Ag-Bag International Limited Announces 2nd Quarter Results.

WARRENTON, Ore. -- Ag-Bag International Limited (OTCBB:AGBG) announced today that net sales for the second quarter ended June 30, 2004 were $5,607,389, a decrease of 2.99% compared to net sales of $5,780,508 for the same period in 2003. The Company had a net loss of $172,150, or ($.02) per share, for the quarter ended June 30, 2004, compared to a net loss of $34,486, or ($.00) per share, for the same period in 2003.

Regarding the second quarter results, Ag-Bag International Limited CEO, Mike Schoville, stated "Net sales were down for the quarter as a result of continued, guarded customer buying attitudes in the near term, from the prolonged, depressed U.S. milk price situation in the dairy industry, despite the recent increases in milk prices. The Company also continues looking at ways to help improve our financial performance, such as changes to the Company's business model, opportunities to sell the business, refinance the Warrenton, Oregon facility, consolidate or dispose of manufacturing facilities or other tangible or intangible assets, in addition to further expense cutting to improve our bottom line."

Net sales for the six months ended June 30, 2004 were $9,813,087, a decrease of 22.42%, compared to net sales of $12,648,809 for the same period in 2003. The Company had a net loss of $581,098, or $(.05) per share, for the six months ended June 30, 2004, compared to a net loss of $83,773, or ($.01) per share, for the same period in 2003.

Three Months Ended      Six-Months Ended
                              June 30                 June 30
                         2004        2003        2004        2003

Net Sales            $5,607,389 $ 5,780,508 $ 9,813,087 $12,648,809
Gross Profit from
 Operations          $  886,085  $1,042,562  $1,708,020  $2,252,223
Loss from Operations $ (269,792) $ (300,427) $ (689,889) $ (450,169)
Loss before Tax      $ (172,150) $  (78,486) $ (581,098) $ (179,773)
Net Loss             $ (172,150) $  (34,486) $ (581,098) $  (83,773)
Basic and diluted
 EPS                 $     (.02) $      .00  $     (.05) $     (.01)

Ag-Bag International Limited is headquartered in Warrenton, Oregon with a second major facility located in Blair, Nebraska. The Company manufactures and sells to the international agricultural industry its farm feed management systems, for the high moisture storage of silage and grains, and its composting system, for large scale "in-vessel" composting.

The discussion in this press release contains forward-looking statements that involve risks and uncertainties and various factors that could cause actual results to differ materially from those projected. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: a downturn in the dairy industry; a sharp decline in U.S. milk prices; a reduction in availability of credit in the farming sector or the Company's third party financing sources; an inability of customers'/dealers' to qualify for preferred status using the John Deere Farmplan third party financing program; an increase in interest rates; adverse weather conditions; a sharp decline in the health of the farming sector of the U.S. economy; a sharp decline in government subsidies to the farming sector; disruption of the manufacturing process of our sole bag manufacturer; increases in the price of bags and raw material costs; and an adverse outcome in any of the pending litigation against the Company. Readers are urged, however, to review the factors set forth in reports the Company files from time to time with the Securities and Exchange Commission. Actual results may differ materially from the forward-looking statements.