
Seller in and to the assets owned or leased by Seller and used exclusively in
the Business, free and clear of all encumbrances other than Permitted
Encumbrances, as follows:

          (a) Equipment and Fixed Assets. The tangible personal property,
     including the buildings, structures, improvements, facilities, fixtures,
     machinery, equipment, fixed assets, furniture, tools, automobiles, trucks,
     loaders and other vehicles, maintenance equipment and materials and other
     tangible personal property and any replacements thereof acquired prior to
     the Effective Time, in each case, that is or are owned by the Seller and
     used, or intended to be used, in the operation of the Business or the
     operation, repair or maintenance of its Oklahoma swine facilities commonly
     referred to as the Lone Mound, Weathers Sow Farm, Wright Canyon East Sow
     Farm, Wright Canyon West Sow Farm, Randolph Sow Farm, and the Randolph
     Nursery (such facilities may be referred to collectively hereinafter as the
     "Oklahoma Facilities") and set forth on Schedule 2.1(a) (collectively, the
     "Equipment and Fixed Assets");


                                        7


          (b) Swine Inventory. All of the swine owned by Seller as of the
     Effective Time, including the Tyson Finishing Pig Inventory and the
     Countyline Finishing Pig Inventory, and all gilts, unborn animals, farrowed
     pigs, nursery pigs, finishing pigs, and the sows and boars comprising
     Seller's breeding stock, as more completely described in Schedule 2.1(b)
     (collectively, the "Swine Inventory");

          (c) Other Inventory. The feed, medicine and other miscellaneous
     supplies and materials, used or to be used in the operation of the Business
     as more completely described in Schedule 2.1(c) (collectively, the "Other
     Inventory");

          (d) Owned Real Property. The Owned Real Property upon which the
     Oklahoma Facilities are located, which is described in Schedule 2.l(d),
     together with all appurtenant rights and easements thereunto and all owned
     buildings, structures, improvements, plants, facilities, and fixtures
     located thereon;

          (e) Information and Records. To me extent legally transferable, all
     books and records used, or intended to be used, in the operation of the
     Business or relating to the Transferred Employees ("Books and Records")
     that are in the Seller's care, custody or control, including, without
     limitation, accounting records, employee records, and originals of all
     written Contracts (if Seller does not have originals, a copy will be
     provided) and copies of Permits;

          (f) Membership Interest in GK/LOL, LLC. Seller's unencumbered fifty
     percent (50%) Membership Interest in GK/LOL, LLC, a Minnesota limited
     liability company, including its governance rights and financial rights;

          (g) Accounts Receivable and Prepaids. The categories of accounts
     receivable and prepaid accounts as described in Schedule 3.1 (the "Accounts
     Receivable and Prepaids");

          (h) Permits. Subject to the need to obtain any required consent from
     any third party, all Permits and applications for Permits that are legally
     capable of being transferred and which are utilized by Seller to own, lease
     and/or operate the Purchased Assets or to conduct the Business as presently
     operated and conducted. Buyer shall pay the transfer fees, if any, that are
     required to transfer any Permit (to the extent it is transferable) to
     Buyer;

          (i) Rights Against Third Parties. All rights against suppliers
     (including Land O'Lakes Purina Feed LLC for feed products) under warranties
     covering any of the


                                       8



     Swine Inventory, Other Inventory or Equipment and Fixed Assets, and all
     claims against third parties unrelated to Seller relating to the Purchased
     Assets, whether choate or unchoate, known or unknown, contingent or
     non-contingent;

          (j) Goodwill. All goodwill related to the Purchased Assets; and,

          (k) Software and Hardware. The software and hardware as described in
     Schedule 2.1(k) (the "Software and Hardware").

     All of the foregoing assets described in this Section 2.1, together with
the Assigned Contracts described in Section 2.2, but excluding the Excluded
Assets, are referred to herein collectively as the "Purchased Assets."

     2.2 Assignment of Contracts. Subject to the terms and conditions of this
Agreement and the need to obtain any required consent from any third party, on
the Closing Date and as of the Effective Time, the Seller or its affiliates
shall assign and transfer to the Buyer, all of its right, title and interest in
and to, and the Buyer shall assume all of the obligations of the Seller under
the following Contracts and unexpired leases (collectively, the "Assigned
Contracts"):

          (a) Real Property Leases. All leases to or by the Seller of Real
     Property used in the Business and listed on Schedule 2.2(a) (collectively,
     the "Real Property Leases");

          (b) Personal Property Leases. All leases to or by the Seller of
     personal property used exclusively in the Business including, but not
     limited to, those listed on Schedule 2.2(b) (collectively, the "Personal
     Property Leases");

          (c) Grower Agreements. All Contracts for the care and production of
     swine for the Business, whether finishing Contracts, wean-finish Contracts,
     nursery Contracts, farrow feeder pig Contracts, farrow-wean pig
     Contracts, or boar stud Contracts, and listed on Schedule 2.2(c),
     (collectively, the "Grower Agreements");

          (d) The Tyson Marketing Agreement. The Tyson Marketing Agreement;

          (e) Genetics Agreements. The PIC Genetics Agreement and the Monsanto
     Genetics Agreements;

          (f) Hog Slat Maintenance Agreement. The Hog Slat Maintenance
     Agreement;

          (g) Feed Purchase Agreements with Locals. Those feed purchase
     agreements with local cooperatives listed on Schedule 2.2(g);


                                       9


          (h) GK/LOL, LLC Agreements. Those contracts between LOL and GK/LOL,
     LLC listed on Schedule 2.2(h);

          (i) Other Contracts. All Contracts for the purchase of feed products,
     veterinary supplies and services, hauling services, and all other
     miscellaneous Contracts, in any case which relate exclusively to operation
     of the Business with reference to the Purchased Assets to which the Seller
     is a party, including, but not limited to those listed on Schedule 2.2(i);

          (j) New Dominion Agreements. The New Dominion Agreements;

          (k) Camborough-22 Closed Herd Multiplier Agreement. The Camborough-22
     Closed Herd Multiplier Agreement; and

          (l) Waste Disposal Agreements. Those Waste Disposal Agreements listed
     on Schedule 2.2(1).

     2.3 Excluded Assets. Seller shall retain and not sell, transfer or assign
to Buyer, and Buyer shall not purchase or acquire from Seller any of the
following assets related to the Business ("Excluded Assets") all as more
particularly described on Schedule 2.3 attached hereto and made a part hereof:

          (a) All Cash, including any cash in GK/LOL, LLC, and all accounts
     receivable and prepaids not described in Schedule 3.1;

          (b) All intellectual property and all rights thereunder including, but
     not limited to, the LAND O LAKES brand;

          (c) Any "Cost Plus" agreements Seller may have with swine producers;

          (d) Any Swine Aligned Feeder Pig Supply Agreements between Seller and
     various local cooperatives, including the accounts receivable and Contract
     prepayments;

          (e) Tax refunds;

          (f) All software and any license agreements related thereto that are
     not listed as a Purchased Asset;

          (g) FMR, Inc;

          (h) Countyline farrow-feeder pig operation in Ohio;

          (i) Land owned by Seller in the Oklahoma panhandle and the Kreihbel
     property in Caddo County Oklahoma;

          (j) Boars owned by Monsanto in Seller's boar stud facilities;

          (k) Equipment owned by Monsanto in Seller's boar stud facilities;


                                       10



          (l) The Fort Dodge, Iowa office facilities, including all office
     furniture and equipment, except that Equipment listed on Schedule 2.1(a);

          (m) All current hedge positions, except those positions subject to
     Exhibit H;

          (n) Accounts receivables through the Effective Time associated with
     the monthly settlement under the Tyson Marketing Agreement;

          (o) The Tyson Feeder Pig Purchase Agreement;

          (p) Bacon Acres farrow-feeder pig operation in Iowa;

          (q) Any Indiana operations;

          (r) The assets subject to, and the Land Sale Agreement itself, which
     is that contract for the sale of excess land associated with the Lone Mound
     Multiplier Unit between Seller and Dean Smith dated September 8, 2004; and

          (s) The Tyson VMR Agreement.

     2.4 Assumed Obligations. On the Closing Date, but effective as of the
Effective Time, and except to the extent subject to Seller's obligation to
indemnify for breach of any representation or warranty pursuant to Article XIII
hereof, the Buyer shall assume, and agree to discharge, all obligations of the
Business or associated with the Purchased Assets, including the following
obligations of the Seller (the "Assumed Obligations"):

          (a) Contract Obligations. The obligations of the Seller under the
     Assigned Contracts; provided, however, that the Buyer shall not assume any
     obligation arising as a result of the Seller's breach of, or failure to pay
     in the ordinary course in accordance with, the terms of any Assigned
     Contract prior to the Closing Date. Buyer shall pay the transfer fees, if
     any, that are required to transfer any Assigned Contract to Buyer;

          (b) Transferred Employees. The obligations with respect to Transferred
     Employees but only to the extent expressly provided pursuant to Section 5.7
     and Article X;

          (c) Accounts Payable and Accrued Expenses. The categories of accounts
     payable and accrued expenses, as described in Schedule 3.1 ("Accounts
     Payable and Accrued Expenses");

          (d) Guarantees. The obligations of the Seller to guaranty the loans
     listed on Schedule 2.4(d) as documented in Exhibit F;

          (e) Environmental Law. Liabilities, obligations, and commitments of
     Seller relating to any Environmental Law to the extent relating to the
     Purchased Assets or


                                       11


     arising out of the operation of the Business excluding the Excluded Assets
     and Excluded Obligations;

          (f) Miscellaneous. A Payment Agreement entered into with a lessee,
     Lionel Coffey, with respect to back rent due and payable to Seller as of
     March 15, 2005 amounting to $6,857.94. The Double O nursery operation in
     Oklahoma is in default of its contract for failure to provide propane for
     the facilities and failure to maintain facilities in adequate condition.
     Seller has purchased $2778.31 in propane for the facilities which funds are
     listed as receivables and will be deducted from the producer's final
     contract payments with interest. Seller has discussed this situation with
     the grower but has not delivered a formal default notice. This Grower
     Contract expires in August 2005.

     2.5 Excluded Obligations. The Buyer does not assume (or intend to assume)
or agree to pay, perform, fulfill or discharge any of the following obligations,
which shall remain with Seller;

          (a) Excluded Assets. The Buyer is not assuming any obligations of the
     Seller that relate to the Excluded Assets;

          (b) Tax Liability. Except as provided in Section 7.4(a), the Buyer is
     not assuming any Tax liability of any kind of the Seller, including any Tax
     liabilities arising, imposed or assessed in respect of the Seller's
     operation of the Business or its ownership of the Purchased Assets for or
     applicable to periods ending on or before the Effective Time (such as Taxes
     on or measured by income, sales and use Taxes, liabilities for withheld
     federal and state income Taxes and employee or employer Federal Insurance
     Contribution Act Taxes, or as a result of me transactions contemplated
     herein);

          (c) Employees. Except to the extent expressly provided pursuant to
     Section 5.7 and Article X, the Buyer is not assuming any obligations for
     personal, sick and vacation time accruals, workers' compensation accruals,
     any liability arising out of or relating to a Seller employee grievance
     whether or not such employee is a Transferred Employee, liabilities, and
     obligations of Seller to any Employee under any health, life or disability
     insurance plans prior to the Effective Time, including COBRA obligations
     (except for those COBRA obligations set forth in Article X) to any
     employees whom do not accept employment with Buyer, variable compensation
     obligations for Transferred Employees for pension plan obligations of
     Seller to Transferred Employees, pre and post retirement welfare benefit
     obligations of Seller to Transferred Employees, severance,


                                       12



     termination, or otherwise to any employees (present or former), agents or
     independent contractors of the Seller;

          (d) Debt. The Buyer is not assuming any obligations of the Seller for
     any indebtedness for borrowed money;

          (e) Litigation. The Buyer is not assuming any obligations, liabilities
     or losses with respect to any litigation or claims to the extent related to
     Excluded Assets and Excluded Obligations and any litigation or claims filed
     against or, to Seller's Knowledge, threatened against Seller prior to the
     Effective Time;

          (f) Tyson Marketing Agreement Payables. Accounts payable through the
     Effective Time associated with the monthly settlement under the Tyson
     Marketing Agreement;

          (g) Fees and Expenses. The Buyer is not assuming any obligations of
     the Seller for fees and expenses incurred in connection with the
     negotiation, execution, performance and delivery of this Agreement and the
     transactions contemplated hereby, including, without limitation, the fees
     and expenses of counsel and investment bankers; and

          (h) General Liability Insurance. The Buyer is not assuming any
     accruals for general liability insurance.

     All of the foregoing are referred to herein collectively as the "Excluded
Obligations."

     2.6 Schedule Updates. To the extent Purchased Assets listed on any schedule
referred to in this Article II are sold, transferred, or otherwise disposed of
or terminated in the ordinary course of business prior to the Closing Date and
in accordance with Section 6.2, such Purchased Assets shall be deemed to be
deleted from such schedules and any replacement asset shall be deemed to be
added to such schedules. To the extent Seller is reasonably able, Seller shall
provide Buyer with updated Schedules at Closing reflecting any changes as
referenced above.

                                  ARTICLE III

                           PURCHASE PRICE AND PAYMENT

     3.1 Purchase Price; Earnest Money Deposit. In consideration for the sale,
assignment, conveyance, transfer and delivery of the Purchased Assets to the
Buyer, the Buyer shall assume the Assumed Obligations and shall, subject to
Section 3.2 below, pay to Seller an amount equal to Forty-Seven Million Nine
Hundred Seventy Seven Thousand One Hundred


                                       13


Fifty Dollars ($47,977,150.00) (the "Purchase Price"). The Purchase Price is
based on the Seller's net working capital as of July 31, 2004, as calculated,
described and defined in Schedule 3.1 (hereinafter, the "Net Working Capital
Target").

     Upon the execution hereof, Buyer shall deposit with Seller the Earnest
Money Deposit. Upon Closing, the Earnest Money Deposit plus interest at five
percent (5%) per annum shall be credited against the Purchase Price. In the
event this transaction does not close due to a breach hereunder by Buyer, Seller
shall retain such Earnest Money Deposit. In the event this transaction does not
close due to any reason other than breach by Buyer, then Seller shall promptly
return the Earnest Money Deposit plus interest at five percent (5%) per annum to
Buyer, and, if the transaction does not close due to Seller's failure to obtain
any necessary consents, then in addition to return of the Earnest Money Deposit
plus interest referenced above, Seller shall reimburse Buyer for its costs and
expenses in the amount of One Hundred Thousand Dollars ($100,000.00) herein
"Buyer's Costs,"

     3.2 Purchase Price Adjustment. The Purchase Price will be adjusted
("Purchase Price Adjustment") for any changes as of the Closing Date, upward or
downward, to the Net Working Capital Target on a dollar for dollar basis. The
Net Working Capital as of Closing Date shall be calculated in the same manner as
was the Net Working Capital Target. If the Net Working Capital as of the Closing
Date is greater than the Net Working Capital Target, then Buyer shall pay such
difference to Seller. If the Net Working Capital as of the Closing Date is less
than the Net Working Capital Target, then Seller shall pay such difference to
Buyer. Buyer shall calculate the Net Working Capital as of the Closing Date no
later than thirty (30) days after Closing and immediately shall provide such
calculation and supporting materials to Seller. After receipt, Seller shall have
thirty (30) days to review such calculation. If the parties are in agreement,
the amount due shall be immediately paid to the appropriate party with interest
at five percent (5%) per annum. If a dispute arises, such dispute shall be
submitted to a mutually acceptable independent accounting referee within thirty
(30) days. If the parties cannot agree upon an independent accounting referee,
each party shall, within thirty (30) days, select an independent accountant. The
two selected independent accountants shall select an independent accounting
referee within ten (10) days. The decision of such accounting referee shall be
rendered within thirty (30) days and shall be binding upon the parties. The
amount due as determined by the accounting referee, plus interest calculated at
the rate of eight percent per annum calculated from the Closing Date, shall be
due and payable within five Business Days of


                                       14



the accounting referee's decision. The parties agree to bear the cost of the
accounting referees equally.

     The Purchase Price Adjustment shall be paid in accordance with Section 3.3.

     3.3 Payment Process. On the Closing Date, the Buyer shall pay to Seller, by
wire transfer of immediately available funds to accounts designated by Seller,
an amount equal to the Purchase Price as adjusted per Section 7.4(b) less the
Earnest Money Deposit plus accrued interest. Any amounts due under Section 3.2
shall be paid by wire transfer of immediately available funds to an account or
accounts designated by the party to whom the funds are owed.

     3.4 Allocation of Purchase Price. The Seller and the Buyer mutually agree
to make their respective allocations of the Purchase Price in accordance with
Section 1060 of the Code. The Seller and the Buyer will endeavor in good faith
to agree, prior to the Closing Date or as soon as practical following the
Closing Date, on a reasonable allocation of the Purchase Price (as determined
for federal income tax purposes, in accordance with the provisions of the Code,
including Sections 453 and 1274 of the Code, as applicable) among the Purchased
Assets ("Purchase Price Allocation"). The Purchase Price Allocation shall be
evidenced by a written schedule signed and dated by the Seller and the Buyer, in
the form attached as Schedule 3.4. The Seller and the Buyer shall each file IRS
Form 8594 at the time and in the manner as required by Treasury Regulation
Section 1.1060-1 consistent with the Purchase Price Allocation. The Seller and
the Buyer shall be bound by the Purchase Price Allocation in preparing and
filing their respective tax returns and agree to allocate any adjustment to the
Purchase Price as determined for federal income tax purposes in a manner
consistent with the Purchase Price Allocation. The Seller and the Buyer mutually
agree to provide each other with such assistance as is reasonably necessary for
such other party to satisfy its reporting obligations under Section 1060 of the
Code.


                                       15


                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

     EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH HEREIN, THE PURCHASED ASSETS ARE
BEING SOLD AND TRANSFERRED TO BUYER ON AN "AS-IS, WHERE IS" BASIS WITHOUT ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED. The Seller represents and
warrants as of the date hereof and as of the Closing Date, and only with respect
to the Business and the Purchased Assets, as follows:

     4.1 Existence and Good Standing. The Seller is a cooperative corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota. The Seller has all requisite power and authority to own,
lease and operate the Purchased Assets and to conduct the Business as it is
presently conducted and is duly qualified to transact business and is in good
standing in Illinois, Iowa, Minnesota, Missouri, Kansas, Oklahoma and each
jurisdiction in which the Purchased Assets are owned, leased or operated by it
or where the nature of the operation of the Business requires the Seller to
qualify to transact business, except where the failure to be so qualified and in
good standing would not reasonably be expected to have a Material Adverse
Affect.

     4.2 Due Authorization. The Seller has, or will have on the Closing Date,
all requisite power and authority to execute, deliver and perform this Agreement
and the Ancillary Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Seller of this Agreement and the Ancillary Agreements to
which it is a party and the consummation by the Seller of the transactions
contemplated hereby and thereby have been or will be duly and validly authorized
by all necessary action on the part of the Seller, and except as set forth in
Article IX, no other actions or proceedings on the part of the Seller is
necessary to authorize the execution, delivery and performance by the Seller of
this Agreement and by the Seller of the Ancillary Agreements to which it is a
party or the transactions contemplated hereby and thereby. The Seller has duly
and validly executed and delivered this Agreement and has duly and validly
executed and delivered (or prior to or at the Closing shall duly and validly
execute and deliver) the Ancillary Agreements to which it is a party. This
Agreement constitutes, and upon execution and delivery thereof (assuming due
execution and delivery thereof by all other parties thereto) the Ancillary
Agreements to which the Seller is a party shall constitute, legal, valid and
binding obligations of the Seller, enforceable against the Seller in accordance
with their respective terms, except as may


                                       16



be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization
or similar laws in effect which affect creditors' rights generally, or (b)
principles of equity including legal or equitable limitations on the
availability of specific remedies.

     4.3 Absence of Conflicts. Neither the execution and delivery of this
Agreement nor any of the Ancillary Agreements to which the Seller is a party nor
the consummation of any of the transactions contemplated hereby or thereby will
violate, conflict with, or result in a breach of or give any person the right to
declare a default or to exercise any remedy under, or to accelerate the maturity
or performance of, or payment under, or to cancel, terminate or modify the
terms, conditions or provisions of (a) the charter, by-laws or other
organizational documents of the Seller; (b) any judgment, decree or order of any
Governmental Authority to which the Seller is subject or by which the Seller is
bound; (c) any other contracts or agreements by which Seller is bound; or (d)
any requirements of Laws applicable to the Seller.

     4.4 Absence of Changes or Events. From July 31, 2004, through the date of
this Agreement and as of the Closing Date, and except for the Land Sale
Agreement referenced in Section 2.3(r) and the sale of the Johnson farrowing
herd sold to Deer Ridge SEW Feeder Pigs, LC on December 21, 2004, and the
amendment approved by Buyer to amend Section 13 of the GK/LOL, LLC Operating and
Member Control Agreement, the Business has been conducted by Seller in the
ordinary course as defined in Section 6.2. Without limiting the generality of
the immediately preceding sentence, from July 31, 2004, through the date of this
Agreement and as of the Closing Date, the Business has not:

          (a) Suffered any change, damage or destruction that has resulted in
     the discontinuance of operations or has otherwise resulted in a Material
     Adverse Effect;

          (b) Made any change in the method of accounting or accounting practice
     or policy; and/or

          (c) Modified, amended, or terminated, prior to their expiration dates,
     any of the Assigned Contracts in any material respect, except for the
     termination of the Johnson Farrow to Feeder Pig Contract and the amendment
     to the GK/LOL Operating and Member Control Agreement.

     4.5 Business Financial Statements. Attached hereto as Schedule 4.5 are
true, complete and correct, in all material respects, pro forma copies of
Business Financial Statements dated as of December 31, 2004, and pro forma
income statements for the years 2000, 2001, 2002 and 2003.


                                       17


4.6  Title to Assets.

     (a) Except as set forth on Schedule 4.6(a) and other than Owned Real
Property and the Leased Real Property, which are addressed in Section 4.6(b),
the Seller has, or will have at Closing, good, valid and marketable title to
all of the Purchased Assets and valid leasehold interests in, or other rights to
use, all of the Purchased Assets, in each case, free and clear of all
encumbrances, subject only to the Permitted Encumbrances.

     (b) Schedules 2.l(d) and 2.2(a) respectively set forth a complete list of
all Owned Real Property and a complete list of all interests in real property
leased by Seller and used in the Business (the "Leased Real Property"). The
Seller has, or at Closing will have, (a) good, valid and marketable fee simple
title to the Owned Real Property except for the Permitted Encumbrances set
forth as Schedule 4.6(b) (such Schedule to be completed at Closing); and (b)
valid leasehold interests in the Leased Real Property, in each case, free and
clear of all encumbrances, except for the Permitted Encumbrances.

     (c) Seller has not received any notice that there is an existing or
proposed plan to modify or realign any street or highway or any existing or
proposed eminent domain proceeding that would result in the taking of all or any
part of any facility on the Owned Real Property or that would prevent or hinder
the continued use of any facility on the Owned Real Property as heretofore used
in the conduct of the Business of Seller.

4.7  Compliance with Laws; Permits.

     (a) Except as set forth on Schedule 4.7(a), and since January 1, 2000, the
Seller has not received any notice that it has failed to conduct the Business
and maintain the Purchased Assets in material compliance with all applicable
Laws and applicable Permits nor to Seller's Knowledge has any event or
circumstance occurred as of the date of this Agreement and as of Closing Date
that would constitute or result in material noncompliance with any applicable
Laws or Permits.

     (b) To Seller's Knowledge, the Seller owns, holds, possesses or lawfully
uses in the operation of the Business all Permits which are material and
necessary to conduct the Business as currently conducted by the Seller or to own
and use the Purchased Assets as currently used in the Business. Schedule 4.7(b)
sets forth a true, correct, and complete list of all material Permits currently
used in the Business.


                                       18



     4.8  Taxes.

          (a) As of the date of Closing, Seller has filed or caused to be filed
     all Tax Returns which are required to be filed by Seller on or prior to the
     date of this Agreement, and has paid all Taxes which have become due
     pursuant to such Tax Returns or pursuant to any assessment which has become
     payable on or prior to the date hereof, except for any Taxes or assessments
     which are being contested in good faith by appropriate proceedings.

          (b) Seller shall file or cause to be filed all Tax Returns which are
     required to be filed by Seller as a result of the operation of Business
     through the Effective Time and will pay all Taxes due on such Tax Returns
     or as determined to be due on such Tax Returns by a final decision of any
     taxing authority and all Taxes pursuant to any assessment that relate to
     the timeframe up to the Effective Time.

     4.9 Litigation. Except for those matters described on Schedule 4.9, there
is no legal, administrative or arbitration proceeding, suit or action of any
nature ("Litigation") relating to the Business, any Purchased Assets, the
Assumed Obligations or the transactions contemplated by this Agreement, pending,
or, to the Knowledge of the Seller, threatened against the Seller, by or before
any Governmental Authority or by or on behalf of any third party. To Seller's
Knowledge no event or circumstance, other than events or circumstances that
occur in the normal operation of the Business, exists that is reasonably likely
to give rise to or serve as the basis for the commencement of any litigation or
proceeding related to the Purchased Assets, Assumed Obligations, and Business.
Schedule 4.9 sets forth a true, correct, and complete list of all material
Litigation against the Seller relating to the Business, any Purchased Asset, any
Assumed Obligations, or the transactions contemplated hereby.

     4.10 Swine Inventory. Other than the PRRS outbreak in December 2004 and
January 2005 at the Archery and Bald Eagle, Illinois and Brentwood, Missouri
facilities, since July 31, 2004, there has been no material change to the feed
protocol, health protocol, or genetic sources of the Swine Inventory.

     4.11 Contracts.

          (a) Other than purchase orders or service orders placed in the conduct
     of business as defined in Section 6.2, the Assigned Contracts and the
     Schedules thereof referenced in Section 2.2 and the Assumed Obligations
     referenced in Section 2.4(a) collectively contain a complete list of
     Assigned Contracts and Assumed Obligations


                                       19


     related to the Assigned Contracts that by any of their individual terms can
     reasonably be expected to require future payment by or to Seller of $50,000
     or more, or in the aggregate $250,000, or which call for delivery or
     performance on a date more than one year from the date of this Agreement.
     Such Assigned Contracts may be referred to herein as "material Assigned
     Contracts". Seller has received no notice that any party to any of the
     material Assigned Contracts intends to cancel or terminate such agreements
     and to Seller's Knowledge, there is no material default or event that with
     notice and/or lapse of time would constitute a material default by any
     party to any of the Assigned Contracts, and, to Seller's Knowledge, said
     material Assigned Contracts are in full force and effect and valid and
     enforceable in accordance with their terms. Further to Seller's Knowledge
     no material event or circumstance exists that may contravene, conflict with
     or result in a breach of, or give Seller or any other party the right to
     declare a default or exercise any remedy under, or to accelerate the
     maturity or performance of or payment under, or to cancel, terminate or
     modify, any Assigned Contract.

          (b) To Seller's Knowledge, Seller has at all times been in material
     compliance with all applicable terms and requirements of the Assigned
     Contracts and the terms of any Contracts related to Assumed Obligations.

          (c) The Camborough - 22 Closed Herd Multiplier Agreement dated April
     1, 2000 has been terminated. Buyer has received a copy of the termination
     letter sent to PIC regarding this agreement.

          (d) Seller owned the property that is subject to the indemnity
     provisions of Section 8.2 of the Option to Purchase Agreement between
     Seller and New Dominion First Partnership, Inc. dated August 20, 1999, from
     December 30, 1998 to August 20, 1999. To Seller's Knowledge there are no
     facts or circumstances known to the Seller that would result in Seller or
     Buyer having to indemnify any party under the agreement referenced herein
     in this Section 4.11(c).

          (e) With respect to the Grower Contracts, to Seller's Knowledge, no
     notification has been received which would change the addresses for notice
     purposes as set forth in Schedule 2.2(c) or which would alter the
     termination dates as set forth in Schedule 2.2(c).

          (f) All Assigned Contracts, excluding the Camborough-22 Closed Herd
     Multiplier Agreement dated April 1, 2000, are assignable by Seller and will
     be properly


                                       20



     and validly assigned to Buyer on the Closing Date, subject to Section 6.1.
     As of the Closing Date, Seller shall have valid and proper written consents
     to all Assigned Contracts that require consent and will deliver same to
     Buyer, subject to Section 6.1.

     4.12 Employee Matters.

          (a) Schedule 4.12(a) sets forth a complete and correct list of all
     Employee Plans, summaries of which have been delivered or made available to
     the Buyer.

          (b) Schedule 4.12(b), sets forth a complete and correct list of all
     Employees, together with each Employee's name, position, location, salary
     or hourly rate and hire date and all accrued vacation, sick leave, wages or
     other compensation in respect of each Employee. Said Schedule shall be
     updated and be complete and accurate at Closing.

          (c) Seller has not violated the Worker Adjustment and Retraining
     Notification Act (the "WARN Act") or any similar state or local Law during
     the ninety (90) day period prior to the date of this Agreement and as of
     the Closing Date.

     4.13 Environmental Matters.

          (a) Except as set forth on Schedule 4.13, with respect to the Business
     and the Purchased Assets, and since January 1, 2000, the Seller has
     received no written notices, warnings, inquiries or other communication
     that it has not been in compliance with Environmental Laws. To the
     Knowledge of Seller, Seller has been and is in material compliance with and
     is not otherwise liable under any Environmental Laws or regulations with
     respect to the Business or the Purchased Assets.

          (b) Except as set forth on Schedule 4.13, to the Knowledge of Seller,
     there has been no unlawful Release of any Hazardous Material at or from the
     Purchased Assets. Except as set forth in Schedule 4.13, to the Knowledge of
     Seller, Seller, has not generated, treated, stored, handled, disposed,
     transferred, produced or processed any Hazardous Material or any solid
     waste at the Purchased Assets, except in material compliance with all
     applicable Environmental Laws.

          (c) To the Knowledge of Seller, there are no pending or threatened
     claims resulting from or arising under or pursuant to any Environmental Law
     with respect to or affecting any Purchased Assets or the Business.

          (d) Seller has delivered to Buyer true and complete copies and results
     of any reports, studies, analyses, tests or monitoring possessed or
     initiated by Seller pertaining to Hazardous Materials in, on, or under the
     Owned Real Property.


                                       21


          (e) Schedule 4.13 is accurate and complete as of the date of this
     Agreement and will be accurate and complete as of the Closing Date.

          (f) To Seller's Knowledge, there has not been any contamination of any
     drinking water as a result of the operation of the Business.

          (g) With reference to the Lone Mound facility, although not currently
     operating under a CAFO permit Seller has been and will be at Closing in
     compliance with all CAFO permit requirements.

     4.14 Labor Matters. The Seller has not agreed to recognize any union or
other collective bargaining unit with respect to the Business, nor to Seller's
Knowledge has any union or other collective bargaining unit been certified as
representing any Employees. Except as set forth on Schedule 4.14, for the past
one year from the date hereof, the Seller, with respect to the Business: (i) has
no, and has not had any, unfair labor practice charges or complaints pending to
the Knowledge of the Seller, or threatened, to the Knowledge of Seller, against
it before the National Labor Relations Board; (ii) has no, and has not had any
charges pending or, to the Knowledge of the Seller, threatened against it before
the Equal Employment Opportunity Commission or any state or local agency
responsible for the prevention of unlawful employment practices; (iii) has no,
and has not had any investigations, charges or claims made or pending or, to the
Knowledge of the Seller, threatened against it by the Occupational Safety and
Health Administration or any comparable state or local agency; (iv) has no, and
has not had any labor strike, slowdown or work stoppage that occurred or was
threatened against it; and (v) has not had Knowledge of the occurrence of any
union organizational effort or representation petition with respect to any
Employees.

     4.15 Accounts Receivable. All Accounts Receivable represent valid
obligations arising from sales actually made in the ordinary course of business
and were billed in the ordinary course of business, provided that nothing stated
herein shall constitute a guaranty of collection of such receivables.

     4.16 Other Inventory. The Other Inventory (a) was acquired or produced and
has been maintained in the ordinary course of the conduct of the Business and;
(b) is of a quality materially similar to prior inventory of the Business that
has been used.

     4.17 Books and Records. The Books and Records accurately and fairly
reflect, in reasonable detail, the bona fide transactions with respect to the
Business and have been maintained in accordance with sound business practices.
Since the quarter ending September 30,


                                       22



2002, the Books and Records have been maintained in accordance with the
requirements of Section 13(b)(2) of the Exchange Act, including the maintenance
of an adequate system of internal controls.

     4.18 Membership Interest in GK/LOL.

          (a) Seller has made available the organizational and other documents
     in its possession pertaining to GK/LOL, LLC. Seller has received no notice
     of default under any such documents and to Seller's Knowledge there is no
     material default or event that with notice and/or lapse of this would
     constitute a material default to any such documents. As of December
     31, 2004, GK/LOL, LLC was in good standing in the state of Minnesota.

          (b) The financial and governance rights of Seller for the period from
     the creation of GK/LOL, LLC through the Closing Date, have remained
     unchanged. No additional capital contributions were made by any members to
     GK/LOL, LLC after the initial capital contribution.

          (c) As of the date of this Agreement, Seller has received a written
     consent from Gold Kist, Inc., the only other member of GK/LOL, LLC, to
     assign all of Seller's interest in GK/LOL, LLC to Buyer including Seller's
     governance rights and financial rights. Said consent also includes the
     consent of Gold Kist, Inc. to the assignment by Seller of any Contracts
     between Seller and GK/LOL, LLC to Buyer. Seller has provided Buyer with a
     copy of said consent.

     4.19 Guarantees.

          (a) As of the date hereof, Seller has received no demand to pay any
     amount under any of the Guarantees, nor, to Seller's Knowledge, has any
     such demand been threatened.

          (b) Schedule 2.4(d) accurately reflects the guarantee exposure cap as
     of December 31, 2004, and that as of the Closing Date, Seller will provide
     an updated Schedule 2.4(d) and Seller acknowledges that the same shall
     accurately reflect the outstanding guarantee exposure cap as of the Closing
     Date.

          (c) All loans referenced on Schedule 2.4(d) are loans related to hog
     production facilities that are part of the Business and all debtors under
     these loans are operating under a current, valid and enforceable production
     contract with Seller and said production contracts are included in the
     Assigned Contracts.


                                       23


          (d) No loans on Schedule 2.4(d) are currently in default or have been
     in material default since inception. Seller makes payments on all loans to
     LOL Finance Co. per a valid and enforceable Assignment of Contract Payments
     except those loans as listed on Schedule 4.19(d)(i). With reference to the
     loans listed on Schedule 2.4(d), LOL Finance Co. holds an Assignment of
     Contract Payments that it can activate except as to those loans listed on
     Schedule 4.19(iii). All loans, except as listed on Schedule 4.19(d)(iii),
     are term loans and no future advances are permissible under the terms of
     the loan and the loan documents do not contain any provisions that would
     allow the guaranteed amount to increase at any time from that number as
     listed on Schedule 2.4(d). The loans on Schedule 4.19(d)(iv), although not
     term loans, include a line of credit with a maximum aggregate of
     $610,000.00.

     4.20 Equipment and Fixed Assets. The Equipment and Fixed Assets, and the
owned buildings, structures, improvements, plants, facilities and fixtures
located on the Owned Real Property, are in general working order in all material
respects, reasonable wear and tear and depreciation because of age excepted.
Schedule 2.1 (a) is complete and accurate in all material respects.

     4.21 Insurance. The Seller has in place insurance policies with respect to
the Purchased Assets, in amounts and types that are customary in the industry
for similar assets, and all such policies are in full force and effect and will
be in full force and effect through the Effective Time.

     4.22 No Undisclosed Liabilities. The Business does not have any debt,
liability, or obligation of any nature, whether known or unknown, or fixed,
absolute, accrued, contingent, or otherwise, required by Generally Accepted
Accounting Principles to be shown on the face of a balance sheet, except those
which (i) are accrued or reserved against in the Books and Records, (ii) have
been specifically disclosed in the Schedules hereto by reference to the specific
section of this Agreement to which such disclosure relates, or (iii) have been
incurred since December 31, 2004 in the ordinary course of business in amounts
and for terms consistent, individually and in the aggregate, with Seller's past
practices (none of which results from, arises out of, relates to, or was caused
by any breach of contract, breach of warranty, tort, infringement or violation
of law).

     4.23 Schedules. As of the date of this Agreement and as of the Closing
Date, all Schedules attached hereto are accurate and complete in all material
respects.


                                       24



     4.24 Waste Disposal Agreements. The Waste Disposal Agreements have been
recorded. As of the Closing Date, and subject to Section 6.1, Seller has
received a valid and proper written waiver of any rights of first refusal under
any Waste Disposal Agreement and consents, to assignment, if required, and
delivered copies of all waivers and consents to Buyer.

     4.25 Misrepresentations and Omissions. No representation, warranty,
covenant or statement by the Seller in this Agreement, the Ancillary Agreements,
the Schedules attached hereto, and the certificates or other documents furnished
or to be furnished to the Buyer pursuant hereto contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not false or materially misleading.

                                    ARTICLE V

                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The Buyer represents and warrants as of the date hereof and as of the
Closing Date:

     5.1 Existence and Good Standing. The Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Illinois. The Buyer is, or will be prior to Closing, duly qualified to
transact business and is or will be prior to Closing in good standing in each
jurisdiction in which the nature of the assets owned, leased or operated by the
Buyer or the conduct of its business makes such qualification necessary, except
where the failure to be so qualified and in good standing would not reasonably
be expected to have a material adverse effect on the business, operations or
financial condition of the Buyer.

     5.2 Due Authorization. The Buyer has or will have at Closing all requisite
power and authority to execute, deliver and perform this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by the
Buyer of this Agreement and the Ancillary Agreements to which it is a party and
the consummation by the Buyer of the transactions contemplated hereby and
thereby have been or will be prior to Closing duly and validly authorized by all
necessary action on the part of the Buyer, and no other actions or proceedings
on the part of the Buyer is necessary to authorize the execution, delivery and
performance by the Buyer of this Agreement and by the Buyer of the Ancillary
Agreements to which it is a party or the transactions contemplated hereby and
thereby. The Buyer has duly and validly executed and


                                       25


delivered this Agreement and has duly and validly executed and delivered (or
prior to or at the Closing shall duly and validly execute and deliver) the
Ancillary Agreements to which it is a party. This Agreement constitutes and,
upon execution and delivery thereof (assuming due execution and delivery thereof
by all other parties thereto), the Ancillary Agreements to which the Buyer is a
party shall constitute, legal, valid and binding obligations of the Buyer,
enforceable against the Buyer in accordance with their respective terms, except
as may be limited by (a) applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect creditors' rights
generally, or (b) principles of equity including legal or equitable limitations
on the availability of specific remedies.

     5.3 Absence of Conflicts. Neither the execution and delivery of this
Agreement nor any of the Ancillary Agreements to which the Buyer is a party nor
the consummation of any of the transactions contemplated hereby or thereby will
violate, conflict with, or result in a breach of or give any person the right to
declare a default or to exercise any remedy under, or to accelerate the maturity
or performance of, or payment under, or to cancel, terminate or modify the
terms, conditions or provisions of (a) the charter, operating agreement or other
organizational documents of the Buyer; (b) any judgment, decree or order of any
Governmental Authority to which the Buyer is subject or by which the Buyer is
bound; (c) any other contracts or agreements by which Buyer is bound; or (d) any
requirements of Laws applicable to the Buyer.

     5.4 Litigation. There is no Litigation of any nature pending or asserted
against the Buyer by or before any Governmental Authority or by or on behalf of
any third party which questions or challenges the validity of this Agreement or
any Ancillary Agreement or any of the transactions contemplated hereby or
thereby or which, if adversely determined, would adversely affect the ability
of the Buyer to consummate the transactions contemplated hereby.

     5.5 Financial Capability. The parties recognize and agree that Buyer may
procure financing prior to Closing. Notwithstanding such financing, the Buyer
(i) at the Closing, will have sufficient funds available to pay the Purchase
Price and any expenses incurred by the Buyer in connection with the transactions
contemplated by this Agreement, (ii) at the Closing, will have the resources and
capabilities (financial or otherwise) to perform its obligations hereunder,
including the Assumed Obligations, and (iii) has not incurred, and will not
incur, prior to the Closing, any obligation, commitment, restriction or
liability of any kind, which would impair or adversely affect such resources and
capabilities.


                                       26



     5.6 Misrepresentations and Omissions. No representation, warranty, covenant
or statement by the Buyer in this Agreement, the Ancillary Agreements, the
Schedules attached hereto, and the certificates or other documents furnished or
to be furnished to the Seller pursuant hereto contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not false or materially misleading.

     5.7 Transferred Employees. Buyer represents to Seller that Buyer does not
currently contemplate a facility closing or layoff of, Transferred Employees, or
any terminations (other than terminations for cause) that in the aggregate would
affect more than ten percent (10%) of Transferred Employees during the one (1)
year period following the Closing. Notwithstanding any provision contained
herein to the contrary, Buyer shall indemnify, defend and hold Seller harmless
from and against any and all loss, cost, damage or expense, including attorneys'
fees, which may be incurred or suffered by Seller, under the "Worker Adjustment
and Retraining Notification Act" ("WARN Act"), 29 U.S.C. Section 2102, et. seq.,
or any similar state law ("WARN Act Laws") arising out of, or relating to, any
actions taken by Buyer with respect to the Transferred Employees on or after the
Closing Date except for circumstances in which an employee of Seller rejects
Buyer's reasonable offer of employment, or in which despite continued employment
of Transferred Employees with Buyer, the Department of Labor or other
governmental entity determines that an employment loss has occurred for which
advance notice should have been given.

                                   ARTICLE VI

                             COVENANTS OF THE SELLER

     The Seller hereby covenants to and with the Buyer as follows:

     6.1 Consents. Seller or its affiliates shall, prior to the Closing Date,
use its reasonable best efforts to obtain the consent of any and all parties to
material Assigned Contracts to the assignment of such Contracts to Buyer, to the
extent such consent is required; obtain consent to transfer Permits; obtain
consent to transfer the Camborough-22 Closed Herd Multiplier Agreement; receipt
of all required internal approvals on the part of the Seller as set forth in
Section 9.5; and, obtain waivers under any Waste Disposal Agreement holders who
may have rights of first refusal to any Owned Real Property. Failure to obtain
any such consent(s) shall


                                       27


not constitute a default by Seller hereunder; provided, however, if Seller fails
to obtain any such consent and, as a result, this transaction does not close,
then Seller shall be obligated to pay Buyer as set forth in Section 3.1.

     6.2. Conduct of Business. Except as otherwise contemplated by this
Agreement, and except as otherwise consented to by the Buyer in writing, from
the date hereof until the Effective Time, the Seller shall:

          (a) Conduct the Business in the usual and ordinary course consistent
     with Seller's current business practices;

          (b) Use commercially reasonable efforts, consistent with the Seller's
     current business practices, to preserve the goodwill of the Business and
     preserve Seller's current relationships with Employees, growers and
     suppliers of the Business;

          (c) Use, operate, repair, replace and maintain all Purchased Assets in
     a commercially reasonable manner and consistent with the Seller's current
     business practices;

          (d) Maintain in full force and effect all types of insurance described
     in Section 4.21 that provides coverage for the Purchased Assets; and,

          (e) Promptly notify the Buyer in writing of any significant incidents
     or accidents involving the Business or the Purchased Assets.

     6.3. Permits. Seller shall take all reasonable measures to assist Buyer to
transfer all Permits including any Permit issued or approved after the date of
this Agreement.

     6.4 Waste Disposal Agreements. Certain of the Waste Disposal Agreements as
identified on Schedule 6.4 were not recorded until 2005, despite being executed
at a prior date. The time period between the date of execution and the date of
recordation shall be referred to herein as the "Gap Period". Seller agrees that
it is responsible to rectify this situation at its own cost and expense with
respect to each such Waste Disposal Agreement such that Buyer will have the
benefit of each such Waste Disposal Agreement as if it had been recorded as of
the date of its execution, or as Buyer and Seller may otherwise mutually agree.
Seller agrees to indemnify and hold Buyer harmless from any losses or damages,
including attorneys' fees, incurred by Buyer resulting from Seller's failure to
record any such Waste Disposal Agreements as of the date of their respective
execution. Buyer agrees to cooperate with Seller to minimize any damages or
losses to itself or expenses to Seller. Buyer shall promptly notify Seller in
writing of any notices it may receive regarding such Waste Disposal
Agreement(s), including notices of any foreclosure


                                       28



action(s) by any Gap Period lienholder. Seller's obligations under this Section
6.4 are not subject to the indemnification limitations set forth in Article
XIII.

                                   ARTICLE VII

                      COVENANTS OF THE BUYER AND THE SELLER

     7.1  Access to Information, Inspections.

          (a) During the period from the date of this Agreement through the
     Closing Date, upon the terms and conditions reasonably required by Seller
     (including any biosecurity protocols) and upon reasonable advance notice
     received from the Buyer, the Seller shall give the Buyer and its authorized
     representatives reasonable access during regular business hours, to all
     properties, offices, facilities, and Books and Records of the Seller
     relating to the Business, such access to be exercised in a manner that does
     not unreasonably interfere with the Seller's operations or result in a
     breach of confidentiality under this Agreement.

          (b) The Buyer shall, at and after the Closing Date, afford promptly to
     the Seller and its respective agents reasonable access during regular
     business hours, upon reasonable advance notice received from the Seller, to
     the properties, Transferred Employees and Books and Records of the
     Business, to the extent reasonably necessary to permit the Seller to
     determine any matter relating to or arising during any period ending on or
     before the Closing Date. If the Buyer proposes to destroy or otherwise
     dispose of any records relating to the Business, the Buyer shall first
     notify the Seller in writing, and afford the Seller the opportunity, for a
     period of at least ninety (90) days following the date of such notice, at
     the Seller's expense to take custody of such records or make extracts
     therefrom or copies thereof. If the Seller proposes to destroy or otherwise
     dispose of any records relating to the Business, the Seller shall first
     notify the Buyer in writing and afford the Buyer the opportunity, for a
     period of at least ninety (90) days following the date of such notice, at
     the Buyer's expense, to take custody of such records or make extracts
     therefrom or copies thereof. The obligations of Buyer and Seller under the
     two (2) preceding sentences shall terminate five (5) years after the
     Effective Time.

     7.2  Title Evidence, Closing Fees and Proration of Utilities.

          (a) As evidence of title to the Owned Real Property, the Seller shall
     cause to be prepared and delivered to the Buyer, as soon as reasonably
     practicable, and at the


                                       29


     Buyer's expense, a commitment (a "Title Commitment") from Caddo County
     Abstract (the "Title Company") together with copies of all exception
     documents, to issue to the Buyer at Closing an owner's title insurance
     policy (for Owned Real Properties), subject to any easements and
     encroachments and other encumbrances disclosed by the Title Commitments.
     Within ten (10) days after receipt of the Title Commitment, Buyer may, at
     Buyer's option and expense, obtain a certified ALTA survey of the Owned
     Real Property, prepared by a licensed surveyor, showing the area,
     dimensions and location boundaries of the Owned Real Property.

          (b) If the Title Commitment or Survey, if applicable, discloses a
     material title defect to which Buyer reasonably objects (other than
     Permitted Encumbrances), the Buyer shall notify the Seller within five (5)
     days after receipt of the Title Commitment or Survey. Any items disclosed
     on the Title Commitments and/or Surveys and not objected to within such
     five (5) day period shall be deemed accepted by the Buyer. After receipt of
     any objection, at a minimum, Seller shall have five (5) days to cure the
     objections made by Buyer, whether prior to or post closing upon mutual
     agreement of the parties. If the Seller is unable to cure such objection,
     Buyer shall have the right to exercise any of the following options: (1)
     waive the objection in writing; (2) allow the Seller an additional time
     period to cure the objection at issue; (3) reduce the Purchase Price by a
     mutually agreed upon amount to compensate for the objection (or failing
     such agreement, terminate this Agreement); or (4) elect to not purchase the
     property which is the subject of the objection and proceed with the Closing
     with regard to the remainder of the Purchased Assets after adjustment to
     the Purchase Price for the property which is the subject of the objection.
     Permitted Encumbances will be set forth on Schedule 4.6(b).

          (c) All fees charged by the Title Company (including the fees charged
     for the Title Commitment and the final title policy) shall be paid by
     Buyer. The Buyer shall pay all costs to record the general warranty deeds
     and all transfer taxes, if any.

          (d) All utility charges, including gas, oil, electricity, telephone,
     sewer and water, pertaining to the Purchased Assets shall be prorated
     between Seller and Buyer as of the Closing Date and settled outside of
     Closing; and accordingly, any invoices for utility charges received
     following the Closing Date which have accrued up to and including the
     Closing Date shall be for Seller's account, and any invoices for utility
     charges which accrue after the Closing Date shall be for Buyer's account.


                                       30



     7.3 Motor Vehicles. The Seller shall take all actions and prepare all
documents necessary to effect the transfer to the Buyer of all motor vehicle
registrations pertaining to automobiles, trucks and other motor vehicles of
whatever kind used in the Business in compliance with the motor vehicle
registration and other applicable Laws of any jurisdictions where such motor
vehicles are registered. All transfer taxes related to the sale of motor
vehicles in connection with the consummation of the transactions contemplated
hereby shall be borne by the Buyer.

     7.4 Tax Matters.

          (a) At the Closing, all state and local real and personal property
     Taxes, tonnage taxes, ad valorem and similar Taxes and assessments
     ("Property Taxes") which are past due or have become due and payable in the
     normal course of business upon any of the Purchased Assets on or before the
     Effective Time shall be paid by the Seller together with any penalty or
     interest thereon. All Property Taxes imposed by any Tax authority with
     respect to the Purchased Assets which is for a period that ends before the
     Effective Time but is not due and payable until after the Effective Date
     shall be paid by Seller to Buyer at Closing based upon the most current tax
     bills. All Property Taxes imposed by any Tax authority with respect to the
     Purchased Assets that have been paid or are due and payable with respect to
     a Taxable period beginning before the Effective Time and ending after the
     Effective Time (taking into account whether such Property Taxes are payable
     in advance or in arrears) shall be apportioned between (i) the period
     beginning before and ending at the Effective Time (the "Pre-Transfer
     Period"); and (ii) the period beginning on the day immediately after the
     Effective Time and ending on the last day of the relevant Taxable period
     (the "Post-Transfer Period"). In performing such apportionment, all
     Property Taxes shall be prorated on the assumption that an equal amount of
     Property Tax applies to each day of the relevant Taxable period regardless
     of how installment payments are billed or made. The Seller shall be liable
     for all such Property Taxes apportioned to the Pre-Transfer Period. The
     Buyer shall be liable for all such Property Taxes apportioned to the
     Post-Transfer Period.

          (b) The Purchase Price shall be adjusted for any prorations under
     Section 7.4(a). After Closing, the Buyer shall pay to the appropriate
     Governmental Authority all Property Taxes which become due and payable
     after the Effective Time with respect to a Taxable period beginning before
     the Effective Time and ending after the Effective Time.


                                       31


          (c) At or before the Closing Date, Seller shall provide a certificate
     to Buyer, in the form prescribed by Treasury Regulations under Section 1445
     of the Code, that Seller is not a foreign person within the meaning of
     Section 1445 of the Code and the Treasury Regulations thereunder.

     7.5 Confidentiality. Buyer and Seller reaffirm that they are bound by terms
and conditions of that Confidentiality Agreement dated August 2, 2004, between
Buyer and Seller's agent, Goldsmith, Agio, Helms, and Lynner, (the
"Confidentiality Agreement"), and in furtherance of such agreement, the Buyer
and Seller shall keep confidential all information obtained by it with respect
to the other in connection with this Agreement and the negotiations preceding
this Agreement, the terms and conditions of this Agreement and any Ancillary
Agreement, and shall use such information solely in connection with the
transactions contemplated by this Agreement, and as otherwise contemplated by
the Confidentiality Agreement. If the transactions contemplated hereby are not
consummated, each party shall return to the other upon request, without
retaining a copy thereof, any schedules, documents, or other written information
obtained from the other in connection with this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing, either party's attorney,
accountant, banker or other consultants shall be able to retain a copy of
documents received in their file. Furthermore, notwithstanding the above, no
party shall be required to keep confidential or return any information that (a)
is required to be disclosed by Law, pursuant to an order or request of a
judicial authority or Governmental Authority having competent jurisdiction, or
pursuant to the rules and regulations of any national stock exchange applicable
to the disclosing party (provided the party seeking to disclose such information
provides the other party with reasonable prior written notice thereof), (b) is
required to be disclosed by the Seller in connection with obtaining the release
of an encumbrance, or (c) can be shown to have been generally available to the
public other than as a result of a breach of this Section 7.5.

     7.6 Payments Received. After the Closing, the Seller and Buyer shall hold
and promptly transfer and deliver to the other, from time to time as and when
received by them, any cash, checks with appropriate endorsements (using their
best efforts not to convert such checks into cash), or other property that they
may receive on or after the Closing which properly belongs to the other party,
including any insurance proceeds, and shall account to the other for all such
receipts.


                                       32



     7.7 Satisfaction of Conditions. Without limiting the generality or effect
of any provision of Articles VIII and IX, prior to the Closing, each of the
parties hereto shall use their respective reasonable best efforts with due
diligence and in good faith to satisfy promptly all conditions required hereby
to be satisfied by such party in order to expedite the consummation of the
transactions contemplated hereby.

     7.8 Excluded Accounts Receivable. The accounts receivable of the Business
not constituting Accounts Receivable as defined herein remain property of the
Seller. Buyer hereby agrees to deliver to Seller or its assignee, within three
(3) Business Days after its receipt, any checks made payable to Seller and all
monies delivered to Buyer representing payment on any such excluded accounts
receivable. The Buyer also agrees to cooperate, to the extent that said
cooperation does not interfere with Buyer's operation of its business, with the
Seller or its assignee in the Seller or its assignee's collection of any such
accounts receivable.

     7.9 Ancillary Agreements. The parties covenant to each other that, on the
Closing Date and as a condition to Closing for both Seller and Buyer, Seller and
Buyer shall execute and deliver to each other, or cause to be executed and
delivered to each other, the following agreements, (collectively, the "Ancillary
Agreements"):

          (a) Agreement Regarding Tyson Marketing Agreement, in the form of
     Exhibit A;

          (b) Guaranty of Maschhoff Entities, in the form of Exhibit B;

          (c) Feeder Pig Supply Agreement, in the form of Exhibit C;

          (d) Lease of Fort Dodge office space, in the form of Exhibit D;

          (e) Transitional Services Agreement, in the form of Exhibit E;

          (f) Loan Guaranty Agreement, in the form of Exhibit F; and

          (g) Waste Disposal Agreement to Dean Smith property as described in
     Land Sale Agreement, in the form of Exhibit G.

     7.10 Hedging Understanding. Seller shall transfer and Buyer shall assume
certain hedge positions pursuant to that email from Bob V. at FC Stone to Pete
Petersen dated February 9, 2005 attached hereto as Exhibit H.

     7.11 Exclusivity. The parties agree that during the period from the date of
this Agreement to the Closing Date, or the expiration or termination hereof,
each party shall deal exclusively with the other party regarding the transfer of
the Purchased Assets.


                                       33


                                  ARTICLE VIII

                CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER

     The obligations of the Buyer to consummate the transactions contemplated
hereby are subject to the satisfaction or waiver by the Buyer of the following
conditions precedent on or before the Closing Date:

     8.1 Accuracy of Representations and Warranties. The representations and
warranties of the Seller contained herein and in any certificate or other
writing delivered by the Seller pursuant to this Agreement or the Ancillary
Agreements shall be true, accurate and correct as of the date of this Agreement
and as of the Closing Date, as if made at and as of such date (unless any such
representation or warranty refers specifically to a specified date, in which
case such representation or warranty shall be true, accurate and correct on and
as of such specified date) in all material respects. The Buyer shall have
received a certificate signed by an executive officer of the Seller to the
foregoing effect.

     8.2 Compliance with Agreements and Covenants. The Seller shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement to be performed and
complied with by it on or prior to the Closing Date. The Buyer shall have
received a certificate signed by an executive officer of the Seller to the
foregoing effect

     8.3 No Injunctions. There shall not be in effect any temporary restraining
order, preliminary injunction, injunction or other pending or threatened action
by any third party or any order of any court or Governmental Authority
restraining or prohibiting the Closing of the transactions contemplated by this
Agreement or the Ancillary Agreements.

     8.4 Title Insurance. The Buyer shall have received binding commitments to
issue policies of title insurance consistent with Section 7.2.

     8.5 No Material Adverse Effect. There shall not have occurred any event,
circumstance, change or effect, that has had, or could reasonably be expected to
result in, a Material Adverse Effect to the Business. In the event of a casualty
loss to any of the Purchased Assets prior to Closing, the Buyer may elect to go
forward with Closing and Buyer may take an assignment of any third party
insurance proceeds to which Seller would otherwise be entitled with respect to
such casualty loss.

     8.6 Deliveries. The Seller shall have made, or be prepared to make at the
Closing, all of the deliveries set forth in Section 11.2.


                                       34



     8.7 Approval and Consents. Receipt of all required internal approvals on
the part of the Buyer, including but not limited to members and managers
approval; receipt of all required internal approvals on the part of the Seller;
and receipt of all third party consents, waivers, approvals, and assignments
necessary for the consummation of the transactions contemplated hereby.

     8.8 Permits. All Permits are transferred to Buyer or are at a stage in the
transfer process that is acceptable to Buyer in its sole discretion.

                                   ARTICLE IX

                CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER

     The obligations of the Seller to consummate the transactions contemplated
hereby are subject to the satisfaction or waiver by the Seller of the following
conditions precedent on or before the Closing Date:

     9.1 Accuracy of Representations and Warranties. The representations and
warranties of the Buyer contained herein and in any certificate or other writing
delivered by the Buyer pursuant to this Agreement or the Ancillary Agreements
shall be true, accurate and correct as of the date of this Agreement and as of
the Closing Date, as if made at and as of such date (unless any such
representation or warranty refers specifically to a specified date, in which
case such representation or warranty shall be true, accurate and correct on and
as of such specified date) in all material respects. The Seller shall have
received a certificate signed by an executive officer of the Buyer to the
foregoing effect.

     9.2 Compliance with Agreements and Covenants. The Buyer shall have
performed and complied with all of its covenants, obligations and agreements
contained in this Agreement to be performed and complied with by it on or prior
to the Closing Date in all material respects. The Seller shall have received a
certificate signed by an executive officer of the Buyer to the foregoing effect.

     9.3 No Injunctions. There shall not be in effect any temporary restraining
order, preliminary injunction, injunction or other pending or threatened action
by any third party or any order of any court or Governmental Authority
restraining or prohibiting the Closing of the transactions contemplated by this
Agreement and the Ancillary Agreements.

     9.4 Deliveries. The Buyer shall have made, or be prepared to make at the
Closing, all of the deliveries set forth in Section 11.3.


                                       35


     9.5 Approvals. Receipt of all required internal approvals on the part of
the Seller, including but not limited to Board of Directors approval; receipt of
all required internal approvals on the part of the Buyer; and receipt of all
third party consents, waivers, approvals, and assignments necessary for the
consummation of the transactions contemplated hereby, including but not limited
to consents, waivers, and approvals from Seller's lenders.

                                    ARTICLE X

                           EMPLOYEES AND BENEFIT PLANS

     10.1 Offer of Employment. Seller shall cause all of those employees
associated with the Business and listed on Schedule 4.12(b) (the "Employees") to
be terminated effective at the Effective Time, subject to the Closing having
occurred. Buyer shall offer continued employment to all Employees at salary or
wages substantially comparable to the salary or wages currently provided to such
Employees by Seller or its affiliate with benefits as noted in Schedule 10.1
("Benefits"). Buyer shall offer to employ all Employees (all such Employees who
accept Buyer's offer of employment being referred to herein as the "Transferred
Employees") effective as of the Effective Time; provided, that in the case of
Employees who are on disability or leave of absence on the Closing Date as noted
in Schedule 10.1 (a) ("Employees on Disability or Leave"), their employment with
Seller will not end and their employment with Buyer shall not be effective and
they shall not become Transferred Employees unless and until they are removed
from disability status and return to work or return from leave per the
recommendation of Buyer's medical advisor. Seller makes no representation as to
whether Employees will accept employment with Buyer. Seller shall be responsible
for any variable compensation obligations prior to the Effective Time to the
Employees under Seller's customary practice or policy and shall pay same
directly to such Employees, with no adjustment in the Purchase Price. Seller
will pay to the Transferred Employees any outstanding paid time off balances as
referenced on Schedule 10.1 (b). If Buyer fails to offer employment to any
Employee, and if such Employee does not have continuing employment with Seller,
or if any Employee declines an offer of employment from Buyer because a
condition of such an offer is that such Employee must agree to relocate to a job
site more than thirty-five (35) miles from such Employee's current work site,
Buyer shall promptly reimburse Seller for amounts actually paid to such Employee
pursuant to the terms of the separation pay and benefits continuation guidelines
as set forth in Schedule 10.1(c) ("Separation Pay and Benefits") provided such
Employee is eligible to receive an offer of


                                       36



separation pay and benefits continuation under its company guidelines.. Seller
shall provide Buyer with a statement detailing any such payments within sixty
(60) days after payment is made. Although all Transferred Employees remain
employees at will, if at any time during the one (1) year period following the
Closing Date Buyer terminates any Transferred Employee or subjects any
Transferred Employee to an indefinite layoff, in each case for any reason other
than "for cause," then Buyer shall enter into a separation agreement with such
Transferred Employee whereby, at a minimum, the Buyer shall agree to pay said
Transferred Employee pursuant to the terms of the separation pay and benefits
continuation guidelines as set forth in Schedule 10.1(c). All obligations of
Buyer hereunder this Section 10.1 shall terminate one (1) year after the date of
this Agreement.

     10.2 Recognition. Buyer shall recognize for purposes of participation,
eligibility and vesting (but not necessarily for purposes of benefit accrual and
compensation arrangements) under its employee benefit plans (including vacation
and for the first year of employment with Buyer the separation pay and benefits
continuation guidelines), the service of any Transferred Employee with either
Seller or their respective affiliates prior to the Closing Date.

     10.3 Rehire. Seller for a period of one (1) year after the Closing Date
shall not solicit any Transferred Employees without the consent of Buyer. This
provision shall not apply in the event employment is procured through a general
advertisement or other general solicitation or if initiated by the Transferred
Employee. Notwithstanding the above, Seller agrees not to hire for a period of
one year after the Closing Date, without Buyer's consent, any of those
Transferred Employees listed on Schedule 10.3. If Seller shall hire a
Transferred Employee after the Closing Date, Buyer shall have no obligations of
reimbursement or payment of any kind to Seller or the hired Transferred Employee
as defined in Section 5.7 or this Article.

     10.4 COBRA Benefits. Seller shall provide COBRA notices to all Transferred
Employees.


                                       37


                                   ARTICLE XI

                                    CLOSING

     11.1 Closing. The Closing shall take place on or before February
25, 2005, unless extended as mutually agreed to by the parties, at the Seller's
offices in Arden Hills, Minnesota, at or about 9:00 a.m. Central Standard Time.
The parties agree that time is of the essence. The date on which the Closing
occurs is referred to in this Agreement as the "Closing Date." The Closing shall
be effective as of the Effective Time.

     11.2 Deliveries by the Seller. At or prior to the Closing, the Seller shall
deliver to the Buyer the following, each dated the Closing Date and duly
executed by the Seller:

          (a) One or more Assignment and Assumption Agreements, general warranty
     deeds for each parcel of Owned Real Property, bills of sale and other
     conveyance documents (collectively, the "Conveyance Documents") with
     respect to tangible personal property included in the Purchased Assets in
     forms acceptable to Buyer;

          (b) Possession of the Purchased Assets and the Real Property Leases,
     the original, if in Seller's possession of the Personal Property Leases and
     originals, if in Seller's possession, of all other Assigned Contracts
     listed in any schedule hereto to the extent Seller does not have originals,
     then copies of the Personal Property Leases and Assigned Contracts shall be
     provided;

          (c) Other instruments of transfer reasonably requested by the Buyer to
     evidence the transfer of the Purchased Assets to the Buyer and consummation
     of the transactions contemplated hereby;

          (d) A certificate, dated the Closing Date, of the Seller certifying as
     to the compliance by the Seller with Sections 8.1 and 8.2;

          (e) A certificate, dated the Closing Date, of the Secretary of the
     Seller certifying resolutions of the board of directors of Seller approving
     and authorizing the execution, delivery and performance of this Agreement
     by the Seller and the Ancillary Agreements to which the Seller is a party
     and the consummation by the Seller of the transactions contemplated hereby
     and thereby (together with an incumbency and signature certificate
     regarding the officer(s) signing on behalf of the Seller);

          (f) A certificate, in the form prescribed by Treasury regulations
     under Section 1445 of the Code, that the Seller is not a foreign Person
     within the meaning of Section 1445 of the Code;


                                       38



          (g) Certificates of Good Standing for Seller in those states
     referenced in Section 4.1 dated within 30 days of Closing;

          (h) The Ancillary Agreements, fully executed;

          (i) The parties shall cause to be filed Amended UCC-1's on the
     Closing Date reflecting an amendment to the Secured Party from Seller to
     Buyer;

          (j) Copies of all consents, waivers or other approvals referenced in
     Sections 6.1, and 9.5;

          (k) Such other documents and instruments as may be reasonably required
     to consummate the transactions contemplated by this Agreement and the
     Ancillary Agreements; and

          (l) Copies of all Permits and any documentation in Seller's Possession
     required to complete transfer of the Permits to Buyer.

     11.3 Deliveries by the Buyer. At the Closing, the Buyer shall make the
payment described in Section 3.1 and shall deliver to the Seller the following,
each dated the Closing Date and duly executed by the Buyer:

     (a) One or more Assignment and Assumption Agreements under which the
Purchased Contracts are assigned to Buyer and Buyer agrees to comply with all of
Seller's obligations under the Assigned Contracts which become due and
dischargeable on or after the Closing Date;

     (b) A certificate, dated the Closing Date, of the Buyer, certifying as to
compliance by the Buyer with Sections 9.1 and 9.2;

     (c) A certificate, dated the Closing Date, of the Buyer certifying that all
necessary actions have been taken by the Buyer to approve and authorize this
Agreement and the Ancillary Agreements to which the Buyer is a party and the
consummation by the Buyer of the transactions contemplated hereby and thereby
(together with an incumbency and signature certificate regarding the managers or
members signing on behalf of the Buyer);

     (d) The Ancillary Agreements, fully executed; and

     (e) Such other documents and instruments as may be reasonably required to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements.


                                       39


                                   ARTICLE XII

                                   TERMINATION

     12.1 Termination. This Agreement may be terminated at any time on or prior
to the Closing:

          (a) By the mutual written agreement of the Seller and the Buyer;

          (b) By the Seller or the Buyer if the Closing shall not have taken
     place as provided in Section 11.1; provided, however, that the terminating
     party shall not have failed to fulfill any obligation under this Agreement
     or be in breach of any representation or warranty under this Agreement,
     which failure or breach was the cause of or resulted in the failure of the
     Closing to occur on or before such date;

          (c) By the Seller or the Buyer, if any court of competent jurisdiction
     or other Governmental Authority shall have issued a final and
     non-appealable order, decree or ruling or taken any other action
     permanently restraining, enjoining or otherwise prohibiting the
     consummation of the transactions contemplated hereby;

          (d) By the Seller or the Buyer, if prior to the Closing Date, the
     other party is in default or breach in any material respect of any
     representation, warranty, covenant, or agreement contained herein (except
     that failure to obtain the consents set forth in Section 6.1 shall not be
     deemed a default or breach hereunder), and such default or breach shall not
     be cured within ten (10) Business Days after the date written notice of
     such breach is delivered by the party claiming such default or breach to
     the party in default or breach; or,

          (e) By the Buyer if an event or circumstance shall have occurred since
     the date of this Agreement that has a Material Adverse Effect on the
     Business.

     12.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 12.1, all obligations of the parties hereunder shall terminate, except
for the obligations set forth in Sections 7.5 (Confidentiality), 14.2
(Expenses), 14.8 (Publicity), and 14.12 (Applicable Law; Jurisdiction), which
shall survive the termination of this Agreement, and except that no such
termination shall relieve any party from liability for any prior breach of this
Agreement. Seller, unless otherwise provided in this Agreement, shall return the
Earnest Money plus interest at the rate of five percent (5%) per annum to Buyer.


                                       40



     12.3 Seller's Remedy Upon Buyer's Breach. In the event this Agreement is
terminated by Seller pursuant to Section 12.1(d) due to a breach by Buyer,
Seller's sole and exclusive remedy shall be to retain the Earnest Money Deposit.

     12.4 Buyer's Remedy Upon Seller's Breach. In the event this Agreement is
terminated by Buyer pursuant to 12.1(d) due to a breach by Seller, Buyer shall
receive a refund of the Earnest Money Deposit plus interest at the rate of five
percent (5%) per annum and Buyer's Costs as liquidated damages as Buyer's sole
and exclusive remedy.

     12.5 Break Up Fee. In the event Seller breaches the exclusivity covenant
set forth in Section 7.11 or fails to use its reasonable best efforts to obtain
the consents or approvals as required under Section 6.1 and as a result, this
transaction fails to close, Seller shall return to Buyer the Earnest Money
Deposit plus interest at the rate of five percent (5%) per annum plus an amount
equal to the Earnest Money Deposit as a break up fee.

                                  ARTICLE XIII

                                INDEMNIFICATION

     13.1 Excluded Assets and Excluded Obligations. Without limitation as to
time or dollar amount, Seller shall indemnify and hold Buyer harmless from and
against any loss, cost, expense or other damage (including, without limitation,
reasonable attorneys' fees and expenses) resulting from, arising out of, or
incurred with respect to, or (in the case of claims asserted against Buyer by a
third party), alleged to result from or arise out of or have been incurred with
respect to any of the Excluded Assets or Excluded Obligations.

     13.2 Purchased Assets and Assumed Obligations. Without limitation as to
time or dollar amount, and except to the extent subject to Seller's obligation
to indemnify Buyer for breach of any representation or warranty described in
Section 13.3, Buyer shall indemnify and hold Seller harmless from and against
any loss, cost, expense or other damage (including, without limitation,
reasonable attorneys' fees and expenses) resulting from, arising out of, or
incurred with respect to, or (in the case of claims asserted against Buyer by a
third party), alleged to result from or arise out of or have been incurred with
respect to the Business, any of the Purchased Assets or any of the Assumed
Obligations.

     13.3 Breach of Representations and Warranties. Except as otherwise provided
herein, the parties hereto agree as follows regarding indemnification of each
other concerning claims, actions, or proceedings arising from a breach of a
representation and warranty hereunder:


                                       41


     (a) Survival. The representations and warranties of Seller and Buyer
contained in this Agreement shall survive for four years following the Closing
Date, except those representations of Seller set forth in Section 4.13
"Environmental Matters" shall survive for seven years following the Closing
Date, at which time they shall expire. No claim by either party regarding a
breach of any such representation or warranty shall be made after such relevant
date. Any claim asserted within such period of survival as herein provided shall
be deemed timely made for purposes hereof.

     (b) Indemnification. Subject to Section 13.3(a), each party shall indemnify
and hold the other party harmless from and against any loss, cost, expense or
other damage (including, without limitation, reasonable attorneys' fees and
expenses) resulting from, arising out of, or incurred with respect to, or (in
the case of claims asserted by a third party), alleged to result from or arise
out of or have been incurred with respect to the falsity or the breach of any
representation or warranty made by such party herein or in any Schedule or
Exhibit hereto. Each party acknowledges that such indemnification is its sole
remedy against the other party for any such claim.

     (c) Limitation on Amount.

          (i) Each party's obligation to indemnify the other party provided in
     Section 13.3(b) shall not exceed the aggregate maximum sum of ten percent
     (10%) of the Purchase Price prior to the Purchase Price Adjustment (the
     "Indemnification Cap"), provided however, that neither party shall be
     liable to the other party for indemnification until such time as the
     aggregate damages incurred by such party seeking indemnification shall have
     exceeded one percent (1%) of the Purchase Price (prior to the Purchase
     Price Adjustment) (the "Indemnification Basket"). Each party shall only be
     obligated to indemnify the other for amounts in excess of the
     Indemnification Basket, subject to the Indemnification Cap;

          (ii) With respect to Environmental Matters referenced in Section 4.13,
     the Indemnification Cap shall be increased to twenty-five percent (25%) of
     the Purchase Price prior to the Purchase Price Adjustment and there shall
     be no applicable Indemnification Basket; and

          (iii) In no event shall either party be liable to the other for
     incidental, special, punitive, exemplary or consequential damages
     including, but not limited to, loss of profits or revenue, interference
     with business operations, loss of


                                       42



     tenants, lenders, buyers, diminution in value of the Purchased Assets, or
     inability to use the Purchased Assets, in excess of the applicable
     Indemnification Cap.

13.4 Procedure.

     (a) Within thirty (30) days after receipt of the assertion of any claim or
the commencement of any action ("Assertion") against any party who is or may be
entitled to indemnification under this Article XIII, (the "Indemnified Party"),
such Indemnified Party shall notify the party from whom such indemnification may
be sought (the "Indemnifying Party") in writing of the Assertion. Failure to so
notify the Indemnifying Party shall relieve the Indemnifying Party of any
liability hereunder.

     (b) The Indemnifying Party shall be entitled to participate in and, to the
extent the Indemnifying Party elects by written notice to the Indemnified Party
within thirty (30) days after receipt by the Indemnifying Party of notice of
such Assertion, to assume the defense of such Assertion, at the Indemnifying
Party's own expense, with counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party. Notwithstanding that the Indemnifying
Party shall have elected by such written notice to assume the defense of any
Assertion, the Indemnified Party shall have the right to participate in the
investigation and defense thereof, with separate counsel chosen by such
Indemnified Party, and in such event the fees and expenses of such counsel shall
be paid by the Indemnified Party.

     (c) Notwithstanding anything to the contrary in this Section, neither party
shall (a) settle or compromise any action or consent to the entering of any
judgment which does not include as an unconditional term thereof the delivery by
the claimant or plaintiff to such other party of a duly executed written release
of such party from all liability in respect of such party, or (b) settle or
compromise any action without the consent of the other party, which consent
shall not be unreasonably withheld. Failure to comply with the provisions of
this Subsection 13.4(c) shall be construed as a waiver of any right of
indemnification related to such claim. However, if a party fails to consent to a
proposed settlement and the liability upon the Assertion is later determined to
be in excess of the amount of the proposed settlement, the non-consenting party
shall be liable for the entire difference between the amount of the proposed
settlement and the amount ultimately determined to be due upon the Assertion and
any additional expenses related to the defense by either party against that
Assertion.


                                       43


     13.5 Payment. Subject to the provisions of this Article XIII, the
Indemnifying Party shall promptly pay and/or reimburse the Indemnified Party for
any amounts due hereunder, including the amount of any judgment rendered or
settlement entered into with respect to any claim by a third party in such
litigation and for all losses and expenses, legal or otherwise incurred by the
Indemnified Party in connection with the defense against such claim or
litigation, and for all losses, damages, and expenses suffered or incurred by
the Indemnified Party with respect to the falsity or the breach of any
representation, warranty, covenant or agreement made herein (whether or not
arising out of the claim of a third party).

     13.6 Sole Remedy. Unless another remedy is specifically provided for
elsewhere in this Agreement, Buyer and Seller each agree that the
indemnification obligations set forth herein constitute the sole and exclusive
remedy arising hereunder. In furtherance of the foregoing, Seller and Buyer
hereby waive, to the fullest extent permitted under applicable law, all rights,
claims and causes of action Seller may have against Buyer and Buyer may have
against Seller under or based upon any federal, state, local or foreign statute,
law, ordinance, rule, or regulation or arising under or based upon common law or
otherwise.

                                   ARTICLE XIV

                                  MISCELLANEOUS

     14.1 Disclosure Schedules. The inclusion of any matter on any schedule
shall not constitute an admission by the Seller that such matter is material or
would reasonably be expected to have a Material Adverse Effect.

     14.2 Expenses. Except as otherwise provided herein, each party hereto shall
bear its own expenses with respect to the transactions contemplated hereby.

     14.3 Amendment. This Agreement may be amended, modified or supplemented
only by a writing signed by the Buyer and the Seller.

     14.4 Interpretation. The headings preceding the text of articles and
sections included in this Agreement and the headings to schedules and exhibits
attached to this Agreement are for convenience only and shall not be deemed part
of this Agreement or be given any effect in interpreting this Agreement. The
terms as set forth in this Agreement have been arrived at after mutual
negotiation with the advice of counsel and, therefore, it is the intention of
the parties that its terms may not be construed against any of the parties by
reason of the fact that it was prepared by one of the parties.


                                       44



     14.5 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given (a) when received if given in person or by courier or a courier
service, (b) on the date of transmission if sent by telex,(1) facsimile or other
wire transmission (receipt confirmed) or (c) five (5) Business Days after being
deposited in the mail, certified or registered, return receipt requested,
postage prepaid:

     If to the Seller, addressed as follows:

     Land O'Lakes, Inc.

               4001 Lexington Avenue North
               Arden Hills, MN 55126
               Attention: President

     With a copy to:

               Land O'Lakes, Inc.
               Law Department, MS 2500
               P.O. Box 64101
               St. Paul, MN 55164-0101
               Attention: John Curran

     If to the Buyer, addressed as follows:

               Maschhoff West, LLC 7475
               State Route 127
               Carlyle, IL 62231
               Attention: Jason Logsdon

     With a copy to:

               Lorraine K. Cavataio
               Mathis, Marifian, Richter & Grandy, Ltd.
               23 Public Square, Ste. 300
               P.O. Box 307
               Belleville, IL 62220

     or to such other individual or address or facsimile number as a party
hereto may designate for itself by notice given as herein provided.

     14.6 Waivers. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by a party of any condition or of any
breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition


                                       45


or breach in other instances or a waiver of any other condition or breach of any
other term, covenant, representation or warranty.

     14.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective permitted successors
and assigns, provided, however, that neither this Agreement, nor any Ancillary
Agreements (except as may be expressly provided otherwise in any such Ancillary
Agreement) nor any right or obligation hereunder or thereunder may be assigned
by any party hereto without the prior written consent of the other party;
provided further, that no such assignment shall relieve a party from its
obligations under this Agreement or any Ancillary Agreement.

     14.8 Publicity. No public announcement or other publicity regarding the
transactions referred to herein shall be made by the Buyer or the Seller or any
of their respective officers, directors, employees, representatives or agents,
without the prior written agreement of the Seller and the Buyer, respectively,
unless such announcement or disclosure is required by any Governmental Authority
or Applicable Law. Any announcement shall be agreed to by the parties as to
form, content, timing and manner of distribution or publication. Nothing in this
Section 14.8 shall prevent such parties from discussing such transactions with
those persons whose consent, approval, agreement or opinion, as the case may be,
is required for consummation of such transactions. Such parties shall exercise
all reasonable efforts to assure that such persons keep confidential any
information relating to this Agreement or any agreement, document or instrument
contemplated herein.

     14.9 Further Assurances. The Seller and the Buyer agree to cooperate fully
with each other in connection with obtaining the satisfaction of the conditions
set forth in Articles VIII and IX. The Seller and the Buyer agree to execute and
deliver such other documents, certificates, agreements and other writings and to
take such other actions as may be reasonable, necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated by this
Agreement and any agreement, document or instrument contemplated herein.

     14.10 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.

     14.11 Entire Understanding. This Agreement, the Confidentiality Agreement,
the Hedging Agreement, and the Ancillary Agreements set forth the entire
agreement and


                                       46



understanding of the parties hereto with respect to the transactions
contemplated hereby and thereby and supersede any and all prior agreements,
arrangements and understandings among such parties relating to the subject
matter hereof and thereof.

     14.12 Applicable Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Oklahoma for issues related to the Owned Real Property or Assigned Contracts
related to easements or leasehold interests in Oklahoma real estate; the State
noted in any Assigned Contracts as to disputes regarding the Assigned Contracts,
and as to any other disputes the State of Minnesota without giving effect to the
principles of conflicts of law thereof.

     14.13 Counterparts and Facsimile. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same original instrument. The parties
agree that this Agreement may be signed by any party and transmitted to the
other party by facsimile with originals to follow. The parties agree that such
signature transmitted by facsimile shall bind each such party to this Agreement.

     14.14 Passage of Title and Risk of Loss. Legal title, equitable title, and
risk of loss in respect of the Purchased Assets will not pass to the Buyer until
such Purchased Assets are transferred at the Closing, which transfer, once it
has occurred, will be deemed effective for tax, accounting, insurance and other
computational purposes as of the Effective Time.

                   [Reminder of Page Intentionally Left Blank]


                                       47



     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Asset Purchase and Sale Agreement as of the date first above written.

MASCHHOFF WEST,LLC                      LAND O'LAKES, INC.


By: /s/ Kenneth D. Maschhoff            By: /s/ Daniel Knutson
    ---------------------------------       ------------------------------------
Print Name: Kenneth D. Maschhoff        Print Name: Daniel Knutson
Title: Manager                          Title: Sr. V.P. & Chief Financial
                                               Officer


                                       48

EX-10.13

                                                                   Exhibit 10.13

                               PURCHASE AGREEMENT

THIS AGREEMENT is made effective the 27th day of January, 2006, between Osborne
Investments, L.L.C., a Missouri limited liability company ("OI") and Land
O'Lakes, Inc., a Minnesota corporation ("LOL").

                                    RECITALS

A.   Pursuant to a Joint Venture Agreement dated January, 2000, ("JV Agreement")
     OI and LOL previously formed Moark, LLC, a Missouri limited liability
     company (the "LLC"), for the purpose of engaging in the production and
     marketing of eggs and egg products (the "Business").

B.   Initially, and pursuant to the original Limited Liability Company Operating
     Agreement of Moark LLC, ("Operating Agreement") OI and LOL each held a
     fifty (50%) percent membership Interest in the LLC. Over time, and pursuant
     to several amendments to the JV Agreement and the Operating Agreement and
     agreements ancillary thereto, the parties admitted a new member to the LLC
     and altered their respective membership Interests such that the current
     members and their Interests (subject to the allocation agreement referenced
     in the Second Amendment to the June 15, 2001 Agreement dated February 14,
     2003 ("Second Amendment")) are as follows:



Member              Membership Interest
- ------              -------------------
                 
LOL Holdings, Inc   Five (5%) percent
LOL                 Fifty-two and one half (52.5%) percent
OI                  Forty-two and one half (42.5%) percent


C.   LOL desires to purchase from OI and OI desires to sell to LOL all of OI's
     membership Interest in the LLC, including all rights represented thereby,
     upon and subject to the terms and conditions provided in this Agreement.

                              TERMS AND CONDITIONS

In consideration of the foregoing Recitals which are made a contractual part of
this Agreement, and of the respective agreements and covenants contained herein,
and intending to be legally bound hereby, the parties further agree as follows:

                                   ARTICLE I
                               PURCHASE AND SALE

Section 1.1 Purchase and Sale of OI's Membership Interest. Upon and subject to
the terms and conditions set forth in this Agreement, LOL shall purchase at the
Closing from OI and OI shall sell, transfer, assign and deliver to LOL, all of
OI's right, title and interest in and to all of its complete membership Interest
in the LLC as defined in (i) the Operating Agreement including but not limited
to the Definitions in Exhibit B of the Operating Agreement, and all amendments
and addendums thereof; (ii) the First Addendum to Limited Liability Company
Operating Agreement of Moark, LLC; (iii) the Agreement Substituting and
Replacing the June 15, 2001 Agreement, and (iv) the Second



Amendment to the June 15, 2001 Agreement, including all rights thereunder,
including, but not limited to, all governance rights and financial rights,
rights to capital accounts, rights to guaranteed payments, and rights to
undistributed earnings ("OI's Membership Interest").

Section 1.2 Consideration. The consideration for the sale of the Assets is as
follows:

          a.   Cash. Cash in the amount of Seventy-One Million Dollars
               ($71,000,000.00); and,

          b.   Assumption of Manager Payment Obligations. LOL shall assume, or
               cause the LLC to assume, those obligations of OI to three of the
               managers of the LLC as referenced in Schedule 1.2b hereto.

Section 1.3 Payment Process. At Closing, LOL shall pay to OI, by wire transfer
of immediately available funds to accounts as designated by OI, the amount of
cash as referenced in Section 1.2a above.

                                   ARTICLE II
                      REPRESENTATIONS AND WARRANTIES OF LOL

LOL represents and warrants to OI as of the date hereof and as of the date of
Closing as follows:

Section 2.1 Due Incorporation and Qualification. LOL is a cooperative
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota, and has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted.

Section 2.2 Authorization LOL has all requisite corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and performance of LOL's obligations
hereunder have been duly authorized by all necessary corporate action on the
part of LOL, and no other corporate proceedings on the part of LOL are necessary
to authorize the execution, delivery and performance of LOL hereunder. This
Agreement has been duly executed and delivered by LOL and constitutes LOL's
valid and binding obligation enforceable against LOL in accordance with its
terms.

Section 2.3 No Conflict. Assuming the consents/waivers referenced in Section
4.4b are received, then the execution, delivery and performance of LOL's
obligations hereunder, and the consummation of the transaction contemplated
thereby, will not (a) conflict with or violate any provision of the articles of
incorporation, bylaws, or other governing documents of LOL; (b) conflict with or
result in a breach or default under any of the terms, conditions or provisions
of any agreement or other instrument or obligation to which LOL is a party or by
which LOL or its assets or properties may be bound; (c) violate any judgment,
order, writ, injunction, or decree of any Governmental Authority applicable to
LOL or any of its assets or properties.


                                        2


                                   ARTICLE III
                      REPRESENTATIONS AND WARRANTIES OF OI

OI represents and warrants to LOL as of the date hereof and as of the date of
Closing as follows:

Section 3.1 Authorization. OI has all requisite power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the performance of OI's obligations hereunder
have been duly authorized by all necessary action on the part of OI. This
Agreement has been duly executed and delivered by OI and constitutes OI's valid
and binding obligation, enforceable against OI in accordance with its terms.

Section 3.2 No Conflict. The execution, delivery and performance of OI's
obligations hereunder, and the consummation of the transaction contemplated
hereby, will not (a) conflict with or result in a breach or default under any of
the terms, conditions or provisions of any agreement or other instrument or
obligation to which OI is a party or by which OI or any of its assets or
properties may be bound; or, (b) violate any judgment, order, writ, injunction,
or decree of any Governmental Authority applicable to OI or any of its assets or
properties.

Section 3.3 Title to OI's Membership Interest. There are no outstanding liens,
encumbrances, options, warrants, contracts, commitments or other agreements or
arrangements of any character whatsoever relating to OI's Membership Interest or
any part thereof or to which OI is a party, other than in favor of LOL or as
contemplated by this Agreement. LOL hereby acquires clear title to OI's complete
Membership Interest, free and clear of all liens or encumbrances of whatsoever
nature.

Section 3.4 No Undisclosed Liabilities. To the best knowledge of the principals
of OI, namely Hollis Osborne, Paul Osborne, and Jerry Wells, there are no debts,
liabilities, or obligations of any nature, whether fixed, absolute, accrued,
contingent or otherwise, except those which have been made known to LOL or to
the senior management of the LLC prior to the date hereof or prior to Closing
which could have a material adverse impact, individually or in the aggregate, on
the LLC or the Business, or OI's Membership Interest.

Section 3.5 No Other Management/Employee Obligations. Except for those
obligations described in Schedule 1.2b and to Craig Wells, OI has no obligations
to any of the former or current managers or any former or current employees of
the LLC or any of its subsidiaries. OI agrees to timely fulfill its obligations
to Craig Wells.

                                   ARTICLE IV
                                    CLOSING

Section 4.1 Closing. The Closing shall take place on January 27, 2006, at or
about 10:00 a.m. Central Standard Time, or such other time and in such fashion
as the parties may mutually agree.

Section 4.2 Deliveries By OI. OI shall deliver to LOL at Closing the following:

          a.   An assignment transferring all of OI's right, title and interest
               in and to OI's Membership Interest, in the form attached hereto
               as Schedule 4.2;


                                       3






          b.   A certificate of the Secretary of OI certifying resolutions of
               the governing board of OI approving and authorizing the
               execution, delivery and performance of this Agreement by OI and
               the consummation of the transaction contemplated hereby;

          c.   A certificate, in the form prescribed by treasury regulations
               under Section 1445 of the Tax Code, that OI is not a foreign
               person within the meaning of Section 1445 of the Code;

          d.   Written resignation from the board and officerships of the LLC
               and the boards and officerships of any LLC subsidiary from the
               representatives of OI; and,

          e.   Such other documents and instruments as may be reasonably
               required to consummate the transactions contemplated by this
               Agreement.

Section 4.3 Deliveries by LOL. At the Closing, LOL shall make the payment
described in Section 1.2a and shall deliver to OI the following:

          a.   An assignment and assumption agreement for the Managers Contracts
               in the form attached hereto as Schedule 4.3a;

          b.   A certificate dated the Closing, of the secretary or assistant
               secretary of LOL certifying that all necessary actions have been
               taken by LOL to approve and authorize this Agreement and the
               consummation by LOL of the transactions contemplated hereby;

          c.   Copies of new signature cards for all banks of the LLC and its
               subsidiaries and affiliates, which do not bear Hollis Osborne's,
               Paul Osborne's, and Jerry Wells' names as having signature
               authority, or alternatively a certificate dated the Closing of
               LOL certifying that those individuals have been, or will promptly
               be, removed from signature authority on all banks of the LLC and
               its subsidiaries and affiliates; and,

          d.   Such other documents and instruments as may be reasonably
               required to consummate the transactions contemplated by this
               Agreement.

Section 4.4 Conditions to Closing. As conditions to Closing hereunder:

          a.   The LLC shall have received amendments to those Amended and
               Restated Employment Agreements entered into by the LLC and Hollis
               Osborne, Paul Osborne, and Jerry Wells in the forms as attached
               hereto as Schedule 4.4.; and,

          b.   LOL shall have received consents, waivers, or the like from its
               lenders and lenders to the LLC with respect to this transaction
               in form and substance satisfactory to LOL.

Section 4.5 Termination of Rights. As of the Closing, OI shall cease to be a
member of the LLC, with no membership Interest in the LLC, and have no rights
pursuant to the JV Agreement, the Operating Agreement and the Second Amendment,
and all documents ancillary thereto. As of the Closing, any and all rights of OI
to guaranteed payments, rights to capital accounts, rights to undistributed
earnings, and rights pursuant to any put/call agreements pertaining to the
parties' membership interest in the LLC, shall be effectively terminated.


                                       4


                                    ARTICLE V
                             POST CLOSING COVENANTS

Section 5.1 Further Assurances. From and after the effective date hereof, LOL,
the LLC and OI each shall promptly execute and deliver any other documents or
instruments reasonably required in order to comply with the terms of this
Agreement or give full effect to the transactions contemplated hereby.

Section 5.2 Survival of Representations; Indemnification. The representations
and warranties made by each party hereunder shall survive the closing
indefinitely. Each party agrees to defend, indemnify and hold harmless the other
party against all damages, claims, losses and expenses, including, without
limitation, litigation costs and fees of attorneys, arising out of, resulting
from or in connection with any misrepresentation or breach of representation,
warranty, covenant or undertaking hereunder of such party.

Section 5.3 Non-Competition; Non-Solicitation.

          a. For a period of two years following the Closing hereunder, OI
agrees that it will not, and shall cause its affiliates to not, except in the
case of a Permitted Investment, directly or indirectly own, manage, operate,
join, or participate in the ownership, management, control of, any person or
entity involved in any Competitive Business in the United States.

          b. "Competitive Business" shall mean any business which is engaged in
any activity which is competitive with any of the business activities in which
the LLC, or any LLC subsidiary, is currently engaged, or for which any of them
are actively developing plans. "Permitted Investment" shall mean those present
business operations (as listed on Schedule 5.3b) owned by or invested in by OI
or by Hollis Osborne, plus the ownership of not more than 3% of the outstanding
shares of common stock of a publicly traded entity which is engaged in a
Competitive Business.

          c. It is understood and agreed that the restrictions imposed by the
provisions of the foregoing Section 5.3a are separate and severable, and it is
the intent of the parties hereto that in the event the restrictions imposed by
said Section should be determined by any court of competent jurisdiction to be
void for any reason whatsoever, the remaining provisions of this Agreement and
the restrictions imposed by the remainder of said Section shall remain valid and
binding upon the parties. It is also agreed and understood that in the event any
restriction contained in Section 5.3a should be considered by any court of
competent jurisdiction to be unenforceable because unreasonable either in length
of time or area to which said restriction applies, it is the intent of both
parties hereto that said court reduce and reform the provisions thereof so as to
apply to limits considered enforceable by said court.

          d. Recognizing that irreparable damage may result to LOL and/or the
LLC in the event of breach of any of the foregoing covenants and assurances of
Section 5.3a by OI, LOL shall be entitled to an injunction to be issued by any
court of competent jurisdiction enjoining and restraining OI and each and every
person, firm, company, corporation or other entity acting in concert or
participating with OI from the continuation of such breach.


                                        5



          e. For a period of two years following the Closing, OI shall not, and
shall cause its affiliates to not, directly or indirectly, solicit any salaried
employee of the LLC or any of its subsidiaries, who was employed by the LLC or
the subsidiary on the date hereof and who has not been involuntarily terminated
by the LLC or the subsidiary, as the case may be, to enter into any written or
oral agreement, arrangement, or understanding regarding employment or retention
as a consultant by OI or any affiliate thereof, provided that nothing herein
shall prohibit OI from hiring or engaging such an employee pursuant to general
advertising or posting through the efforts of a search firm not retained by OI.

Section 5.4 Confidentiality; Publicity.

OI agrees to keep confidential all information concerning the LLC, any of its
subsidiaries, the Business, and any past, current and future plans with respect
thereto, as well as the terms and conditions of this Agreement, (collectively,
"Confidential Information") and shall not disclose such Confidential Information
to any third party, except to those of its employees, officers and directors,
financial, tax and legal advisors, on an absolute need to know basis, and all
such third parties shall be advised of the confidential nature of this
information and agree to keep it confidential. OI shall be responsible for any
breach of this obligation of confidentiality by any such third party.

Except as may be required by law in the reasonable judgment of such party's
legal counsel, no public announcements or other publicity regarding this
transaction shall be made by LOL or OI or any of their respective officers,
directors, employees, representatives or agents, without the prior written
agreement of LOL and OI, respectively. Any announcement shall be agreed to by
the parties as to form, content, timing and manner of distribution or
publication. The parties agree that LOL may disclose such information as it
believes necessary to comply with any requirements of the Securities Exchange
Commission.

                                   ARTICLE VI
                                 MISCELLANEOUS

Section 6.1 Definition of Certain Terms. Capitalized terms not defined herein
shall have the meaning ascribed to them in the JV Agreement and/or the Operating
Agreement.

Section 6.2 Amendment. This Agreement may be amended only by the written consent
of all parties hereto.

Section 6.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter contained herein and
supersedes and replaces in whole any prior oral or written agreement of the
parties as to the subject matter contained herein.

Section 6.4 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of Minnesota, without
regard to the principles of conflicts of laws thereof.

Section 6.5 Assignment. This Agreement shall be binding on and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned without the prior written consent of
the other party hereto.


                                       6



Section 6.6 Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

Section 6.7 Incorporation of Recitals. The Recitals set forth above are
contractual in nature and are hereby incorporated into this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.

OSBORNE INVESTMENTS, LLC                LAND O'LAKES, INC.


By: /s/ Jerry E. Wells                  By: /s/ Daniel Knutson
    ---------------------------------       ------------------------------------
Print Name: Jerry E. Wells              Print Name: Daniel Knutson
Its: Member                             Its: Senior Vice President, CFO

Consent of LOL Holdings, Inc.: LOL Holdings, Inc. hereby consents to the sale
and transfer of OI's Membership Interest in the LLC to LOL per this Agreement.

LOL HOLDINGS, INC.


By: /s/ Peter S. Janzen
    ---------------------------------
Print Name: Peter S. Janzen
Its: Assistant Secretary

LIST OF SCHEDULES

1.2b Manager Agreements to be assumed by LOL

4.2  Assignment by OI of Membership Interest to LOL

4.3a Assignment and Assumption Agreement re Manager Contracts

4.4  Amendments to Employment Agreements with Hollis Osborne, Paul Osborne and
     Jerry Wells

5.3b Permitted Investments


                                       7

EX-10.24

                                                                  Exhibit 10.24

                               LAND O'LAKES, INC.
                        COOPERATIVE VALUE INCENTIVE PLAN



Land O'Lakes, Inc. (the "Company"), a Minnesota cooperative association, hereby
amends and restates the Land O'Lakes, Inc. Cooperative Value Incentive Plan (the
"Plan") in order to provide deferred compensation to certain key employees of
the Company effective January 1, 2005. The Company has determined that it is in
its interest to provide certain key employees with financial incentives to
reward the employees for their performance and to encourage long-term commitment
to employment with the Company. These financial incentive awards shall be
determined under the terms of this Plan.

                                   ARTICLE 1
                                   DEFINITIONS

         Section 1.1 Definitions. When used in this document with initial
capital letters, the following terms have the meanings indicated unless a
different meaning is plainly required by the context:

         "Board of Directors" or "Board" means the Board of Directors of the
Company.

         "Change in Control Event" means a change in ownership or change in
effective control of a corporation or a change in control of a substantial
portion of a corporation's assets as defined in proposed regulations under
Section 409A of the Code or subsequent Treasury Department guidance.

         "Change in Control Event with respect to the Participant" means a
Change in Control Event that is considered to relate to a Participant because it
relates to (a) the corporation for which the Participant is performing services
at the time of the event, (b) the corporation that is liable for payments to the
Participant under the Plan (or all such corporations if there are more than
one), or (c) a corporation that is a majority shareholder of a corporation
identified in (a) or (b), or any corporation in a chain of corporations in which
each corporation is a majority shareholder of another corporation in the chain,
ending in a corporation identified in (a) or (b). For purposes of this
definition, the corporation referred to in (a) must be the Company or a Related
Employer and the corporation referred to in (b) must be the Company. For
purposes of this definition, a majority shareholder is a shareholder owning more
than 50% of the total fair market value and total voting power of such
corporation.

         "Disability" means a medically determinable physical or mental
condition which is expected to result in death or to last for a continuous
period of not less than 12 months and which renders a Participant unable to
engage in any substantial gainful activity or is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering employees of the Company. The
existence or nonexistence of such Disability shall be established by the
certificate of a medical doctor selected by or satisfactory to the Company.

         "Early Retirement" means a voluntary Termination of Service by a
Participant on or after the date that will enable the Participant to be eligible
to receive an early retirement benefit under the Land O'Lakes, Inc. Employee
Retirement Plan (or would enable such a benefit if the Participant participated
in that plan).




         "Executive Committee" means the Executive Committee of the Board, to
which the Board has delegated authority for administration of the Plan.

          "Normal Retirement" means a voluntary Termination of Service by a
Participant on or after the date that will enable the Participant to be eligible
to receive a normal retirement benefit under the Land O'Lakes, Inc. Employee
Retirement Plan (or would enable such a benefit if the Participant participated
in that plan).

         "Participant" means any employee or individual described in Section
2.1.

         "Participant's Beneficiary" has the meaning set forth in Section 6.3.

         "Plan" means the Land O'Lakes, Inc. Cooperative Value Incentive Plan,
as set forth herein, including any amendments hereto, which is maintained by the
Company primarily for the purpose of providing financial incentives for certain
key employees.

         "Plan Year" means the calendar year.

         "Related Employer" means each entity that is treated as part of a
single employer with the Company under Section 414 of the Code.

         "Retirement" means a voluntary Termination of Service by a Participant
on or after the date that will enable the Participant to be eligible to receive
an Early Retirement or Normal Retirement benefit under the Land O'Lakes, Inc.
Employee Retirement Plan (or would enable such a benefit if the Participant
participated in that plan).

         "Termination of Service" means that an employee has terminated
employment with the Company and each Related Employer.

         "Unforeseeable Emergency" means a severe financial hardship to a
Participant resulting from illness or accident of the Participant, the
Participant's spouse, or a dependent (as defined in Section 152(a) of the
Internal Revenue Code) of the Participant, loss of the Participant's property
due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. The Company
will determine whether such a severe financial hardship has taken place and may
require that the Participant provide sufficient evidence to support such a
determination.

          "Value Appreciation Right" means an award granted by the Company to a
Participant under this Plan as described in Article 3.

         "Value of the VAR Unit" means the value of a VAR Unit determined under
Section 3.4.

         "VAR Unit" or "Value Appreciation Right Unit" means a performance unit
used to describe and value the Value Appreciation Right benefits granted to
Participants under the Plan.

                                   ARTICLE 2
                                  PARTICIPATION

Section 2.1 Eligibility. The employees of the Company who are eligible to become
Participants in the Plan are the Chief Executive Officer of the Company,
officers of the Company who have attained the level of a Vice President or
above, and any other employees of the Company who are designated by the Chief
Executive Officer as eligible to become Participants in the Plan.



                                       2





                                   ARTICLE 3
                    NATURE OF VALUE APPRECIATION RIGHT AWARDS

         Section 3.1 Description of Value Appreciation Right Awards.

                  (a) Annual Value Appreciation Right Awards will be made in the
         form of VAR Units all as further provided in this Plan. In general, a
         Participant will be granted a specified number of VAR Units with
         respect to a particular Plan Year. The Executive Committee shall be
         responsible for determining the amount of the annual Value Appreciation
         Right Award for the Chief Executive Officer. The Chief Executive
         Officer shall be responsible for determining the level and annual Value
         Appreciation Right Award for all other Participants (including those
         new employees of the Company who become Participants during a Plan
         Year). In general, the number of VAR Units granted to a Participant
         each year as a Value Appreciation Right Award shall be within the
         following guidelines:



         Level of Participant         Value Appreciation Right Award
         --------------------         ------------------------------
                                
         Chief Executive Officer      Amount determined by Executive Committee
         Level 1 Officer              Up to 5,250 VAR Units
         Level 2 Officer              Up to 2,250 VAR Units
         Level 3 Officer              Up to 1,000 VAR Units
         Level 4 Non-Officer          Up to 1,000 VAR Units


                  (b) Notwithstanding the foregoing, the Chief Executive Officer
         may grant Value Appreciation Right Awards in excess of the amount set
         forth above. The Chief Executive Officer shall report annually to the
         Executive Committee with regard to the participating Participants and
         the Value Appreciation Right Awards made to each Participant under this
         Plan. The total of all Value Appreciation Right Awards granted to
         Participants for a given Plan Year shall not exceed 200,000 VAR Units.

                  (c) Any options that had been granted under the Plan as of
         December 31, 2004 or under the Land O'Lakes, Inc. California
         Cooperative Value Incentive Plan shall be converted to VAR Units under
         this Plan, effective as of January 1, 2005. The conversion shall be
         made by crediting each individual who was a participant under either
         plan on December 31, 2004 with a number of VAR Units equal to the
         number of units that were available to be acquired by the Participant
         pursuant to the grant of such options.

         Section 3.2 Vesting of Value Appreciation Right Awards. VAR Units
granted under Section 3.1 shall vest over four (4) years with the first 25% of
the VAR Units to be vested on December 31 of the Plan Year in which the Value
Appreciation Right Award is made, and the remaining 75% of the VAR Units vesting
in 25% increments on December 31 of the three (3) succeeding years. A VAR Unit
credited under Section 3.1(c) shall vest as if it had been granted in the year
that an option was granted with respect to which the credit was made.
Notwithstanding the foregoing, in the event a Participant's employment status
with the Company changes, the special vesting rules set forth in Article 5 shall
apply.

         Section 3.3 Participant Accounts. At the time a grant of VAR Units is
first made to a Participant, the Company shall establish an "account" under the
Plan in the name of the Participant to reflect the number of VAR Units held for
such Participant.


                                       3




         Section 3.4 Valuation of VAR Units.


                  (a) The value of a VAR Unit granted under the Plan, referred
         to in the Plan as the Value of the VAR Unit, shall be the difference
         between a "current price" with respect to that VAR Unit and a "grant
         price" with respect to that VAR Unit, but shall not be less than zero.
         The "grant price" with respect to a VAR Unit shall be the current price
         with respect to that VAR Unit as of December 31 of the year immediately
         preceding the year for which the Value Appreciation Right Award is
         granted. The "current price" with respect to a VAR Unit shall be
         determined on that date and on the December 31 of each subsequent year
         before the year in which distribution is completed with respect to that
         VAR Unit or the VAR Unit expires. The initial Value of the VAR Unit at
         time of grant shall be zero because the current price and grant price
         with respect to the VAR Unit are the same at the time of grant. An
         annual valuation of VAR Units shall be made as of December 31 of each
         year and shall be used to establish the Value of the VAR Unit with
         respect to which a distribution will be made in the following year, as
         further provided in Articles 4 and 5.

                  (b) The "current price" with respect to a VAR Unit shall be
         determined in accordance with the following formula:

                      Enterprise Value:     8 x 5-Year Average EBIT
                                            (Earnings Before Interest and Taxes)

                      Less:                 5-Year Average Long-Term
                                            Debt and Capital Securities

                      Plus:                 5-Year Average Cash to Members
                                            (Patronage Plus Equity Redemption)

                      Equals:               Total Equity Value

                      Divided By:           10-Million

                      Equals:               Current Price per VAR Unit

                  (c) Each option to acquire units that existed under the Plan
         prior to this restatement and options under the Land O'Lakes, Inc.
         California Cooperative Value Incentive Plan have been converted to VAR
         Units under the Plan as provided in Section 3.1(c). The Value of the
         VAR Unit credited to a Participant on account of such an option shall
         be determined under this section as if the VAR Unit had been granted in
         the year that such option was granted to the Participant.

                  (d) After 4 years have passed from the date that a VAR Unit
         has been granted to a Participant, including the year of the grant, the
         Participant may elect pursuant to a process established by the Company
         to have the VAR Unit valued in a different manner permitted by this
         subsection. Such an election will only be effective for calendar years
         that follow the year during which the election is made. If such an
         election is made, the Value of the VAR Unit will be determined on
         December 31 of the calendar year preceding the year in which that
         election is effective, using the method provided in the prior
         provisions of this section. Subsequent to that date, the Value of the
         VAR Unit will be determined by increasing the Value of the VAR Unit
         determined on that December 31


                                       4



         by a specified interest rate. That rate shall be set by the Company at
         the beginning of each calendar year for purposes of determining the
         Value of the VAR Unit on the next December 31. If no rate is specified
         at the beginning of a calendar year, the Company may set the rate at a
         later time or choose to apply the rate used for the prior calendar
         year.

                  (e) Except for VAR Units described in Section 3.4(c),
         beginning in the calendar year following the tenth year after grant of
         a VAR Unit, including the year of the grant, the Value of the VAR Unit
         will be determined by increasing the Value of the VAR Unit determined
         on December 31 of that tenth year by a specified interest rate. That
         rate shall be the same for a calendar year as the rate specified in
         Section 3.4(d) for that year. Notwithstanding those requirements, if a
         Participant's Termination of Service occurs on account of the
         Participant's Disability or Retirement, then the valuation method
         described in the provisions before this Subsection (e) shall not be
         used later than through the second calendar year following the calendar
         year in which that Termination of Service occurs and thereafter shall
         be determined by increasing the Value of the VAR Unit determined on
         December 31 of that second calendar year by the specified interest rate
         described earlier in this Subsection (e).

                  (f) Notwithstanding Subsection (e) above, in the case of VAR
         Units described in Section 3.4(c), the valuation method described in
         the provisions before Subsection (e) above shall apply through at least
         the December 31 immediately preceding the calendar year in which the
         Participant incurs a Termination of Service. Further, notwithstanding
         Subsection (e) above, in the case of VAR Units described in Section
         3.4(c), if that Termination of Service occurs on account of the
         Participant's Disability or Retirement, then such valuation method
         shall be used through the second calendar year following the calendar
         year in which that Termination of Service occurs and thereafter shall
         be determined by increasing the Value of the VAR Unit determined on
         December 31 of that second calendar year by the specified interest rate
         described in Subsection (e). Also, notwithstanding Subsection (e)
         above, in the case of VAR Units described in Section 3.4(c), if that
         Termination of Service occurs on account of the Participant's death,
         then the valuation method described in the provisions before Subsection
         (e) above shall be used through the end of the calendar year preceding
         the date of that death.


                                   ARTICLE 4
                                  DISTRIBUTIONS

         Section 4.1 Distribution Requirements.

                  (a) The value of any VAR Unit may not be distributed until
         that VAR Unit is vested as provided in Section 3.2.

                  (b) Except as otherwise provided in Section 4.3, distributions
         shall be made in February of a calendar year. Distribution of the value
         of any VAR Unit acquired by a Participant shall be made during a
         specific February elected by the Participant or otherwise specified
         under Section 4.3, or at any other time specified in Section 4.3. If
         distribution is to be made during a specific February, but
         administrative matters prevent distribution during that February, then
         that distribution will be made as soon as administratively feasible
         after that February.


                                       5




                  (c) Payment to or on behalf of a Participant with regard to a
         VAR Unit shall be made in a single sum.

                  (d) Elections under this article shall be made on forms and
         pursuant to rules established by the Company.

                  (e) Upon full payment to the Participant of the Value of the
         VAR Unit, the Participant shall have no further interest in the VAR
         Unit for which the Participant has received that payment, and the
         Participant shall have no further right to any increase in the value of
         that VAR Unit.

                  (f) The Company shall have the right to deduct any federal or
         state taxes required by law to be withheld from all distributions made
         pursuant to the Plan.

         Section 4.2 Time of Distribution Election.

                  (a) A Participant's election regarding the time of
         distribution with respect to a VAR Unit shall be made before the
         calendar year that the VAR Unit is granted. However, in the first year
         that a Participant becomes eligible to participate in the Plan, such
         election may be made within 30 days after the date the Participant
         becomes eligible to participate in the Plan and before grants are made
         to the Participant under this Plan.

                  (b) Notwithstanding Subsection (a), during calendar year 2006,
         a Participant may make an election regarding the time of distribution
         with respect to VAR Units granted during 2005 and 2006, which must be
         after 2006. This right shall also apply to VAR Units credited during
         2005 under Section 3.1(c) to replace options that had been granted
         under the Plan or another plan prior to 2005. Such election must be
         made prior to a Participant's Termination of Service in 2006.

         Section 4.3 Distribution Timing Options.

                  (a) A Participant may elect to have distribution with respect
         to a VAR Unit that is scheduled to vest in a particular calendar year
         made on or about a specified date in a February for which such
         distribution is permitted under the Plan. A Participant may not elect a
         date later than a date in February of the first calendar year following
         the Participant's earliest possible Normal Retirement date. If a
         Participant makes this election, that distribution will be made on or
         about that date to the Participant, unless the Participant dies prior
         to that date or incurs a Termination of Service prior to that date and
         prior to the Participant's earliest possible Retirement date. In the
         event of such a death or Termination of Service, distribution will be
         made within or as soon as administratively feasible after 90 days
         following the earlier of such death or Termination of Service. A
         separate such election may be made that will apply in the event of the
         Participant's Disability. The same rules apply to that election, except
         that the elected time of distribution will not be accelerated in the
         event of the Participant's Termination of Service on account of or
         subsequent to the Participant's incurring a Disability.

                  (b) Alternatively, a Participant may elect (including by not
         electing a specified date under Subsection (a) above) to have
         distribution with respect to a VAR Unit that is scheduled to vest in a
         particular calendar year be made subsequent to the earliest to occur of
         the following: (1) the Participant's Termination of Service after


                                       6




         reaching the Participant's earliest possible Retirement date, (2) the
         Participant's Disability, (3) the Participant's Termination of Service
         (other than on account of incurring a Disability) before the
         Participant's earliest possible Retirement date or (4) the
         Participant's death. In the case of the Participant's Disability or
         Termination of Service after reaching the Participant's earliest
         possible Retirement date, distribution will be made during the February
         following the event for which distribution is made. In the case of the
         Participant's death or Termination of Service (other than on account of
         incurring a Disability) before the Participant's earliest possible
         Retirement date, distribution will be made within or as soon as
         administratively possible after 90 days following the event for which
         distribution is made.

                  (c) If a Participant doesn't make an election under Subsection
         (a) or Subsection (b) with respect to a VAR Unit granted to the
         Participant, then distribution of the value of such VAR Unit will be
         made as if the Participant made an election under Subsection (b).

                  (d) A Participant may make a second election to have
         distribution with respect to a VAR Unit granted to the Participant made
         on a specified date in a February at least five years after the
         Participant's Termination of Service, or the specified date for
         commencement of distribution with respect to that VAR Unit if the
         Participant has previously elected such a specified date under this
         section. Such election shall not be effective in the event of the
         Participant's death or of the Participant's Termination of Service
         prior to Retirement. The election must be made at least one year prior
         to that Termination of Service, or specified date, for it to be
         effective. A Participant may also make a second election regarding the
         time of distribution on account of Disability. The election must be
         made at least one year prior to such event for it to be effective. If
         such an election is effective, a five-year delay is not required but
         the elected time of distribution must be otherwise consistent with this
         Article IV. If a Participant makes a second election under this
         Subsection (d), the Participant may not elect a payment later than a
         date in February of the first calendar year following the Participant's
         earliest possible Normal Retirement date.

                  (e) Except if a Participant dies or incurs a Termination of
         Service prior to Retirement, no distribution will be made under the
         Plan in 2006.

         Section 4.4 Distribution Form and Date of Determination of Value.

                  (a) Distribution to a Participant under the Plan with respect
         to a VAR Unit shall be made in a lump sum payment of cash equal to the
         then Value of the VAR Unit.

                  (b) Generally, the Value of the VAR Unit that will be
         distributed will be its Value on the December 31 prior to the date of
         distribution. However, in the case of a Participant's Termination of
         Service prior to Retirement or the Participant's death, the Value of
         the VAR Unit that will be distributed will be its Value on the December
         31 prior to the date of that event.


                                       7




                                   ARTICLE 5
                           CHANGE IN EMPLOYMENT STATUS

         Section 5.1 Termination of Employment. In the event a Participant's
Termination of Service occurs for any reason, except death, Disability, or
Retirement, the Participant shall cease to be a Participant in the Plan as of
the date of that Termination of Service, except as otherwise provided in this
Section. Upon such Termination of Service:

                  (a) Any unvested VAR Units held in the name of the Participant
         shall be forfeited as of the date of the Termination of Service.

                  (b) The value of any vested VAR Units held in the name of the
         Participant shall be distributed in accordance with the procedure set
         forth in Article IV.

         Section 5.2 Retirement. In the event a Participant's Termination of
Service occurs as a result of the Participant's Retirement, the Participant
shall cease to be a Participant in the Plan as of the date of Retirement, except
as otherwise provided in this Section. Upon such Termination of Service:

                  (a) Any Value Appreciation Right Award made with respect to
         the year of Retirement shall be prorated to the Retirement date.

                  (b) In the event that a Participant's Termination of Service
         results from Normal Retirement or Early Retirement, any unvested VAR
         Units will vest.

                  (c) The valuation of the VAR Units and distribution to the
         Participant shall occur as set forth in Sections 3.4 and Article IV,
         respectively.

         Section 5.3 Disability. In the event that a Participant's employment
status with the Company has changed as a result of Participant's Disability, the
Participant shall cease to be a Participant in the Plan as of the date of such
status change, except as otherwise provided in this Section. Upon such status
change:

                  (a) Any Value Appreciation Right Award made with respect to
         the year of the status change shall be prorated.

                  (b) In the event that a Participant's Termination of Service
         results from a Disability, any unvested VAR Units will vest.

                  (c) The valuation of the VAR Units and distribution to the
         Participant shall occur as set forth in Sections 3.4 and Article IV,
         respectively.

                  (d) If a Participant returns to employment by a Participating
         Employer or a Related Employer after incurring a Disability, any
         distributions on account of that Disability will cease.

         Section 5.4 Death. Upon Participant's death:

                  (a) Any unvested VAR Units held in the name of the deceased
         Participant shall be forfeited as of the date of death.

                  (b) Any VAR Units held in name of the deceased Participant
         must be distributed on behalf of the Participant as provided in Article
         IV and the valuation of the


                                       8




         VAR Units shall occur as set forth in Section 3.4. Distribution will be
         made to the Participant's Beneficiary.

                                   ARTICLE 6
                               NON-TRANSFERABILITY

         Section 6.1 Anti-alienation of VAR Units. VAR Units granted to a
Participant and any rights and privileges pertaining thereto may not be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or
subjected to any charge or legal process; and no interest or right to receive a
benefit may be taken, either voluntarily or involuntarily, for the satisfaction
of the debts of, or other obligations or claims against, such person or entity,
including claims for alimony, support, separate maintenance and claims in
bankruptcy proceedings.

         Section 6.2 Incompetent Participants. If any Participant has been
declared incompetent and a conservator or other person legally charged with the
care of such Participant or of his or her estate has been appointed, any
distribution under the Plan to which the Participant is entitled shall be paid
to such conservator or other person legally charged with the care of the
Participant or his or her estate. Except as provided above, when the Company has
determined that a Participant is unable to manage his or her affairs, the
Company may provide for such distribution or any part thereof to be made to any
other person or institution then contributing toward or providing for the care
and maintenance of such Participant. Any such distribution shall be a payment
for the account of such Participant and a complete discharge of any liability of
the Company and the Plan therefor.

         Section 6.3 Designated Beneficiary. In the event of a Participant's
death prior to the distribution of any amounts payable under the Plan, the
payment of any amounts on behalf of the Participant under the Plan shall be made
to the Participant's Beneficiary designated on a form provided to the
Participant by the Company (the "Participant's Beneficiary"). If no such
beneficiary has been designated, payments shall be made to the duly appointed
and qualified executor or other personal representative of the Participant to be
distributed in accordance with the Participant's will or applicable intestacy
law; or in the event that there shall be no such representative duly appointed
and qualified within six (6) months after the date of death of such deceased
Participant, then to such persons as, at the date of the Participant's death,
would be entitled to share in the distribution of such deceased Participant's
personal estate under the provisions of the applicable statute then in force
governing the descent of intestate property, in the proportions specified in
such statute.

                                   ARTICLE 7
                           ADMINISTRATION OF THE PLAN

         Section 7.1 Administrator. The administrator and named fiduciary of the
Plan shall be the Company.

         Section 7.2 Authority of Administrator. The Company shall have
authority, duty and power to interpret and construe the provisions of the Plan
as it deems appropriate, to temporarily suspend the Plan, to adopt, establish
and revise rules, procedures and regulations relating to the Plan, to determine
the conditions subject to which the value of any Value Appreciation Right Awards
that may be made or payable, and to make any other determinations which it
believes necessary or advisable for the administration of the Plan. The Company
shall have the duty and responsibility of maintaining records, making the
requisite calculations and dispersing payments hereunder. The Company's
determinations, interpretations, regulations and calculations shall be final and
binding on all persons and parties concerned. The Chief Executive Officer of the
Company shall be the agent of the Plan for the service of legal process in
accordance with Section 502 of the Employee Retirement Income Security Act of
1974, as amended.


                                       9




         Section 7.3 Operation of Plan. The Company shall be responsible for the
general operation and administration of the Plan and for carrying out the
provisions thereof. The Company shall be responsible for the expenses incurred
in the administration of the Plan. The Company shall also be responsible for
determining eligibility for payments and the amounts payable pursuant to the
Plan. The Company shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the Plan. The procedures for filing claims for payments
under the Plan are described below.

         Section 7.4 Claims Procedures.

                  (a) It is the intent of the Company to make distributions
         under the Plan without the Participant having to complete or submit any
         claims forms other than notices contemplated by the Plan. However, a
         Participant who believes he or she is entitled to a payment under the
         Plan may submit a claim for such payment in writing to the Company. Any
         claim must be made by the Participant or his or her beneficiary in
         writing and state the claimant's name and the nature of the payment to
         be made under the Plan on a form acceptable to the Company. If for any
         reason a claim under this Plan is denied by the Company, the Claims
         Manager shall deliver to the claimant a written explanation setting
         forth the specific reasons for the denial, specific references to the
         pertinent provisions under the Plan on which the denial is based, a
         description of any additional material or information necessary for the
         claimant to perfect the claim and an explanation of why such material
         or information is necessary, and information on the procedures to be
         followed by the claimant in obtaining a review of his or her claim, all
         written in a manner reasonably understandable to the claimant. For this
         purpose: (i) the claimant's claim shall be deemed to be filed when
         presented orally or in writing to the Claims Manager and (ii) the
         Claims Manager's explanation shall be in writing delivered to the
         claimant within 90 days of the date the claim is filed.

                  (b) The claimant shall have 60 days following his or her
         receipt of the denial of the claim to file with the Claims Manager a
         written request for review of the denial. For such review, the claimant
         or the claimant's representative may review pertinent documents and
         submit written issues and comments.

                  (c) The Claims Manager shall decide the issue on review and
         furnish the claimant with a copy within 60 days of receipt of the
         claimant's request for review of the claimant's claim. The decision on
         review shall be in writing and shall include specific reasons for the
         decision, written in a manner reasonably understandable to the
         claimant, as well as specific references to the pertinent provisions in
         the Plan on which the decision is based. If a copy of the decision is
         not so furnished to the claimant within such 60 days, the claim shall
         be deemed denied on review. In no event may a claimant commence legal
         action for benefits the claimant believes are due the claimant until
         the claimant has exhausted all of the remedies and procedures afforded
         the claimant by this Section 7.4.

                  (d) For claims procedures purposes, the "Claims Manager" shall
         be the Company.

         Section 7.5 Participant's Address. Each Participant shall keep the
Company informed of his or her current address and the current address of his or
her beneficiary. The Company shall not be obligated to search for any person. If
the location of a Participant is not made known to the Company within three (3)
years after the date on which payment of the Participant's benefits payable
under this Plan may be made, payment may be made as though the Participant



                                       10



had died at the end of the three-year period. If, within one (1) additional year
after such three-year period has elapsed, or, within three (3) years after the
actual death of a Participant, the Company is unable to locate any designated
beneficiary of the Participant, then the Company shall have no further
obligation to pay any benefit hereunder to such Participant or designated
beneficiary and such benefits shall be irrevocably forfeited.

         Section 7.6 Liability. Notwithstanding any of the provisions of the
Plan to the contrary, neither the Company nor any individual acting as an
employee or agent of the Company shall be liable to any Participant or any other
person for any claim, loss, liability or expense incurred in connection with the
Plan, unless attributable to fraud or willful misconduct on the part of the
Company or any such employee or agent of the Company.

                                   ARTICLE 8
                            MISCELLANEOUS PROVISIONS

         Section 8.1 No Employment Rights. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained in
the employ of the Company.

         Section 8.2 Unfunded and Unsecured. The Plan shall at all times be
considered entirely unfunded both for tax purposes and for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended, and no
provision shall at any time be made with respect to segregating assets of the
Company for payment of any amounts hereunder. Any funds with respect to payment
to be made hereunder shall continue for all purposes to be part of the general
assets of the Company and available to the general creditors of the Company in
the event of the Company's bankruptcy (when the Company is involved in a pending
proceeding under the Federal Bankruptcy Code) or insolvency (when the Company is
unable to pay its debts as they mature). No Participant or any other person
shall have any interests in any particular assets of the Company by reason of
the right to receive a benefit under the Plan and to the extent the Participant
or any other person acquires a right to receive benefits under this Plan, such
right shall be no greater than the right of any general unsecured creditor of
the Company. The Plan constitutes a mere promise by the Company to make payments
to the Participants in the future. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other person or entity that any
funds in any trust or the assets of the Company will be sufficient to pay any
benefit hereunder. Furthermore, no Participant shall have any right to a benefit
under the Plan except in accordance with the terms of the Plan.

         Section 8.3 Plan Provisions. Except when otherwise required by the
context, any singular terminology shall include the plural.

         Section 8.4 Severability. If a provision of the Plan shall be held to
be illegal or invalid, the illegality or invalidity shall not affect the
remaining parts of the Plan and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

         Section 8.5 Applicable Law. To the extent not preempted by the laws of
the United States, the laws of the State of Minnesota shall apply with respect
to this Plan.

         Section 8.6 Successor to Company. In the event there is a successor or
assignee to or of the Company, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all (at least 85% of the
assets or the common stock) of the Company, the Company, in its sole discretion,
may either cash out or require such successor or assignee to assume and agree to
perform the Company's obligations under the Plan, in the same manner and


                                       11




to the same extent that the Company would be required to perform if no such
succession or assignment had occurred or terminate the Plan pursuant to the
provisions of Article 10. If a successor or assignee assumes the Plan pursuant
to this Section 8.6, the term "Company," as used in the Plan, shall mean the
Company as hereinbefore defined and any successor or assignee to the Company
which by reason hereof becomes bound by the terms and provisions of the Plan.

         Section 8.7 Authority of CEO. Except in cases where the
responsibilities are reserved to the Board or Executive Committee under this
Plan, the Chief Executive Officer of the Company (or his designee) may act on
behalf of the Company under this Plan.

                                    ARTICLE 9
                                    AMENDMENT

The Company reserves the power to alter, amend or wholly revise or terminate the
Plan at any time and from time to time by the action of the Board and the
interest of each Participant is subject to the powers so reserved. An amendment
shall be authorized by the Board or Executive Committee and shall be stated in
an instrument in writing signed in the name of the Company by a person or
persons authorized by the Board. After the instrument has been so executed, the
Plan shall be effectively amended in the manner therein set forth, and all
Participants shall be bound thereby. No amendment to the Plan may alter, impair,
or reduce the methodology for valuation of Value Appreciation Rights (VAR Units)
of Participants that have been awarded under the Plan prior to the effective
date of such amendment without the written consent of the affected Participants.
However, if the Company determines that an event has occurred that substantially
changes the relationship between the value measured under Section 3.4 and the
value of the Company, such as a major merger, the Company may modify such
methodology as it determines to be appropriate in order to limit such a change.
Such modification may include a modification of the number of VAR Units held
under the Plan on behalf of each Participant. However, the modification shall
not reduce the total value of the VAR Units held in the name of a Participant
below such value prior to such event.

                                   ARTICLE 10
                               TERMINATION OF PLAN

         Section 10.1 Power to Terminate and Consequences of Termination of the
Plan. The Company may at any time terminate the Plan by action of the Board. No
further Value Appreciation Right Awards will be granted after the date of
termination of the Plan. The termination of the Plan shall not reduce alter,
impair, or reduce the methodology for valuation of Value Appreciation Rights
(VAR Units) of Participants that have been awarded prior to the effective date
of such termination, without the written consent of the affected Participant.
Upon such termination, all unvested VAR Units shall immediately vest.
Thereafter, the Company shall distribute the value of all VAR Units held in the
name of Participants and the Participants shall have no further rights or
benefits under the Plan after that distribution is complete. The valuation of
VAR Units so distributed and the distribution to the Participants shall occur as
set forth in Sections 3.4 and Article IV, respectively.

         Section 10.2 Options to Accelerate Distribution.

                  (a) The Company may elect to make lump sum distributions of
         the value of all VAR Units held in the names of Participants if it
         elects to terminate the Plan and make those distributions within twelve
         (12) months of a Change in Control Event that is a Change in Control
         Event with respect to the Participant for each Participant.


                                       12



                  (b) The Company may elect to make lump sum distributions of
         the value of all VAR Units held in the names of Participants if it
         elects to terminate the Plan and make those distributions subsequent to
         12 months after and within 24 months of that termination provided that:

                  (1) All arrangements sponsored by a Participating Employer or
                  Related Employer that would be aggregated with this Plan under
                  Section 1.409A-1(c) of Proposed Treasury Regulations (or
                  successor regulations), if Participants participated in those
                  arrangements, are terminated; and

                  (2) The Company does not adopt a new arrangement that would
                  have been aggregated with the Plan under those regulations
                  (had the Plan continued), if Participants participated under
                  that arrangement and the Plan, at any time within five years
                  following the date of termination of the Plan.

         Notwithstanding the prior provisions of this Subsection (b), if those
         elections are made under this Subsection (b), payments to Participants
         that would have been made before such 12 month period shall be made as
         if those elections had not been made.

In Witness Whereof, this restatement is effective as of _________________, 2005.


                                                  LAND O'LAKES

                                                  BY:  ________________________

                                                  TITLE: _______________________




                                       13

EX-10.25

                               LAND O'LAKES, INC.
                        COOPERATIVE VALUE INCENTIVE PLAN



Land O'Lakes, Inc. (the "Company"), a Minnesota cooperative association, hereby
amends and restates the Land O'Lakes, Inc. Cooperative Value Incentive Plan (the
"Plan") in order to provide deferred compensation to certain key employees of
the Company effective January 1, 2005. The Company has determined that it is in
its interest to provide certain key employees with financial incentives to
reward the employees for their performance and to encourage long-term commitment
to employment with the Company. These financial incentive awards shall be
determined under the terms of this Plan.

                                   ARTICLE 1
                                   DEFINITIONS

         Section 1.1 Definitions. When used in this document with initial
capital letters, the following terms have the meanings indicated unless a
different meaning is plainly required by the context:

         "Board of Directors" or "Board" means the Board of Directors of the
Company.

         "Change in Control Event" means a change in ownership or change in
effective control of a corporation or a change in control of a substantial
portion of a corporation's assets as defined in proposed regulations under
Section 409A of the Code or subsequent Treasury Department guidance.

         "Change in Control Event with respect to the Participant" means a
Change in Control Event that is considered to relate to a Participant because it
relates to (a) the corporation for which the Participant is performing services
at the time of the event, (b) the corporation that is liable for payments to the
Participant under the Plan (or all such corporations if there are more than
one), or (c) a corporation that is a majority shareholder of a corporation
identified in (a) or (b), or any corporation in a chain of corporations in which
each corporation is a majority shareholder of another corporation in the chain,
ending in a corporation identified in (a) or (b). For purposes of this
definition, the corporation referred to in (a) must be the Company or a Related
Employer and the corporation referred to in (b) must be the Company. For
purposes of this definition, a majority shareholder is a shareholder owning more
than 50% of the total fair market value and total voting power of such
corporation.

         "Disability" means a medically determinable physical or mental
condition which is expected to result in death or to last for a continuous
period of not less than 12 months and which renders a Participant unable to
engage in any substantial gainful activity or is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering employees of the Company. The
existence or nonexistence of such Disability shall be established by the
certificate of a medical doctor selected by or satisfactory to the Company.

         "Early Retirement" means a voluntary Termination of Service by a
Participant on or after the date that will enable the Participant to be eligible
to receive an early retirement benefit under the Land O'Lakes, Inc. Employee
Retirement Plan (or would enable such a benefit if the Participant participated
in that plan).




         "Executive Committee" means the Executive Committee of the Board, to
which the Board has delegated authority for administration of the Plan.

          "Normal Retirement" means a voluntary Termination of Service by a
Participant on or after the date that will enable the Participant to be eligible
to receive a normal retirement benefit under the Land O'Lakes, Inc. Employee
Retirement Plan (or would enable such a benefit if the Participant participated
in that plan).

         "Participant" means any employee or individual described in Section
2.1.

         "Participant's Beneficiary" has the meaning set forth in Section 6.3.

         "Plan" means the Land O'Lakes, Inc. Cooperative Value Incentive Plan,
as set forth herein, including any amendments hereto, which is maintained by the
Company primarily for the purpose of providing financial incentives for certain
key employees.

         "Plan Year" means the calendar year.

         "Related Employer" means each entity that is treated as part of a
single employer with the Company under Section 414 of the Code.

         "Retirement" means a voluntary Termination of Service by a Participant
on or after the date that will enable the Participant to be eligible to receive
an Early Retirement or Normal Retirement benefit under the Land O'Lakes, Inc.
Employee Retirement Plan (or would enable such a benefit if the Participant
participated in that plan).

         "Termination of Service" means that an employee has terminated
employment with the Company and each Related Employer.

         "Unforeseeable Emergency" means a severe financial hardship to a
Participant resulting from illness or accident of the Participant, the
Participant's spouse, or a dependent (as defined in Section 152(a) of the
Internal Revenue Code) of the Participant, loss of the Participant's property
due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. The Company
will determine whether such a severe financial hardship has taken place and may
require that the Participant provide sufficient evidence to support such a
determination.

          "Value Appreciation Right" means an award granted by the Company to a
Participant under this Plan as described in Article 3.

         "Value of the VAR Unit" means the value of a VAR Unit determined under
Section 3.4.

         "VAR Unit" or "Value Appreciation Right Unit" means a performance unit
used to describe and value the Value Appreciation Right benefits granted to
Participants under the Plan.

                                   ARTICLE 2
                                  PARTICIPATION

         Section 2.1 Eligibility. The employees of the Company who are eligible
to become Participants in the Plan are the Chief Executive Officer of the
Company, officers of the Company who have attained the level of a Vice President
or above, and any other employees of the Company who are designated by the Chief
Executive Officer as eligible to become Participants in the Plan.


                                       2




                                   ARTICLE 3
                    NATURE OF VALUE APPRECIATION RIGHT AWARDS

Section 3.1       Description of Value Appreciation Right Awards.

                  (a) Annual Value Appreciation Right Awards will be made in the
         form of VAR Units all as further provided in this Plan. In general, a
         Participant will be granted a specified number of VAR Units with
         respect to a particular Plan Year. The Executive Committee shall be
         responsible for determining the amount of the annual Value Appreciation
         Right Award for the Chief Executive Officer. The Chief Executive
         Officer shall be responsible for determining the level and annual Value
         Appreciation Right Award for all other Participants (including those
         new employees of the Company who become Participants during a Plan
         Year). In general, the number of VAR Units granted to a Participant
         each year as a Value Appreciation Right Award shall be within the
         following guidelines:

         Level of Participant                    Value Appreciation Right Award
         --------------------                    ------------------------------
         Chief Executive Officer                 Amount determined by Executive
                                                 Committee
         Level 1 Officer                         Up to 5,250 VAR Units
         Level 2 Officer                         Up to 2,250 VAR Units
         Level 3 Officer                         Up to 1,000 VAR Units
         Level 4 Non-Officer                     Up to 1,000 VAR Units

                  (b) Notwithstanding the foregoing, the Chief Executive Officer
         may grant Value Appreciation Right Awards in excess of the amount set
         forth above. The Chief Executive Officer shall report annually to the
         Executive Committee with regard to the participating Participants and
         the Value Appreciation Right Awards made to each Participant under this
         Plan. The total of all Value Appreciation Right Awards granted to
         Participants for a given Plan Year shall not exceed 200,000 VAR Units.

                  (c) Any options that had been granted under the Plan as of
         December 31, 2004 or under the Land O'Lakes, Inc. California
         Cooperative Value Incentive Plan shall be converted to VAR Units under
         this Plan, effective as of January 1, 2005. The conversion shall be
         made by crediting each individual who was a participant under either
         plan on December 31, 2004 with a number of VAR Units equal to the
         number of units that were available to be acquired by the Participant
         pursuant to the grant of such options.

         Section 3.2 Vesting of Value Appreciation Right Awards. VAR Units
granted under Section 3.1 shall vest over four (4) years with the first 25% of
the VAR Units to be vested on December 31 of the Plan Year in which the Value
Appreciation Right Award is made, and the remaining 75% of the VAR Units vesting
in 25% increments on December 31 of the three (3) succeeding years. A VAR Unit
credited under Section 3.1(c) shall vest as if it had been granted in the year
that an option was granted with respect to which the credit was made.
Notwithstanding the foregoing, in the event a Participant's employment status
with the Company changes, the special vesting rules set forth in Article 5 shall
apply.

         Section 3.3 Participant Accounts. At the time a grant of VAR Units is
first made to a Participant, the Company shall establish an "account" under the
Plan in the name of the Participant to reflect the number of VAR Units held for
such Participant.


                                       3




         Section 3.4 Valuation of VAR Units.

                  (a) The value of a VAR Unit granted under the Plan, referred
         to in the Plan as the Value of the VAR Unit, shall be the difference
         between a "current price" with respect to that VAR Unit and a "grant
         price" with respect to that VAR Unit, but shall not be less than zero.
         The "grant price" with respect to a VAR Unit shall be the current price
         with respect to that VAR Unit as of December 31 of the year immediately
         preceding the year for which the Value Appreciation Right Award is
         granted. The "current price" with respect to a VAR Unit shall be
         determined on that date and on the December 31 of each subsequent year
         before the year in which distribution is completed with respect to that
         VAR Unit or the VAR Unit expires. The initial Value of the VAR Unit at
         time of grant shall be zero because the current price and grant price
         with respect to the VAR Unit are the same at the time of grant. An
         annual valuation of VAR Units shall be made as of December 31 of each
         year and shall be used to establish the Value of the VAR Unit with
         respect to which a distribution will be made in the following year, as
         further provided in Articles 4 and 5.

                  (b) The "current price" with respect to a VAR Unit shall be
         determined in accordance with the following formula:

         Enterprise Value:       8 x 5-Year Average EBIT
                                 (Earnings Before Interest and Taxes)

         Less:                   5-Year Average Long-Term
                                 Debt and Capital Securities

         Plus:                   5-Year Average Cash to Members
                                 (Patronage Plus Equity Redemption)

         Equals:                 Total Equity Value

         Divided By:             10-Million

         Equals:                 Current Price per VAR Unit

                  (c) Each option to acquire units that existed under the Plan
         prior to this restatement and options under the Land O'Lakes, Inc.
         California Cooperative Value Incentive Plan have been converted to VAR
         Units under the Plan as provided in Section 3.1(c). The Value of the
         VAR Unit credited to a Participant on account of such an option shall
         be determined under this section as if the VAR Unit had been granted in
         the year that such option was granted to the Participant.

                  (d) After 4 years have passed from the date that a VAR Unit
         has been granted to a Participant, including the year of the grant, the
         Participant may elect pursuant to a process established by the Company
         to have the VAR Unit valued in a different manner permitted by this
         subsection. Such an election will only be effective for calendar years
         that follow the year during which the election is made. If such an
         election is made, the Value of the VAR Unit will be determined on
         December 31 of the calendar year preceding the year in which that
         election is effective, using the method provided in the prior
         provisions of this section. Subsequent to that date, the Value of the
         VAR Unit will be determined by increasing the Value of the VAR Unit
         determined on that December 31


                                       4




         by a specified interest rate. That rate shall be set by the Company at
         the beginning of each calendar year for purposes of determining the
         Value of the VAR Unit on the next December 31. If no rate is specified
         at the beginning of a calendar year, the Company may set the rate at a
         later time or choose to apply the rate used for the prior calendar
         year.

                  (e) Except for VAR Units described in Section 3.4(c),
         beginning in the calendar year following the tenth year after grant of
         a VAR Unit, including the year of the grant, the Value of the VAR Unit
         will be determined by increasing the Value of the VAR Unit determined
         on December 31 of that tenth year by a specified interest rate. That
         rate shall be the same for a calendar year as the rate specified in
         Section 3.4(d) for that year. Notwithstanding those requirements, if a
         Participant's Termination of Service occurs on account of the
         Participant's Disability or Retirement, then the valuation method
         described in the provisions before this Subsection (e) shall not be
         used later than through the second calendar year following the calendar
         year in which that Termination of Service occurs and thereafter shall
         be determined by increasing the Value of the VAR Unit determined on
         December 31 of that second calendar year by the specified interest rate
         described earlier in this Subsection (e).

                  (f) Notwithstanding Subsection (e) above, in the case of VAR
         Units described in Section 3.4(c), the valuation method described in
         the provisions before Subsection (e) above shall apply through at least
         the December 31 immediately preceding the calendar year in which the
         Participant incurs a Termination of Service. Further, notwithstanding
         Subsection (e) above, in the case of VAR Units described in Section
         3.4(c), if that Termination of Service occurs on account of the
         Participant's Disability or Retirement, then such valuation method
         shall be used through the second calendar year following the calendar
         year in which that Termination of Service occurs and thereafter shall
         be determined by increasing the Value of the VAR Unit determined on
         December 31 of that second calendar year by the specified interest rate
         described in Subsection (e). Also, notwithstanding Subsection (e)
         above, in the case of VAR Units described in Section 3.4(c), if that
         Termination of Service occurs on account of the Participant's death,
         then the valuation method described in the provisions before Subsection
         (e) above shall be used through the end of the calendar year preceding
         the date of that death.


                                   ARTICLE 4
                                  DISTRIBUTIONS

         Section 4.1 Distribution Requirements.

                  (a) The value of any VAR Unit may not be distributed until
         that VAR Unit is vested as provided in Section 3.2.

                  (b) Except as otherwise provided in Section 4.3, distributions
         shall be made in February of a calendar year. Distribution of the value
         of any VAR Unit acquired by a Participant shall be made during a
         specific February elected by the Participant or otherwise specified
         under Section 4.3, or at any other time specified in Section 4.3. If
         distribution is to be made during a specific February, but
         administrative matters prevent distribution during that February, then
         that distribution will be made as soon as administratively feasible
         after that February.


                                       5




                  (c) Payment to or on behalf of a Participant with regard to a
         VAR Unit shall be made in a single sum.

                  (d) Elections under this article shall be made on forms and
         pursuant to rules established by the Company.

                  (e) Upon full payment to the Participant of the Value of the
         VAR Unit, the Participant shall have no further interest in the VAR
         Unit for which the Participant has received that payment, and the
         Participant shall have no further right to any increase in the value of
         that VAR Unit.

                  (f) The Company shall have the right to deduct any federal or
         state taxes required by law to be withheld from all distributions made
         pursuant to the Plan.

         Section 4.2 Time of Distribution Election.

                  (a) A Participant's election regarding the time of
         distribution with respect to a VAR Unit shall be made before the
         calendar year that the VAR Unit is granted. However, in the first year
         that a Participant becomes eligible to participate in the Plan, such
         election may be made within 30 days after the date the Participant
         becomes eligible to participate in the Plan and before grants are made
         to the Participant under this Plan.

                  (b) Notwithstanding Subsection (a), during calendar year 2006,
         a Participant may make an election regarding the time of distribution
         with respect to VAR Units granted during 2005 and 2006, which must be
         after 2006. This right shall also apply to VAR Units credited during
         2005 under Section 3.1(c) to replace options that had been granted
         under the Plan or another plan prior to 2005. Such election must be
         made prior to a Participant's Termination of Service in 2006.

         Section 4.3 Distribution Timing Options.

                  (a) A Participant may elect to have distribution with respect
         to a VAR Unit that is scheduled to vest in a particular calendar year
         made on or about a specified date in a February for which such
         distribution is permitted under the Plan. A Participant may not elect a
         date later than a date in February of the first calendar year following
         the Participant's earliest possible Normal Retirement date. If a
         Participant makes this election, that distribution will be made on or
         about that date to the Participant, unless the Participant dies prior
         to that date or incurs a Termination of Service prior to that date and
         prior to the Participant's earliest possible Retirement date. In the
         event of such a death or Termination of Service, distribution will be
         made within or as soon as administratively feasible after 90 days
         following the earlier of such death or Termination of Service. A
         separate such election may be made that will apply in the event of the
         Participant's Disability. The same rules apply to that election, except
         that the elected time of distribution will not be accelerated in the
         event of the Participant's Termination of Service on account of or
         subsequent to the Participant's incurring a Disability.

                  (b) Alternatively, a Participant may elect (including by not
         electing a specified date under Subsection (a) above) to have
         distribution with respect to a VAR Unit that is scheduled to vest in a
         particular calendar year be made subsequent to the earliest to occur of
         the following: (1) the Participant's Termination of Service after


                                       6



         reaching the Participant's earliest possible Retirement date, (2) the
         Participant's Disability, (3) the Participant's Termination of Service
         (other than on account of incurring a Disability) before the
         Participant's earliest possible Retirement date or (4) the
         Participant's death. In the case of the Participant's Disability or
         Termination of Service after reaching the Participant's earliest
         possible Retirement date, distribution will be made during the February
         following the event for which distribution is made. In the case of the
         Participant's death or Termination of Service (other than on account of
         incurring a Disability) before the Participant's earliest possible
         Retirement date, distribution will be made within or as soon as
         administratively possible after 90 days following the event for which
         distribution is made.

                  (c) If a Participant doesn't make an election under Subsection
         (a) or Subsection (b) with respect to a VAR Unit granted to the
         Participant, then distribution of the value of such VAR Unit will be
         made as if the Participant made an election under Subsection (b).

                  (d) A Participant may make a second election to have
         distribution with respect to a VAR Unit granted to the Participant made
         on a specified date in a February at least five years after the
         Participant's Termination of Service, or the specified date for
         commencement of distribution with respect to that VAR Unit if the
         Participant has previously elected such a specified date under this
         section. Such election shall not be effective in the event of the
         Participant's death or of the Participant's Termination of Service
         prior to Retirement. The election must be made at least one year prior
         to that Termination of Service, or specified date, for it to be
         effective. A Participant may also make a second election regarding the
         time of distribution on account of Disability. The election must be
         made at least one year prior to such event for it to be effective. If
         such an election is effective, a five-year delay is not required but
         the elected time of distribution must be otherwise consistent with this
         Article IV. If a Participant makes a second election under this
         Subsection (d), the Participant may not elect a payment later than a
         date in February of the first calendar year following the Participant's
         earliest possible Normal Retirement date.

                  (e) Except if a Participant dies or incurs a Termination of
         Service prior to Retirement, no distribution will be made under the
         Plan in 2006.

         Section 4.4 Distribution Form and Date of Determination of Value.

                  (a) Distribution to a Participant under the Plan with respect
         to a VAR Unit shall be made in a lump sum payment of cash equal to the
         then Value of the VAR Unit.

                  (b) Generally, the Value of the VAR Unit that will be
         distributed will be its Value on the December 31 prior to the date of
         distribution. However, in the case of a Participant's Termination of
         Service prior to Retirement or the Participant's death, the Value of
         the VAR Unit that will be distributed will be its Value on the December
         31 prior to the date of that event.


                                       7



                                   ARTICLE 5
                           CHANGE IN EMPLOYMENT STATUS

         Section 5.1 Termination of Employment. In the event a Participant's
Termination of Service occurs for any reason, except death, Disability, or
Retirement, the Participant shall cease to be a Participant in the Plan as of
the date of that Termination of Service, except as otherwise provided in this
Section. Upon such Termination of Service:

                  (a) Any unvested VAR Units held in the name of the Participant
         shall be forfeited as of the date of the Termination of Service.

                  (b) The value of any vested VAR Units held in the name of the
         Participant shall be distributed in accordance with the procedure set
         forth in Article IV.

         Section 5.2 Retirement. In the event a Participant's Termination of
Service occurs as a result of the Participant's Retirement, the Participant
shall cease to be a Participant in the Plan as of the date of Retirement, except
as otherwise provided in this Section. Upon such Termination of Service:

                  (a) Any Value Appreciation Right Award made with respect to
         the year of Retirement shall be prorated to the Retirement date.

                  (b) In the event that a Participant's Termination of Service
         results from Normal Retirement or Early Retirement, any unvested VAR
         Units will vest.

                  (c) The valuation of the VAR Units and distribution to the
         Participant shall occur as set forth in Sections 3.4 and Article IV,
         respectively.

         Section 5.3 Disability. In the event that a Participant's employment
status with the Company has changed as a result of Participant's Disability, the
Participant shall cease to be a Participant in the Plan as of the date of such
status change, except as otherwise provided in this Section. Upon such status
change:

                  (a) Any Value Appreciation Right Award made with respect to
         the year of the status change shall be prorated.

                  (b) In the event that a Participant's Termination of Service
         results from a Disability, any unvested VAR Units will vest.

                  (c) The valuation of the VAR Units and distribution to the
         Participant shall occur as set forth in Sections 3.4 and Article IV,
         respectively.

                  (d) If a Participant returns to employment by a Participating
         Employer or a Related Employer after incurring a Disability, any
         distributions on account of that Disability will cease.

         Section 5.4 Death. Upon Participant's death:

                  (a) Any unvested VAR Units held in the name of the deceased
         Participant shall be forfeited as of the date of death.

                  (b) Any VAR Units held in name of the deceased Participant
         must be distributed on behalf of the Participant as provided in Article
         IV and the valuation of the


                                       8




         VAR Units shall occur as set forth in Section 3.4. Distribution will be
         made to the Participant's Beneficiary.

                                   ARTICLE 6
                               NON-TRANSFERABILITY

         Section 6.1 Anti-alienation of VAR Units. VAR Units granted to a
Participant and any rights and privileges pertaining thereto may not be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or
subjected to any charge or legal process; and no interest or right to receive a
benefit may be taken, either voluntarily or involuntarily, for the satisfaction
of the debts of, or other obligations or claims against, such person or entity,
including claims for alimony, support, separate maintenance and claims in
bankruptcy proceedings.

         Section 6.2 Incompetent Participants. If any Participant has been
declared incompetent and a conservator or other person legally charged with the
care of such Participant or of his or her estate has been appointed, any
distribution under the Plan to which the Participant is entitled shall be paid
to such conservator or other person legally charged with the care of the
Participant or his or her estate. Except as provided above, when the Company has
determined that a Participant is unable to manage his or her affairs, the
Company may provide for such distribution or any part thereof to be made to any
other person or institution then contributing toward or providing for the care
and maintenance of such Participant. Any such distribution shall be a payment
for the account of such Participant and a complete discharge of any liability of
the Company and the Plan therefor.

         Section 6.3 Designated Beneficiary. In the event of a Participant's
death prior to the distribution of any amounts payable under the Plan, the
payment of any amounts on behalf of the Participant under the Plan shall be made
to the Participant's Beneficiary designated on a form provided to the
Participant by the Company (the "Participant's Beneficiary"). If no such
beneficiary has been designated, payments shall be made to the duly appointed
and qualified executor or other personal representative of the Participant to be
distributed in accordance with the Participant's will or applicable intestacy
law; or in the event that there shall be no such representative duly appointed
and qualified within six (6) months after the date of death of such deceased
Participant, then to such persons as, at the date of the Participant's death,
would be entitled to share in the distribution of such deceased Participant's
personal estate under the provisions of the applicable statute then in force
governing the descent of intestate property, in the proportions specified in
such statute.

                                   ARTICLE 7
                           ADMINISTRATION OF THE PLAN

         Section 7.1 Administrator. The administrator and named fiduciary of the
Plan shall be the Company.

         Section 7.2 Authority of Administrator. The Company shall have
authority, duty and power to interpret and construe the provisions of the Plan
as it deems appropriate, to temporarily suspend the Plan, to adopt, establish
and revise rules, procedures and regulations relating to the Plan, to determine
the conditions subject to which the value of any Value Appreciation Right Awards
that may be made or payable, and to make any other determinations which it
believes necessary or advisable for the administration of the Plan. The Company
shall have the duty and responsibility of maintaining records, making the
requisite calculations and dispersing payments hereunder. The Company's
determinations, interpretations, regulations and calculations shall be final and
binding on all persons and parties concerned. The Chief Executive Officer of the
Company shall be the agent of the Plan for the service of legal process in
accordance with Section 502 of the Employee Retirement Income Security Act of
1974, as amended.


                                       9




         Section 7.3 Operation of Plan. The Company shall be responsible for the
general operation and administration of the Plan and for carrying out the
provisions thereof. The Company shall be responsible for the expenses incurred
in the administration of the Plan. The Company shall also be responsible for
determining eligibility for payments and the amounts payable pursuant to the
Plan. The Company shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the Plan. The procedures for filing claims for payments
under the Plan are described below.

         Section 7.4 Claims Procedures.

                  (a) It is the intent of the Company to make distributions
         under the Plan without the Participant having to complete or submit any
         claims forms other than notices contemplated by the Plan. However, a
         Participant who believes he or she is entitled to a payment under the
         Plan may submit a claim for such payment in writing to the Company. Any
         claim must be made by the Participant or his or her beneficiary in
         writing and state the claimant's name and the nature of the payment to
         be made under the Plan on a form acceptable to the Company. If for any
         reason a claim under this Plan is denied by the Company, the Claims
         Manager shall deliver to the claimant a written explanation setting
         forth the specific reasons for the denial, specific references to the
         pertinent provisions under the Plan on which the denial is based, a
         description of any additional material or information necessary for the
         claimant to perfect the claim and an explanation of why such material
         or information is necessary, and information on the procedures to be
         followed by the claimant in obtaining a review of his or her claim, all
         written in a manner reasonably understandable to the claimant. For this
         purpose: (i) the claimant's claim shall be deemed to be filed when
         presented orally or in writing to the Claims Manager and (ii) the
         Claims Manager's explanation shall be in writing delivered to the
         claimant within 90 days of the date the claim is filed.

                  (b) The claimant shall have 60 days following his or her
         receipt of the denial of the claim to file with the Claims Manager a
         written request for review of the denial. For such review, the claimant
         or the claimant's representative may review pertinent documents and
         submit written issues and comments.

                  (c) The Claims Manager shall decide the issue on review and
         furnish the claimant with a copy within 60 days of receipt of the
         claimant's request for review of the claimant's claim. The decision on
         review shall be in writing and shall include specific reasons for the
         decision, written in a manner reasonably understandable to the
         claimant, as well as specific references to the pertinent provisions in
         the Plan on which the decision is based. If a copy of the decision is
         not so furnished to the claimant within such 60 days, the claim shall
         be deemed denied on review. In no event may a claimant commence legal
         action for benefits the claimant believes are due the claimant until
         the claimant has exhausted all of the remedies and procedures afforded
         the claimant by this Section 7.4.

                  (d) For claims procedures purposes, the "Claims Manager" shall
         be the Company.

         Section 7.5 Participant's Address. Each Participant shall keep the
Company informed of his or her current address and the current address of his or
her beneficiary. The Company shall not be obligated to search for any person. If
the location of a Participant is not made known to the Company within three (3)
years after the date on which payment of the Participant's benefits payable
under this Plan may be made, payment may be made as though the Participant


                                       10






had died at the end of the three-year period. If, within one (1) additional year
after such three-year period has elapsed, or, within three (3) years after the
actual death of a Participant, the Company is unable to locate any designated
beneficiary of the Participant, then the Company shall have no further
obligation to pay any benefit hereunder to such Participant or designated
beneficiary and such benefits shall be irrevocably forfeited.

         Section 7.6 Liability. Notwithstanding any of the provisions of the
Plan to the contrary, neither the Company nor any individual acting as an
employee or agent of the Company shall be liable to any Participant or any other
person for any claim, loss, liability or expense incurred in connection with the
Plan, unless attributable to fraud or willful misconduct on the part of the
Company or any such employee or agent of the Company.

                                   ARTICLE 8
                            MISCELLANEOUS PROVISIONS

         Section 8.1 No Employment Rights. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained in
the employ of the Company.

         Section 8.2 Unfunded and Unsecured. The Plan shall at all times be
considered entirely unfunded both for tax purposes and for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended, and no
provision shall at any time be made with respect to segregating assets of the
Company for payment of any amounts hereunder. Any funds with respect to payment
to be made hereunder shall continue for all purposes to be part of the general
assets of the Company and available to the general creditors of the Company in
the event of the Company's bankruptcy (when the Company is involved in a pending
proceeding under the Federal Bankruptcy Code) or insolvency (when the Company is
unable to pay its debts as they mature). No Participant or any other person
shall have any interests in any particular assets of the Company by reason of
the right to receive a benefit under the Plan and to the extent the Participant
or any other person acquires a right to receive benefits under this Plan, such
right shall be no greater than the right of any general unsecured creditor of
the Company. The Plan constitutes a mere promise by the Company to make payments
to the Participants in the future. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other person or entity that any
funds in any trust or the assets of the Company will be sufficient to pay any
benefit hereunder. Furthermore, no Participant shall have any right to a benefit
under the Plan except in accordance with the terms of the Plan.

         Section 8.3 Plan Provisions. Except when otherwise required by the
context, any singular terminology shall include the plural.

         Section 8.4 Severability. If a provision of the Plan shall be held to
be illegal or invalid, the illegality or invalidity shall not affect the
remaining parts of the Plan and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

         Section 8.5 Applicable Law. To the extent not preempted by the laws of
the United States, the laws of the State of Minnesota shall apply with respect
to this Plan.

         Section 8.6 Successor to Company. In the event there is a successor or
assignee to or of the Company, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all (at least 85% of the
assets or the common stock) of the Company, the Company, in its sole discretion,
may either cash out or require such successor or assignee to assume and agree to
perform the Company's obligations under the Plan, in the same manner and


                                       11





to the same extent that the Company would be required to perform if no such
succession or assignment had occurred or terminate the Plan pursuant to the
provisions of Article 10. If a successor or assignee assumes the Plan pursuant
to this Section 8.6, the term "Company," as used in the Plan, shall mean the
Company as hereinbefore defined and any successor or assignee to the Company
which by reason hereof becomes bound by the terms and provisions of the Plan.

         Section 8.7 Authority of CEO. Except in cases where the
responsibilities are reserved to the Board or Executive Committee under this
Plan, the Chief Executive Officer of the Company (or his designee) may act on
behalf of the Company under this Plan.

                                    ARTICLE 9
                                    AMENDMENT

The Company reserves the power to alter, amend or wholly revise or terminate the
Plan at any time and from time to time by the action of the Board and the
interest of each Participant is subject to the powers so reserved. An amendment
shall be authorized by the Board or Executive Committee and shall be stated in
an instrument in writing signed in the name of the Company by a person or
persons authorized by the Board. After the instrument has been so executed, the
Plan shall be effectively amended in the manner therein set forth, and all
Participants shall be bound thereby. No amendment to the Plan may alter, impair,
or reduce the methodology for valuation of Value Appreciation Rights (VAR Units)
of Participants that have been awarded under the Plan prior to the effective
date of such amendment without the written consent of the affected Participants.
However, if the Company determines that an event has occurred that substantially
changes the relationship between the value measured under Section 3.4 and the
value of the Company, such as a major merger, the Company may modify such
methodology as it determines to be appropriate in order to limit such a change.
Such modification may include a modification of the number of VAR Units held
under the Plan on behalf of each Participant. However, the modification shall
not reduce the total value of the VAR Units held in the name of a Participant
below such value prior to such event.

                                   ARTICLE 10
                               TERMINATION OF PLAN

         Section 10.1 Power to Terminate and Consequences of Termination of the
Plan. The Company may at any time terminate the Plan by action of the Board. No
further Value Appreciation Right Awards will be granted after the date of
termination of the Plan. The termination of the Plan shall not reduce alter,
impair, or reduce the methodology for valuation of Value Appreciation Rights
(VAR Units) of Participants that have been awarded prior to the effective date
of such termination, without the written consent of the affected Participant.
Upon such termination, all unvested VAR Units shall immediately vest.
Thereafter, the Company shall distribute the value of all VAR Units held in the
name of Participants and the Participants shall have no further rights or
benefits under the Plan after that distribution is complete. The valuation of
VAR Units so distributed and the distribution to the Participants shall occur as
set forth in Sections 3.4 and Article IV, respectively.

         Section 10.2 Options to Accelerate Distribution.

                  (a) The Company may elect to make lump sum distributions of
         the value of all VAR Units held in the names of Participants if it
         elects to terminate the Plan and make those distributions within twelve
         (12) months of a Change in Control Event that is a Change in Control
         Event with respect to the Participant for each Participant.


                                       12







                  (b) The Company may elect to make lump sum distributions of
         the value of all VAR Units held in the names of Participants if it
         elects to terminate the Plan and make those distributions subsequent to
         12 months after and within 24 months of that termination provided that:

                  (1) All arrangements sponsored by a Participating Employer or
                  Related Employer that would be aggregated with this Plan under
                  Section 1.409A-1(c) of Proposed Treasury Regulations (or
                  successor regulations), if Participants participated in those
                  arrangements, are terminated; and

                  (2) The Company does not adopt a new arrangement that would
                  have been aggregated with the Plan under those regulations
                  (had the Plan continued), if Participants participated under
                  that arrangement and the Plan, at any time within five years
                  following the date of termination of the Plan.

         Notwithstanding the prior provisions of this Subsection (b), if those
         elections are made under this Subsection (b), payments to Participants
         that would have been made before such 12 month period shall be made as
         if those elections had not been made.

In Witness Whereof, this restatement is effective as of _________________, 2005.



                                                   LAND O'LAKES

                                                   BY:  ________________________

                                                   TITLE: ______________________



                                       13

EX-12

                                                                      EXHIBIT 12

                               LAND O'LAKES, INC.
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                             (dollars in thousands)




                                                                                     Year Ended December 31,
                                                                                     -----------------------
                                                                     2005         2004        2003         2002        2001
                                                                 ---------------------------------------------------------------
                                                                                                      
Earnings:
Earnings before income taxes and discontinued operations            $ 132,281     $ 29,584    $107,619     $114,161    $ 56,652
(Less): Equity in earnings of affiliated
  companies                                                           (36,692)     (58,412)    (57,249)     (24,166)    (45,258)
Add: Minority interest in earnings
  of subsidiaries                                                       1,354        1,648       6,366        5,487       6,882
Add: Distributed income of equity investees                            35,250       47,846      37,356       26,407       3,048
Add: Fixed Charges (1)                                                107,669      105,529     103,761       96,815      73,831
Less: Capitalized interest                                                  -          (68)         (8)        (143)       (126)
                                                                 ---------------------------------------------------------------
        Earnings available to cover fixed charges                   $ 239,862    $ 126,127    $197,845     $218,561    $ 95,029
Ratio of earnings to fixed charges                                        2.2          1.2         1.9          2.3         1.3


(1) Fixed charges consist of the following:



                                                                                     Year Ended December 31,
                                                                                     -----------------------
                                                                                  2004        2003         2002        2001
                                                                 ---------------------------------------------------------------
                                                                                                     
Interest expense, gross                                              $ 89,978     $ 88,356    $ 86,541     $ 82,011    $ 62,246
Rentals (interest factor)                                              17,691       17,173      17,220       14,804      11,585
                                                                 ---------------------------------------------------------------
    Total fixed charges                                             $ 107,669    $ 105,529    $103,761     $ 96,815    $ 73,831

EX-21

                                                                               .
                                                                               .
                                                                               .
                                                                      Exhibit 21


SUBSIDIARIES OF THE REGISTRANT AS OF MARCH 30, 2006



SUBSIDIARY OR ORGANIZATION                                                                   JURISDICTION OF INCORPORATION
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                          
ACS STORES, LLC                                                                                          DELAWARE
ADVANCED BUSINESS CONCEPTS INTERNATIONAL, LLC                                                            MINNESOTA
ADVANCED FOOD PRODUCTS, LLC                                                                              DELAWARE
ADVANTAGE DAIRY GROUP COOPERATIVE                                                                        VIRGINIA
AGLAND - LAND O'LAKES FEED, LLC                                                                          COLORADO
AGRICULTURAL INDEMNITY INSURANCE COMPANY                                                                 VERMONT
AGRILIANCE LLC                                                                                           DELAWARE
AGRILIANCE - AFC, LLC                                                                                    ALABAMA
AGRILIANCE DE MEXICO, S.A. DE C.V.                                                                       MEXICO
AGRILIANCE SPV, LLC                                                                                      DELAWARE
AGRO DISTRIBUTION, LLC                                                                                   DELAWARE
AGRONOMY COMPANY OF CANADA, LTD                                                                          CANADA
ALLIANCE MILK PRODUCTS, LLC                                                                              MINNESOTA
AMERICA'S COUNTRY STORES HOLDINGS, LLC                                                                   DELAWARE
AMERICA'S COUNTRY STORES, LLC                                                                            DELAWARE
CALVA PRODUCTS CO., INC.                                                                                 CALIFORINA
CALVATOLIQUID, LLC                                                                                       MINNESOTA
CHEESE & PROTEIN INTERNATIONAL LLC                                                                       DELAWARE
COLCHESTER FOODS, INC.                                                                                   CONNECTICUT
CORPORATE CREDIT, LLC                                                                                    DELAWARE
CUTLER AT ABBEVILLE, LLC                                                                                 MISSOURI
CUTLER AT PHILADELPHIA, LLC                                                                              MISSOURI
DAKOTALAND FEEDS, LLC                                                                                    SOUTH DAKOTA
DELTA EGG FARM, INC.                                                                                     DELAWARE
EASTERN BLOCK, INC.                                                                                      DELAWARE
EASTGATE FEED & GRAIN, LLC                                                                               PENNSYLVANIA
EGG EXPRESS, INC.                                                                                        CONNECTICUT
ESLABON CATTLE CO. LP                                                                                    TEXAS
ESLABON FEEDERS, LP                                                                                      TEXAS
ESLABON MANAGEMENT LLC                                                                                   TEXAS
FEED SERVICES, LLC                                                                                       DELAWARE
FITCHVILLE REALTY HOLDING, LLC                                                                           CONNECTICUT
FITCHVILLE REALTY, INC.                                                                                  CONNECTICUT
FORAGE GENETICS ARGENTINA S.R.L.                                                                         ARGENTINA
FORAGE GENETICS, INC.                                                                                    MINNESOTA
GOLDEN STATE FEEDS, LLC                                                                                  DELAWARE
GOLDEN VALLEY DAIRY PRODUCTS, INC.                                                                       CALIFORINA
GRAND MESA EGGS, INC.                                                                                    COLORADO
HAY MARKETS INTERNATIONAL LLC                                                                            MINNESOTA
HEJLIK PIG CO., L.C.                                                                                     IOWA
HI POINT INDUSTRIES, LLC                                                                                 CALIFORINA
KF SERVICIOS DEL MAY, S.A. DE C.V.                                                                       MEXICO
KOFKOFF EGG FARM, LLC                                                                                    CONNECTICUT
KOFKOFF FEED, INC.                                                                                       CONNECTICUT
L & W EGG PRODUCTS, INC.                                                                                 OHIO
LAND O'LAKES GREAT WALL ENTERPRISE HOLDING LTD.                                                          BRITISH VIRGIN ISLANDS
LAND O'LAKES PURINA FEED LLC                                                                             DELAWARE
LAND O'LAKES HOLDINGS, INC.                                                                              MINNESOTA
LAND O'LAKES INTERNATIONAL DEVELOPMENT CORP.                                                             DELAWARE
LAND O'LAKES MULTITECNOLOGIAS NUTRICIONALES DE MEXICO S.A. DE C.V.                                       MEXICO
LIQUITECH MANAGEMENT GROUP, INC.                                                                         NEBRASKA
LIQUITECH, LTD.                                                                                          NEBRASKA
LOL SPV, LLC                                                                                             DELAWARE
LOL FINANCE CO.                                                                                          MINNESOTA
LOL HOLDINGS II, INC.                                                                                    DELAWARE
LOL POWER, LLC                                                                                           WISCONSIN
LOLFC, LLC                                                                                               MINNESOTA
LOOMIS CROP NUTRIENTS LLC                                                                                NEBRASKA
MADISON FARMS BUTTER, LLC                                                                                ILLINOIS
MCANALLY ENTERPRISES, LLC                                                                                MISSOURI
MCANALLY ENTERPRISES, INC.                                                                               CALIFORINA
MELROSE DAIRY PROTEINS, LLC                                                                              DELAWARE
MILK PRODUCTS, LLC                                                                                       MINNESOTA
MOARK, LLC                                                                                               MISSOURI
MOARK EGG CORPORATION                                                                                    MISSOURI
MOARK/FORT RECOVERY EGG MARKETING, LLC                                                                   MISSOURI
MUNSON LAKES NUTRITION, LLC                                                                              MINNESOTA
NEW FEEDS, LLC                                                                                           IOWA
NORCO RANCH HOLDING COMPANY, INC.                                                                        CALIFORINA
NORCO RANCH, INC.                                                                                        CALIFORINA
NORTHERN COUNTRY FEEDS, LLC                                                                              IOWA
NORTHWEST IOWA AGRONOMY LLC                                                                              IOWA
NORTHWEST FOOD PRODUCTS COMPANY, INC.                                                                    MINNESOTA
NORTHWEST FOOD PRODUCTS TRANSPORTATION, LLC                                                              WISCONSIN
NUTRA-BLEND, LLC                                                                                         MISSOURI
NUTRIKOWI FARMLAND, S.A. DE C.V.                                                                         MEXICO
PACHECO EGG FARMS, LLC                                                                                   MASSACHUSETTS
PACE MANUFACTURING COMPANY                                                                               DELAWARE
PAPILLON AGRICULTURAL PRODUCTS, INC.                                                                     MARYLAND
PENNY NEWMAN MILLING LLC                                                                                 CALIFORINA
PMI AGRICULTURE, LLC                                                                                     MISSOURI
PMI NUTRITION INTERNATIONAL, LLC                                                                         DELAWARE
PMI NUTRITION, LLC                                                                                       DELAWARE
PREMIER FARMS, LLC                                                                                       MISSOURI
PRO-PET, LLC                                                                                             DELAWARE
PURINA MILLS, LLC                                                                                        DELAWARE
RESEARCH SEEDS, INC.                                                                                     MISSOURI
RSA MICROTECH, LLC                                                                                       DELAWARE
SOUTHERN NEW ENGLAND EGG, LLC                                                                            MISSOURI
SOUTHWEST CROP NUTRIENTS, LLC                                                                            KANSAS
SOUTHWEST LIQUIDS, LLC                                                                                   KANSAS
SOYBEAN RESEARCH FOUNDATION, INC.                                                                        MINNESOTA
SOYGENETICS, LLC                                                                                         DELAWARE
SUNBEST FOODS OF IOWA, INC.                                                                              IOWA
SUNBEST FOODS, LLC                                                                                       MISSOURI
SWINE MANAGEMENT SERVICES OF PIPESTONE, LLC                                                              DELAWARE
THOMAS PRODUCTS, LLC                                                                                     DELAWARE
TRI-STATE AGRI SERVICES, LLC                                                                             KANSAS
VISION AG LLC                                                                                            IOWA
WESTCO AGRONOMY COMPANY, LLC                                                                             DELAWARE
WHIP-O-WILL EGG FARMS, LLC                                                                               CONNECTICUT
WILCO-AGRILIANCE, LLC                                                                                    OREGON

EX-31.1

                                                                    EXHIBIT 31.1

                                 CERTIFICATIONS

I, Christopher J. Policinski, certify that:

       1. I have reviewed this annual report on Form 10-K of Land O'Lakes,
Inc.;

       2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

       3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

       4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

           a) designed such disclosure controls and procedures, or caused such
       disclosure controls and procedures to be designed under our supervision,
       to ensure that material information relating to the registrant, including
       its consolidated subsidiaries, is made known to us by others within those
       entities, particularly during the period in which this report is being
       prepared;

           b) evaluated the effectiveness of the registrant's disclosure
       controls and procedures and presented in this report our conclusions
       about the effectiveness of the disclosure controls and procedures, as of
       the end of the period covered by this report based on such evaluation;
       and

           c) disclosed in this report any change in the registrant's internal
       control over financial reporting (as defined in Exchange Act Rules
       13a-15(f) and 15d-15(f)) that occurred during the registrant's most
       recent fiscal quarter that has materially affected, or is reasonably
       likely to materially affect, the registrant's internal control over
       financial reporting.

       5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors:

           a) all significant deficiencies and material weaknesses in the design
       or operation of internal control over financial reporting which are
       reasonably likely to adversely affect the registrant's ability to record,
       process, summarize and report financial information; and

           b) any fraud, whether or not material, that involves management or
       other employees who have a significant role in the registrant's internal
       control over financial reporting.


Date:  March 20, 2006
                                       By: /s/ Christopher J. Policinski
                                           -------------------------------------
                                           Christopher J. Policinski
                                           President and Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                                 CERTIFICATIONS

I, Daniel Knutson, certify that:

       1. I have reviewed this annual report on Form 10-K of Land O'Lakes, Inc.;

       2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

       3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

       4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

           a) designed such disclosure controls and procedures, or caused such
       disclosure controls and procedures to be designed under our supervision,
       to ensure that material information relating to the registrant, including
       its consolidated subsidiaries, is made known to us by others within those
       entities, particularly during the period in which this report is being
       prepared;

           b) evaluated the effectiveness of the registrant's disclosure
       controls and procedures and presented in this report our conclusions
       about the effectiveness of the disclosure controls and procedures, as of
       the end of the period covered by this report based on such evaluation;
       and

           c) disclosed in this report any change in the registrant's internal
       control over financial reporting (as defined in Exchange Act Rules
       13a-15(f) and 15d-15(f)) that occurred during the registrant's most
       recent fiscal quarter that has materially affected, or is reasonably
       likely to materially affect, the registrant's internal control over
       financial reporting.

       5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors:

           a) all significant deficiencies and material weaknesses in the design
       or operation of internal control over financial reporting which are
       reasonably likely to adversely affect the registrant's ability to record,
       process, summarize and report financial information; and

           b) any fraud, whether or not material, that involves management or
       other employees who have a significant role in the registrant's internal
       control over financial reporting.


Date:  March 20, 2006
                                              By: /s/ Daniel Knutson
                                                  ------------------------------
                                                  Daniel Knutson
                                                  Senior Vice President and
                                                  Chief Financial Officer


                                       2

EX-32.1

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Land O'Lakes, Inc. (the "Company") on
Form 10-K for the period ending December 31, 2005 as filed with the Securities
and Exchange Commission on March 20, 2006 (the "Report"), I, Christopher J.
Policinski, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.


Date:  March 20, 2006
                                           By: /s/ Christopher J. Policinski
                                               ---------------------------------
                                               Christopher J. Policinski
                                               President
                                               and Chief Executive Officer



                                       3

EX-32.2

                                                                    EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Land O'Lakes, Inc. (the "Company") on
Form 10-K for the period ending December 31, 2005 as filed with the Securities
and Exchange Commission on March 20, 2006 (the "Report"), I, Daniel Knutson,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350,
as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.


Date:  March 20, 2006
                                                 By: /s/ Daniel Knutson
                                                     ---------------------------
                                                     Daniel Knutson
                                                     Senior Vice President
                                                     and Chief Financial Officer



                                       4