September 30, 2002

Agway Inc. announced today that the Company and certain of its subsidiaries intend to file voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in order to keep all of its businesses running normally and without interruption while the Company gains the time needed to reorganize its financial obligations and strengthen its balance sheet. The petitions for Agway Inc. and certain of its subsidiaries will include the following business units: Agway Feed and Nutrition, Agway Agronomy, Seedway, Feed Commodities International (FCI), Country Best Produce, CPG Nutrients, Agway CPG Technologies and Agway General Agency. These petitions are expected to be filed with the United States Bankruptcy Court for the Northern District of New York in Utica, New York, on October 1, 2002.

Agway Inc. intends to develop a longer-term strategic plan of reorganization that will serve as a framework for Agway's emergence from the Chapter 11 process as a financially healthy, more competitive enterprise.

Four wholly owned Agway Inc. subsidiaries will not be included in the Chapter 11 filings: Agway Energy Products LLC, Agway Energy Services, Inc., Agway Energy Services-PA, Inc. and Telmark LLC. In addition, Telmark debenture holders will not be subject to the Chapter 11 filings. And, Agway dealer stores will not be included in the filings, because they are separately owned and are not affiliated with Agway Inc. in any way.

The bankruptcy law prohibits companies from paying pre-Chapter 11 claims, including most indebtedness, without obtaining the approval of the Court. Agway Inc. intends to ask the Bankruptcy Court for immediate approval to continue paying its employees' wages and salaries and to continue medical and other benefit programs.

The Company plans to continue its efforts to sell Telmark, Agronomy and Seedway as previously announced and does not have plans for other significant reductions in workforce or plant closings as a result of the Chapter 11 filing.

As in all Chapter 11 cases, after the commencement of such cases, any obligations that Agway and its filed subsidiaries incur to its employees, vendors and other trade partners will be honored and satisfied in the normal course of business without need to obtain Court approval. The Company also intends to ask the Court for approval to continue its "prepay" program with farmers who purchase the Company's animal feed and agronomy supplies and to allow the Company to pay for purchases subject to the Perishable Agricultural Commodities Act (PACA).

In conjunction with the filing, Agway Inc. has obtained commitments for $125 million in secured debtor-in-possession (DIP) financing from a group of institutions led by GE Commercial Finance. This facility, which is subject to the approval of the Court, is designed to provide adequate liquidity for all of Agway's operating units to continue normal operations in a business-as-usual manner throughout the Chapter 11 process.

The Company said the filing was due to insufficient cash flow and Agway Inc.'s burden of debt. While some of its businesses are doing well, Agway Inc. as a whole has not been generating the cash it needs to support the level of debt the Company is carrying, and that debt has taken on increased significance because of losses during the past three fiscal years. Market conditions, especially in the agriculture sector, continue to be challenging. The financial markets and general economy have also presented difficult environments for asset and business sales underway.

Normal Operations to Continue with Business as Usual

Agway expects that each of its operations will continue to conduct business as usual going forward with no interruption in production, distribution or other normal activities. There should be no supply chain disruption with vendors of the operating businesses, because merchandise and services purchased on or after the filing date will be paid for in full.

In addition, Agway is committed to delivering in full and on time all products and services to its customers. Customers should see no changes in the quality or the availability of Agway products and services. And, future orders for products will be serviced as they always have been. Agway and all of its subsidiaries continue to be committed to, and fully in support of, all sales plans and programs currently in operation. All Agway facilities are open for business.

The Best and Most Realistic Option for the Company

Agway Chief Executive Officer Donald P. Cardarelli said, "The Board of Directors believes that reorganization under Chapter 11 is by far the best and most realistic option available to Agway, its employees, customers, vendors and other trade partners, because it allows us to keep our businesses running normally while providing the Company with the time and the breathing room to develop a comprehensive plan to reorganize our financial obligations and reduce our debt.

"Through reorganization," Mr. Cardarelli continued, "we can safeguard the value of our businesses and assets, preserve jobs for our employees, and ultimately emerge from Chapter 11 as a stronger and healthier company. One of our primary objectives as we work our way through the Chapter 11 process will be to preserve the maximum value possible for Agway's securities holders, other creditors and our employees."

Mr. Cardarelli added, "Although we cannot predict exactly how long it may take for Agway to emerge from Chapter 11, our goal is to move through the process as quickly as possible. We believe that the recent restructuring initiatives we have undertaken to reduce Agway Inc.'s debt load, including the sales of several of our businesses, will facilitate the Company's reorganization process."

"A Foundation of Solid Core Operations, Dedicated Employees, Strong Brands and Loyal Member and Customer Bases" Mr. Cardarelli said: "Several of Agway's businesses are fundamentally sound. We have a good foundation to build on, with solid core operations, dedicated and talented employees, very strong brands and loyal member and customer bases."

Mr. Cardarelli noted that the Company's energy businesses, which are not included in the Chapter 11 filing, continue to perform very well. Agway Energy Products is historically profitable and financially sound. One of the largest heating oil and propane marketers in the U.S., Agway Energy Products reported pre-tax earnings of $10.5 million for this past fiscal year despite one of the warmest winters on record. Agway Energy Products also has substantially grown its heating and air conditioning sales, installation and service business over the past several years, and now markets natural gas and electricity to customers in several utility areas through Agway Energy Services, Inc. and Agway Energy Services-PA, Inc.

In its dairy feed business, Agway is the market leader in the Northeast. Agway Feed & Nutrition has more than 500 dedicated employees who provide farmers with quality products, excellent service and superior technical expertise. In its fresh produce business, Country Best Produce is a leading provider of potatoes, onions and other fresh produce to large chain store customers in the Eastern United States. Through an integrated network of fresh produce operations, Country Best is uniquely positioned to meet the needs of major grocers and foodservice customers.

A number of restructuring efforts undertaken to improve operations and reduce the Company's debt have been successful. These efforts include exiting the retail services business; selling or closing over 60 feed and agronomy locations; and the recently completed sales of Agway Insurance Company, Agway Sunflower and Apex Bag Company.

Agway announced last week that the Company has signed a definitive agreement to sell its Agronomy and Seedway operations. In addition, Agway is continuing efforts to sell its lease financing subsidiary Telmark. Telmark today reported that its net income grew over seventeen percent to $14.3 million for the year ended June 30, 2002, while revenues of $90.2 million were up by $4.0 million, compared to the prior year. Reorganizing under Chapter 11 is anticipated to enable Agway Inc. to complete its current restructuring initiatives.

Today, the Company reported a net loss of $98.2 million for the year ended June 30, 2002, which includes a net loss of $85.4 million directly related to the sale of discontinued operations. The Company had previously reported net losses of $8.9 million in fiscal 2001 and $9.4 million in fiscal 2000. Sales and revenues for fiscal 2002 were $899.9 million, a 21 percent decline from the prior year primarily the result of lower sales of heating oil and propane, due to mild winter weather conditions in the Northeast, lower petroleum commodity prices, and restructuring activities undertaken last year in the Company's Feed and Country Products businesses.

Mr. Cardarelli pointed out that the clear majority of the Company's net loss posted for 2002 was due to the sale of discontinued operations associated with Agway Inc.'s restructuring efforts and were not directly related to the Company's on-going business operations.

Mr. Cardarelli concluded: "Our objective moving forward is to position each of our businesses to realize the best value and opportunity for both our creditors and our employees. This will require continued operations improvements, further simplification of our infrastructure, and an objective assessment of the capital and ownership structures best suited to take our continuing operations to their full potential. We have businesses with superior market positions and effective employee teams that must be given the resources and environment to grow."

Background on Chapter 11

Chapter 11 of the U.S. Bankruptcy Code allows a company to continue to operate its business and manage its assets in the ordinary course of business while it formulates a reorganization plan to restructure its financial obligations. Congress enacted Chapter 11 to provide companies with the "breathing room" to accomplish these objectives and avoid the negative effects of liquidation proceedings. Chapter 11 enables a business to preserve its going concern's value and its operations,
as well as to continue to provide its employees with jobs, and to satisfy creditor claims based upon the value of the reorganized company.

About Agway Inc.

Agway, Inc. is an agricultural cooperative owned by 69,000 Northeast farmer-members. The Cooperative is headquartered in DeWitt, NY.