Agway, Inc. today reported sales of $1.5 billion and net earnings of $1.8 million for fiscal year 1999, which ended June 1999. Sales declined by $79 million compared to the previous year's sales of $1.6 billion primarily due to lower commodity prices in energy and agricultural products. Net earnings were down from last year's $41.2 million, as restated, which included $29.0 million from a pension accounting change. Other factors contributing to the earnings decline included significant losses in the Cooperative's retail and grain marketing businesses and an increase in pension costs which were partially offset by strong performances in Agway's other businesses.

"Fiscal 1999 was a year in which the majority of our businesses - those representing about 82
percent of Agway's sales and revenues - achieved improved financial results, several in very difficult market conditions,'' said Donald P. Cardarelli, Agway president and chief executive officer.

Agway's Agricultural Enterprise operations, Agway Energy Products, Agway Insurance, Telmark,
and the Country Products Group, which includes Agway's food businesses, all reported growth in
pre-tax earnings.

In its Agriculture business, strong volume growth was reported in feed tonnage and seed unit sales for corn and soybeans.

In its Energy business, unit volume growth was reported in gasoline, diesel fuel and propane while
heating, ventilation and air conditioning (HVAC) service sales were also up.

Both Telmark, Agway's lease financing subsidiary, and Agway Insurance reported revenue increases.

"We are pleased with the growth we have seen this year in the majority of our businesses and we
expect continued progress in each of these businesses,'' said Cardarelli. ``We also look forward to seeing the first fruits from our investments in many new initiatives and start-up businesses that are important to the future of Northeast agriculture.''

Some of these new initiatives and start-up businesses include: agronomy consulting; a national
commercial vegetable seed business (through Seedway); several new horizontal feed mills;
state-of-the-art heifer raising facilities; an applied knowledge and technology based business (CPG Nutrients) that is focused on developing innovative products that help farmers; a food preservation business (CPG Technologies International); a branded, nutritionally enriched food products business (LifeRight Foods); a new national produce brand (Country Best); a new produce product (Empire Sweets Onion); and new energy services including natural gas and electricity.

During fiscal 1999, Agway and Telmark paid nearly $40 million in dividends and interest to its
investors, principally Agway farmer-members, employees and retirees.

In response to its Retail business challenges, Agway announced last April that it was combining its agricultural products and retail services businesses. The Retail business is being refocused as a distribution channel promoting Agway-branded products, augmented by non-branded products that broaden and complement its offering to consumers. "We expect a significant improvement in our Retail business in fiscal 2000,'' said Cardarelli.

On July 8, 1999, Agway announced that it had become aware of accounting irregularities in its grain marketing department. An investigation determined that unauthorized speculative positions were taken by the department in commodity instruments. Through improper accounting and falsification of records, these losses were concealed within the department, resulting in misreported eamings by Agway for the fourth quarter of the year ended June 1998 and the first three quarters of the 1999 fiscal year. Agway has since amended its previously filed 1998 annual report on Form 1O-K and its quarterly reports on Form 1O-Q with the Securities and Exchange Commission. The adjustment in after-tax eamings in the amended statements was a decrease of $0.6 million for the year ended June 1998 and a decrease of $3.7 million for the nine months ended March 1999, from the amounts originally reported. The total loss in grain marketing in fiscal 1999, which is primarily due to unauthorized speculative activity, was $5.7 million after-tax. "Corrective actions have been taken to minimize the risk of such activity occurring in the future,'' said Cardarelli.

Agway will hold its 1999 Annual Meeting on November 5, 1999 at the Holiday Inn at Thruway Exit
37 in Syracuse, N.Y. Four incumbent directors, nominated earlier in the year, and one new
director-nominee are expected to be officially elected to three-year terms on the Agway Board of
Directors at the Syracuse meeting. The incumbent directors include: Kevin B. Barrett, Towanda, PA; Robert L. Marshman, Oxford, N.Y.; Carl D. Smith, Corinna, ME; and Joel L. Wenger, Greencastle, PA. The new director-nominee is Richard H. Skellie, Salem, N.Y. Mr. Skellie replaces Peter D. Hanks, Salem, N.Y., who will be retiring from the Board following fifteen years of service.

Agway, Inc. is an agricultural cooperative owned by 71,000 Northeast farmer-members. The
Cooperative is headquartered in DeWitt, N.Y.

Company news release
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