EXHIBIT 10(iii)B(1)


                                   EXHIBIT E

Performance criteria for FY 1997 - FY 1999 cycle include the following:
Aggregate Income, defined as the targeted income, before taxes and extraordinary
items,<F3> for the entire three-year period, as shown in the table below.
                                                                                
Performance goals and amounts funding the payout pool include the following:

Performance Level         Aggregate Income          % of Net Earnings to Pool

Below Target              Below $541,768,000                   0%
Target                          $541,768,000            .83% of earnings
Above Target              Above $541,768,000            .83% of earnings


During the FY 97 - 99 cycle, Farmland Industries, Inc. must return to its
members at least $147,285,000 in cash,<F4> or no payout will occur under this 
plan.

In order to ensure the integrity of Farmland's financial strength, a limit on
funded indebtedness as a percent of capitalization is incorporated into this
plan.  In the event that the indebtedness ratio is above the level which is
established by bank covenants at the end of the cycle, not payout will occur
under this plan.

<F3>     The Chief  Financial  Officer and  the  Chief Executive  Officer  must
     approve the classification  of any  item as  "extraordinary."   Transaction
     deemed as "extraordinary"  and therefore excluded  in the determination  of
     Income for variable compensation include:
     _    The punitive  portion of  litigation results  in favor  of or  against
          Farmland, excluding redemptive payments on normal business matter  
          where the intent is  to substantially restore net income to  where 
          it would have  been had the incident  not occurred.
     _    Nonrecurring (one-time) adjustments to income  or expense such as  the
          gain from settlement of the retirement plan.  Any such items would 
          generally  be reported as extraordinary items on Farmland financial 
          statements under generally accepted accounting principles. 
     _    The gain or loss on the disposal of a major asset, group of assets, or
          investments.
     _    The impact of adjustments resulting from LIFO inventory computations
          or reserves.
     _    Other items as approved.

     Specific requests by an operating unit for treatment of an item as
     "extraordinary" must be approved by the Senior Management representative 
     before review by the Chief Financial Officer and Chief Executive Officer.


<F4> Cash Returned to Members includes cash patronage, equity  redemptions,
     additional equity redemptions due  to tax savings  on net operating  losses
     (NOL), ownerships retirements, capital credits, preferred stock  dividends,
     preferred stock redemptions, and estate settlements.