Agway, Inc. and Southern States Cooperative, Inc. today announced the signing of a letter of intent to pursue discussions toward the creation of a relationship to serve Agway consumer dealers in the northeastern United States.

The letter of intent provides for the two cooperatives to work together to develop a product distribution and marketing system that will serve dealers with a full-line of branded and non-branded products, as well as marketing and advertising support to develop the cooperatives' brands and trademarks over a larger geographic area.

Southern States would assume all dealer marketing, development, operations, distribution and logistics associated with the consumer wholesale business operated by Agway and would provide Agway branded products.

Agway would continue to manufacture, promote, distribute and sell the Agway and Legends bagged feed products through the dealer channel in the Northeast. Agway would also provide Agway Feathered Friend bird food, Agway seed and Seedway's commercial vegetable seed and turf seed products in this market.

The new product distribution and marketing system is expected to be in place by July 2000. Terms were not disclosed.

"We are very excited about this new opportunity with Agway,'' said Wayne Boutwell, president and CEO, Southern States. "We can achieve the size and scope of business that is needed to deliver optimum value to new customers and our existing farmer-owners and dealer network.''

"We see this new relationship as building on the tremendous success that both of our organizations have had through our feed and pet food ventures,'' said Don Cardarelli, president & CEO, Agway. "This new retail relationship with Southern States would create a win-win-win situation for dealers, store customers and both of our cooperatives. Both of our organizations have a tremendous amount of knowledge and talent in product marketing, distribution and retailing. By pooling these resources, we can create the operational efficiencies that will benefit dealers and further strengthen both cooperatives' connections to consumers.''

Currently, Agway and Southern States co-own a bagged feed manufacturing plant in Gettysburg, PA and are co-owners of a pet food joint venture with four other farmer-owned cooperatives. Brands currently available through Agway and Southern States dealers now include: Statesman®, Legends®, Respond®, Pro-Pet®, Big Red®, and Li'l Red®.

Agway is owned by some 71,000 farmers-members in twelve Northeast states. Agway's retail business provides yard, garden, pet food and pet supply products to rural and suburban customers through a network of over 500 dealer and company-owned stores in the Northeastern United States. The Agway retail system is actively involved in transitioning to a predominantly dealer-owned store system. Established in 1964, the Syracuse, N.Y., based cooperative produces and markets dairy and livestock feeds as well as agronomic products and services. Agway's subsidiaries are involved in natural food processing and marketing, energy products, lease financing, insurance and other agriculturally related businesses. Agway had sales and revenues of $1.5 billion in its fiscal year ended June 30, 1999.

Southern States -- founded in 1923 -- is a farmer-owned cooperative of over 307,000 farmer-members in sixteen states stretching from Michigan to Florida and west to Arkansas. This Richmond, VA, based firm is one of the largest U.S. farmer cooperatives that purchases, manufactures or processes feed, seed, fertilizer and fuel. It also sells farm, animal health, lawn, home and garden supplies through 745 local dealers in its operating territory. In addition, Southern States gins cotton and markets livestock, small grains, corn, peanuts and soybeans. In its fiscal year ended June 30, 1999, Southern States had sales of $1.4 billion. 

Company news release
N2684