Ag-Bag International Limited Announces 3rd Quarter Results.

Business Editors

WARRENTON, Ore.--(BUSINESS WIRE)--Oct. 30, 2002

Ag-Bag International Limited (OTCBB:AGBG) announced today that net sales for the third quarter ended Sept. 30, 2002, were $8,816,610, a decrease of 13.19% compared to net sales of $10,156,259 for the same period in 2001.

The Company had net income of $124,591, or $.01 per share, for the quarter ended Sept. 30, 2002, compared to net income of $385,478, or $.03 per share, for the same period in 2001.

Sales for the third quarter were down as a result of drought weather conditions experienced in much of the Midwest and upper-Midwestern United States that greatly reduced the summer alfalfa harvest. Additionally, milk prices continued their steep decline during the third quarter, to record low levels, causing farmers to become cautious on purchasing capital equipment. Also contributing to the quarterly decline was continued tightening in agricultural credit availability resulting from the depressed milk prices, coupled with rising supplemental grain feed costs brought on by the drought conditions in the U.S. Machine sale revenue rose 6.78% and bag sale revenue declined 18.24% for the quarter compared to 2001. Ag-Bag International Limited President and CEO, Larry Inman, stated, "The U.S. dairy farmer must continue to operate cost effectively given the current economic situation. Ag-Bag offers a positive solution for the farmer through its bagging systems with reduced feed losses over traditional storage methods and higher nutrient value, reducing the farmer's need for supplemental feed."

Net sales for the nine-months ended Sept. 30, 2002, were $23,553,322, a decrease of 3.72%, compared to net sales of $24,464,557 for the same period in 2001. The Company had net income of $415,173, or $.03 per share, for the nine-months ended Sept. 30, 2002, compared to net income of $478,665, or $.04 per share, for the same period in 2001.

                                     3rd Quarter
                                ----------------------
                                  2002          2001
                                  ----          ----
Net Sales                     $  8,816,610  $ 10,156,259
Gross Profit from Operations  $  1,622,858  $  2,316,438
Income from Operations        $     59,975  $    558,261
Income before Tax             $    136,266  $    574,884
Net Income                    $    124,591  $    385,478
Basic and Diluted
 Earnings Per Share           $        .01  $        .03


                                   Nine-Month Period
                                ----------------------
                                  2002          2001
                                  ----          ----
Net Sales                     $ 23,553,322  $ 24,464,557
Gross Profit from Operations  $  5,242,633  $  5,467,799
Income from Operations        $    428,377  $    669,698
Income before Tax             $    562,383  $    721,071
Net Income                    $    415,173  $    478,665
Basic and Diluted
 Earnings Per Share           $        .03  $        .04

Ag-Bag International Limited is headquartered in Warrenton, Ore. 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. Forward-looking statements relate to future sales of the Company's products for farming and composting systems. 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; 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 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.