White Wheat Producers Association

Farmer Direct Foods, Inc.

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American White Wheat Producers Association (AWWPA) is a producer-owned cooperative marketing corporation formed in 1988 with the mission to develop white wheat markets for wheat producers. We found out very early that producer’s real benefit was in more than just commodity White Wheat. It was imperative that producers have a process for getting their product further up the marketing chain. To this end, AWWPA has spent the last ten years perfecting a proprietary, identity preserved, targeted delivery, process for value added white wheat products. AWWPA is not aware of any other producer that has accomplished the development of hard white wheat products with a reputation for quality, consistency and reliable delivery. Moreover, we believe no one else has also developed a customer base for hard white wheat products that understands its value and represents a demand base. Presently, AWWPA is engaged with its members in contract production, processing, marketing and delivery. AWWPA tracks and coordinates the flow of the identity preserved lots of grain (usually individual fields) through selected storage and processing facilities hired by, or leased to, AWWPA. Ingredients are processed by AWWPA on order to customer’s specific requirements. AWWPA also markets its grain as value added commodity grain for resale on a commodity exchange market.

AWWPA recently converted to a closed, or defined-membership cooperative structure. This structure is designed to move producers further up the marketing chain. Plus, this structure will enable us to operate more as a value added business than as a community service that has historically been the case for traditional cooperatives. This "business- like" approach takes a long-term view and requires its member owners to make an up front commitment in both capital and production.

Marketing is always a challenge. In the case of AWWPA, it presently operates in a narrowly defined market segment where there are currently relatively few customers. It has, however, established successful relationships with these customers. Recently, AWWPA entered into long-term agreement with a flour manufacturer for the marketing and distribution of AWWPA wheat products. Demand for white wheat may certainly change, but presently it seems to be increasing. Identity preservation, by its nature, may insulate the wheat from certain vagaries of the commodity wheat market by enhancing production and addressing food safety issues. Historically, AWWPA has been able to maintain a stable percent of margin in relation to wheat prices.

The change to a closed cooperative structure has set the stage for continuing the present marketing activities in an environment much more conducive to high quality product because it will generate a larger supply of quality white wheat from which the food ingredient segment can draw. More important, this new organization will be the springboard into further business developments for white wheat and other grain producers. For example, AWWPA has completed preliminary feasibility studies for a manufacturing facility. The new organization intends to take that development to the next level on a course towards actual realization. In addition, it intends to pursue additional strategic alliances in the areas of product development, processing and marketing in order to move more and more of its member/grower products into the global market place. All the while, AWWPA will continue to focus on enhancing its reputation as THE STANDARD for Identity Preserved, Targeted Delivery process in the value added arenas of white wheat and other grains.

With this new capitalization, member delivery obligations and closed cooperative structure, new stockholders will be the foundation for the future. Ownership of the new stock would allow a member to participate in any profits from the flour/ingredient business, and the opportunity to participate in future AWWPA business ventures.