835011--9/12/2008--MGP_INGREDIENTS

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{gas, price, oil}

{cost, operation, labor}

{customer, product, revenue}

{tax, income, asset}

{cost, contract, operation}

{debt, indebtedness, cash}

{product, market, service}

{cost, regulation, environmental}

{personnel, key, retain}

{provision, law, control}

{regulation, change, law}

{loss, insurance, financial}

{control, financial, internal}

{condition, economic, financial}

RISKS THAT AFFECT OUR BUSINESS AS A WHOLE Covenants in our credit facility could hinder our ability to operate. Our failure to comply with covenants in our credit facility could result in the acceleration of the debt extended under such facility, limit our liquidity and trigger other rights. As a result of recent operating losses we have incurred significant debt. Our profitability is affected by the cost of grain that we use in our business, and the availability and cost of such agricultural products are subject to weather and other factors beyond our control. Our profitability is affected by the cost of natural gas. Hedging transactions involve risks that could harm our profitability Work stoppages at our facilities could have a material adverse effect on the profitability of our business. Most of our work force is unionized. The contract at our Pekin facility expires in 2011. The contract at our Atchison facility was scheduled to expire on August 31, 2008, but has been extended by 15 days. Presently, we are engaged in negotiations with the union representing employees at our Atchison facility. If our unionized workers were to engage in a strike, work stoppage or other slowdown in the future at either facility, we would be unable to operate our plant and it is likely that we would experience a significant We may require significant cash flow to make capital expenditures. We are subject to extensive regulation, and compliance with existing or future laws and regulations may require us to incur substantial expenditures or require us to make product recalls. If we lose certain key personnel, we may not be successful. RISKS SPECIFIC TO OUR DISTILLERY PRODUCTS SEGMENT Volatile corn and gasoline prices affect our profitability. The relationship between the price we pay for corn and the sales prices of our co-products can fluctuate significantly and affect our results of operations. The recent rapid growth of production capacity in the ethanol industry creates some market uncertainly for portions of our business and the ethanol industry. Federal regulations concerning tax incentives could expire or change which could reduce our revenue. RISKS SPECIFIC TO OUR INGREDIENT SOLUTIONS SEGMENT We have incurred impairment losses and may suffer future impairment losses. The markets for our protein and starch products are very competitive, and our results could be adversely affected if we do not compete effectively. RISKS SPECIFIC TO OUR OTHER SEGMENT We have incurred impairment losses in our pet treat resin business and may suffer future impairment losses. Our plant-based biopolymers and wood based resins may not prove to be profitable. Common stockholders have limited rights under our Articles of Incorporation

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835011--9/12/2008--MGP_INGREDIENTS_INC