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Repeated Request to CEO Concerning Employee Pension Security

(July 26, 2004)

Copied below is the text of a July 26, 2004 letter to the CEO and Chairman of the Board of Farmer Bros., urging his response to increasing concerns about the security of employee pensions in the context of the previous trading day's closing price of the company's stock at $24.90 per share, down 37% from its high point of $39.39 three months ago.

Reference is made to a previous request for board response to this and other issues in a May 18, 2004 letter, and to a reported management comment expressing disrespect of the employee and shareholder concerns.




575 Madison Avenue

New York, New York 10022

Telephone (212) 605-0335

Facsimile (212) 605-0325


                                                            July 26, 2004


By telecopier: 310/320-2436


Mr. Roy E. Farmer

Farmer Bros. Co.

20333 South Normandie Avenue

Torrance, California 90502



Dear Mr. Farmer:

            Recent fluctuations in the price of Farmer Bros. stock, particularly its close at less than $25 per share on Friday, have stirred increased investor concerns about the company’s management.

            You should understand that the low stock price not only reflects marketplace uncertainty, but also creates an operational risk in relation to employee pensions.  Based on what you’ve reported about the ESOP funding, the $63 million debt owed by the pension plan would be more than 90% of Friday’s market value of the stock securing the debt.  This is a matter that concerns every employee with an interest in the ESOP, as well as every shareholder with an interest in the company’s ability to attract and keep good employees.  It is important for employees and public shareholders alike to know that management has established provisions to protect employee retirement plans.

            This question about employee pension security was one of five issues raised in my May 18, 2004 letter to your board of directors.  There has so far been no management response to any of those five questions, other than a newspaper report of a frivolous comment.  I urge you to take these concerns seriously, and to respond now or at least in your report of June 30th results.


                                                            Sincerely yours,




                                                            Gary Lutin



The Forum is open to all Farmer Bros. shareholders, whether institutional or individual, and to professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives.  As stated in the Forum's Conditions of Participation, participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

There is no charge for participation.  Franklin Mutual Advisers, LLC, the manager of funds owning approximately 12.6% of Farmer Bros. shares, provided initial sponsorship for the Forum and arranged for it to be chaired by Gary Lutin.  Continuing support and guidance of the Forum is provided by an Advisory Panel of actively interested shareholders.

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