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Farmway Sells Feed Assets To Key Feeds

May 24, 2010

For More Information Contact
Art Duerksen, CEO, Farmway Cooperative Inc.,
Phone: 785-738-2241

Farmway sells feed assets to Key Feeds

Effective August 1, 2010, Farmway Cooperative, Inc. will be selling the assets of its feed division to Key Feeds at Clay Center, Kansas.

These assets include the feed mill at Clay Center and Tipton and the feed delivery trucks at Clay Center, Beloit, Lincoln and Tipton.

This decision by the Farmway board of directors was reached after careful analysis of the feed manufacturing operations within the Cooperative.

According to Art Duerksen, Farmway CEO, the cooperative continually analyzes each business unit within the cooperative to make sure they know the strengths and weaknesses of each unit.

"This is done to make sure we can deliver the quantity, quality and services you as a customer desire to make your operation profitable," he said. "Based on this information of the feed manufacturing operations, we found it to be in the best interest of the cooperative to sell the assets of the feed division to Key Feeds."

Several factors involved included: nearly $1 million in repairs and updates would need to be made at the feed mill facilities at Clay Center and Tipton; a complete replacement of the Beloit Elevator feed mill is needed to continue operation; the trend of declining livestock numbers in the trade area; more specialized and regionalized feed manufacturing to control costs and increase quality; larger producers with higher volumes are manufacturing their own feed; the regulatory burden and associated risk with federal drug restrictions required specialized handling equipment; future earning for the Cooperative will be negatively impacted by the capital expenditures required to replace worn out facilities; and the switchover to commodity type rations utilizing DDGs (Dried Distillers Grains) and other byproducts were all part of this decision.

In the near future, the feed mill at the Beloit Elevator will be taken out of operation to make room for additional grain storage and handling facilities including a grain dryer.

"Key Feeds is committed to providing the resources necessary to upgrade the feed mills at Farmway's Clay Center and Tipton locations to continue to manufacture feed in the future," Duerksen said.

Key Feeds will also sell non-bulk products (bagged products, tubs, and blocks) at non-Farmway Co-op locations in Lincoln and Beloit and will be looking for business arrangements in other communities.

"In addition, Farmway will continue to sell bagged feed, tubs and blocks at the Farmway locations of Glen Elder, Leonardville, Scottsville, Asherville, Belleville, Westfall, Hunter, Miltonvale and Denmark to make sure all of our feed customer's needs are met at a nearby location," Duerksen said.

According to Joseph Ebert, VP/GM Fourth and Pomeroy Assoc, Inc., who does business under its registered trademark of "Key Feeds", the purchase of the feed assets of Farmway has enabled Key Feeds to better serve its growing customer base.

"We take pride in formulating feeds for the individual customer so they can utilize their homegrown feedstuffs to their greatest economic and nutritional advantage," Ebert said. "There is no doubt in my mind that this purchase/sale will be mutually beneficial for both companies."

Farmway Cooperative, Inc. is a farm supply cooperative with headquarters in Beloit, Kansas and serves over 6,500 member/customers in north-central Kansas. Farmway is strategically positioned to maximize efficient farm management systems with strong business alliances to give Farmway producers access in the global food supply chain.

Fourth and Pomeroy Associates, Inc., Clay Center, is a privately held, locally owned company that does business under the registered trademark of "Key Feeds".

P 785-738-2241 • F 785-738-9659 • 204 E. Court Street • Beloit, KS 67420 • www.farmwaycoop.com www.farmwaycooperative.com

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Beloit, KS 67420, USA